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Market Structure Identification !!Hello traders! I want to share with you some educational content. ✅ MARKET STRUCTURE . Today we will talk about market structure in the financial markets, market structure is basically the understading where the institutional traders/investors are positioned are they short or long on certain financial asset, it is very important to be positioned your trading opportunities with the trend as the saying says trend is your friend follow the trend when you are taking trades that are alligned with the strucutre you have a better probability of them closing in profit. ✅ Types of Market Structure Bearish Market Structure - institutions are positioned LONG, look only to enter long/buy trades, we are spotingt the bullish market strucutre if price is making higher highs (hh) and higher lows (hl) Bullish Market Structure - institutions are positioned SHORT, look only to enter short/sell trades, we are spoting the bearish market strucutre when price is making lower highs (lh) and lower lows (ll) Range Market Structure - the volumes on short/long trades are equall instiutions dont have a clear direction we are spoting this strucutre if we see price making equal highs and equal lows and is accumulating . I hope I was clear enough so you can understand this very important trading concept, remember its not in the number its in the quality of the trades and to have a better quality try to allign every trading idea with the actual structure
OANDA:XAUUSDEducation
by Snick3rSD
Price Action Fluency As A Second LanguageThis is the most important educational video I have shared. Reading price action is akin to acquiring a second or foreign language. Just as fluency in a new language provides fluency and articulation, mastering price action offers traders a nuanced understanding of market dynamics. One would not expect to learn a new language in a short amount of time. It often takes years while keeping up the practice for the rest of ones life. Price action is no different. There are literally hundreds of subtleties revealing their secrets to the ones who 𓁼 . Indicators obstructing the view of plain truth is most often a useless distraction. It's not just about recognizing patterns; it's about developing a foundational understanding that allows for intuitive and informed trading decisions. Building this skill set enables traders to interpret market 'sentiments' and react more adeptly to volatility, much like a fluent speaker picks up on subtle nuances in conversation. Thus, learning to 'speak' the language of price action is essential for anyone serious about trading, as it equips them with the tools to navigate and succeed in the complex world of financial markets.
Editors' picks
KRAKEN:BTCUSDEducation
by EsotericTrading
34
How to Read the MACD Indicator and Use It in Your TradingTechnical analysis is a vast field with thousands of indicators, which may be confusing to those among us who are just starting out. In this Idea, we look at one of the most popular indicators and also one of the easiest ones to fire up and start using from Day 1. MACD (Moving Average Convergence Divergence) MACD is arguably the most widely used indicator that can get slapped on virtually every chart out there. The indicator’s full name is Moving Average Convergence Divergence, but you don’t need to remember that. If you need to take away one thing, it’s this: MACD is easy to read. Here’s how to do it. Technical Side of Things Add the MACD in your chart of choice — any chart, any time frame. You’ll see three default numbers used to set it up — 12, 26, 9. The 12 is the moving average of the previous 12 bars (also called faster moving average). The 26 is the moving average of the previous 26 bars (also called slower moving average). The 9 is the moving average of the difference between the two averages in play. Next, you see that there are two lines that move up and down and cross each other occasionally. The two lines are: The MACD line: the difference between the two moving averages and the “faster line”. The Signal line: the moving average of the MACD line and the “slower line”. Because the two lines measure price changes at different speeds, the faster one (MACD) will always run ahead and react before the slower one (Signal) catches up. How to Trade with MACD If all that sounds a bit complex, here’s the gist of it: Faster line leads, slower line follows. Faster line crosses slower line to the downside — a downward trend may be forming. Faster line crosses slower line to the upside — an upward trend may be forming. Technically, whenever a new trend is shaping up, the slower line should confirm it by following the faster line. And that happens when the two cross over. The way to potentially spot new trading opportunities is to look for the crossover. This, in a nutshell, is how to read the MACD indicator and use it to help you become a more profitable trader. There's a whole plethora of MACD examples in action — dive right in ! Let us know your thoughts and experience with the MACD in the comments below!
Editors' picks
Education
by TradingView
7
Alternative Investment OptionsAlternative Investment Options Traders and investors are increasingly turning to alternative investment options to diversify their portfolios and seek new avenues for potential returns. In this FXOpen article, we discuss alternative investments, examining the types and explaining the reasons why they are gaining traction. What Is an Alternative Investment? Alternative investments deviate from conventional stocks, bonds, and cash, presenting investors with a diverse range of opportunities characterised by the nature of the assets and the unique market dynamics they inhabit. These alternatives can be broadly classified into tangible assets like real estate and art and intangible assets such as private equity, hedge funds, and cryptocurrencies*. This dual categorisation introduces a distinctive dimension to portfolio construction, allowing investors to strategically blend tangible and intangible assets for a well-balanced and diversified investment strategy. In contrast to traditional investments traded on public exchanges with comprehensive regulatory oversight, which typically offer lower volatility and moderate returns, alternative investments, operating in less liquid markets, hold the potential for higher returns but require specialised knowledge and careful attention to regulatory considerations, contributing to their increased complexity and risk. Alternative Investment Types For each alternative investment type, investors must consider their personal investment objectives and risk tolerance, as each of the assets discussed below has its specifics. Real Estate Real estate is a tangible alternative investment class, providing investors with exposure to potential price appreciation and a steady rental income, whether through direct ownership or Real Estate Investment Trusts (REITs). Real estate investments necessitate a long-term outlook, require significant upfront capital, and are also susceptible to market conditions. Private Equity Private equity entails investing in private companies not listed on public stock exchanges, with diverse investment options such as venture capital, buyouts, and direct investments in private firms. This investment class is characterised by a longer investment horizon, allowing active involvement in the growth of the invested companies. Considerations include high barriers to entry due to larger investment commitments and the necessity for specific expertise. Hedge Funds Hedge funds are investment funds employing diverse strategies, such as long-short equity, macroeconomic bets and high leverage and derivatives trading to generate returns. Notably, these funds often aim for absolute returns regardless of prevailing market conditions. Hedge fund investments are often associated with higher fees compared to traditional investment funds. Also, investors need to understand and monitor the diverse range of strategies employed by these funds. Commodities Commodities encompass tangible assets with intrinsic value, such as precious metals, agricultural products, and energy resources. Commodity prices are influenced by supply and demand dynamics and are mostly used as a hedge against inflation and geopolitical risks. Commodities offer limited returns compared to other assets, while the necessity for physical storage in some cases can be a major disadvantage. Art and Collectables This alternative investment class involves acquiring unique and valuable items, such as art, antiques, and rare collectables. Returns are often linked to the appreciation of these items' cultural or historical significance, though valuation can be subjective and influenced by trends. Major considerations are the difficulty in valuing items, the susceptibility to changing trends and tastes, and the requirement for expertise in the specific market. Cryptocurrencies* Cryptocurrencies* are digital or virtual assets that utilise cryptography and blockchain technology, with notable examples being Bitcoin and Ethereum. The potential long-term benefits of investing in cryptocurrencies* often hinge on their transaction transparency, decentralised nature, and borderless markets, offering advantages in terms of financial inclusion and accessibility. However, it's crucial to acknowledge potential challenges, such as regulatory uncertainty and cybersecurity issues, that can impact the overall risk and viability of cryptocurrency* investments. Peer-to-Peer Lending Peer-to-peer lending utilises online platforms to connect borrowers directly with individual lenders, facilitating loans without traditional financial intermediaries. Returns are generated through interest payments. The potential benefits encompass the advantage of direct lending without the need for a banking intermediary. Considerations involve default risks on loans and a lack of regulatory oversight compared to traditional financial institutions. Reasons to Consider Alternative Investment Options Alternative investments exhibit lower correlations with each other, which mitigates the impact of downturns in specific market sectors, reducing overall portfolio volatility. Alternative assets present opportunities for potential returns, surpassing those of traditional investments. Another valuable feature is the inconsistent correlation of alternative investments with traditional assets like stocks and bonds, offering independence and strategic advantages during market turbulence. Furthermore, commodities and real estate have historically demonstrated resilience against the erosive effects of inflation, serving as effective hedges and preserving wealth in inflationary environments. Alternative investments can thus contribute to an enhanced risk-adjusted return for a portfolio. By strategically incorporating assets that respond differently to market conditions, investors may achieve a more efficient balance between risk and reward. This nuanced approach to portfolio construction aims to maximise returns for a given level of risk tolerance. Risks and Challenges While alternative investments offer unique opportunities, there are also inherent complexities. - Illiquidity stands out as a prominent risk, particularly in assets like real estate, private equity, and certain hedge funds, where longer holding periods hinder the swift conversion to cash. This limitation may impede timely responses to market changes or the exploitation of emerging opportunities. - The heightened level of complexity of alternative assets demands a sophisticated understanding of strategies, valuations, and market nuances. Successful navigation of this complexity requires ongoing education and engagement. - Increased market volatility is another issue to consider, exemplified by significant price swings in cryptocurrencies* and distinct volatility in hedge fund strategies. In alternative investments, thorough due diligence involves researching each asset class, rigorously evaluating fund or investment managers, and maintaining a robust risk management framework with clear parameters, regular portfolio monitoring, and contingency plans for unforeseen events. Conclusion Alternative investments offer a compelling avenue for diversification and potential returns. While not without risks, the unique characteristics of alternative assets make them a valuable addition to a well-balanced investment portfolio. However, if you want to stick to traditional markets, you can trade forex or use derivatives to enter stock, commodity, and cryptocurrency* markets. Open an FXOpen account and try out the possibilities on the free trading platform, TickTrader. *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:XNGUSDEducation
by FXOpen
1
Crypto Earning Strategies for different depositsToday, let's dive into various crypto earning strategies for different deposit sizes. What can you do if your deposit is less than a thousand dollars? Or what options are available for earning with larger capital? First and foremost, don’t try to grab everything at once! There are countless ways to earn, but focus and knowledge are paramount! Time is also a constraint; we can't do it all! Choose a few directions or assemble a team. Level 1: Deposit Amount Up to $1,000 At this level, you need to boost your capital to $5,000-10,000 as quickly as possible. Don't rely on long-term profits—aim to earn within 2-3 months. Active engagement can quickly deplete free capital: testnets, nodes, staking, lending protocols, etc. Long-term activities may yield profits only in 9-12 months. Therefore, if your deposit is under $1,000, focus on these activities: Testnets: Some blockchains offer tester collaboration opportunities before launch. Projects get feedback, and testnet users receive potential rewards. Ambassador Programs: Help projects grow (design, edit, write articles, create memes) and earn rewards. Airdrops: Be active during a project’s development stage. Depending on the product (web application, blockchain, exchange), activities may include executing transactions, adding tokens to liquidity pools, minting NFTs, etc. Testnets and ambassador programs are more suited for Tier-1 projects. For airdrops, focus on Tier-2 and Tier-3 projects. LayerZero and zkSync cases validate this approach. Users focusing on these projects haven't yet received their drops and might have missed other profitable activities (like StarkNet, Wormhole, and Aevo) due to blocked liquidity. Level 2: Deposit Amount from $1,000 to $10,000 If Level 1 requires scalability, Level 2 calls for diversification. Users with this financial capability can engage in a wider range of activities, allocating capital to both medium- and high-capitalization projects. For deposits from $1,000 to $10,000, focus on: Medium-Term Investments: Buy BTC, ETH, niche tokens, or memecoins. Use platforms for crypto market analysis, on-chain analysis, and other tools. Tokens: Despite lower ICO profitability compared to 2017, investing in early-stage projects can still be profitable. Nodes: Earn rewards for participating in blockchain activities. For instance, Celestia node owners earned about 4,500 TIA ($45,000 as of April 2024). Be active in Tier-1 projects to receive airdrops. A larger deposit allows you to overcome "stagnation" without missing new earning opportunities. Level 3: Deposit Amount from $10,000 to $100,000 At Level 3, focus on expansion. Don’t try to invent complex earning methods. Users with deposits between $10,000 and $100,000 should perform the same activities but on a larger scale. Previously, you might have set up a node, performed retroactivities, and participated in ICOs for one project. Now, do the same for 10-20 projects. Focus on other operational tasks: Risk Management: Take less risk for unlikely events, and more for highly likely events. Activity Management: Allocate resources effectively, considering trends and project popularity. Personnel Management: Delegate work to employees. Hope you enjoyed the content I created, You can support with your likes and comments this idea so more people can watch! ✅Disclaimer: Please be aware of the risks involved in trading. This idea was made for educational purposes only not for financial Investment Purposes. --- • Look at my ideas about interesting altcoins in the related section down below ↓ • For more ideas please hit "Like" and "Follow"!
BITSTAMP:BTCUSDEducation
by Crypto4light
Fear and Greed Index: Decoding Crypto Market Sentiment!Hey everyone! If you enjoy this content, please consider giving it a thumbs up and following for more analysis. The cryptocurrency market is known for its volatility, and emotions can often drive trading decisions. The Fear and Greed Index attempts to quantify these emotions, providing a snapshot of investor sentiment at a given time. What is the Fear and Greed Index? The Fear and Greed Index is a composite score ranging from 0 (Extreme Fear) to 100 (Extreme Greed). It analyzes several data points to arrive at a single value: Volatility: Higher price swings indicate greater fear, while lower volatility suggests a calmer market. Market Momentum: Rapid price increases point to greed, while sustained price drops signal fear. Social Media Sentiment: Analyzing the tone of social media discussions about cryptocurrency can reveal fear or greed. Survey Data: Polls and surveys gauging investor sentiment are also factored in. Dominance: The market share of Bitcoin (BTC) relative to other cryptocurrencies is considered. How to Interpret the Fear and Greed Index: 0-24: Extreme Fear: This indicates a potentially oversold market where investors are panicking. It might be a buying opportunity for long-term investors with a high-risk tolerance. 25-49: Fear: The market is cautious, and prices could go either way. 50-74: Greed: Investor sentiment is becoming optimistic, potentially leading to price increases. However, be cautious of entering a potentially overbought market. 75-100: Extreme Greed: Euphoria reigns, and prices could be inflated. This might be a good time to take profits or exercise caution before entering new positions. Is the Fear and Greed Index Manipulated? Can people mess with it? Kinda. They might try to fake positive social media stuff to make the index look more greedy than it is. Also, the way the index weighs different things can be tweaked a bit. But here's the thing: There's a lot of data going into the score, so it's not super easy to manipulate. Plus, everyone knows how it works, so investors can take it with a grain of salt. The Fear and Greed Index at 47 (Neutral) With a current score of 47, the Fear and Greed Index suggests a neutral market sentiment. Investors are neither overly fearful nor excessively greedy. This could indicate a period of consolidation or a wait-and-see approach before the market makes its next move. Remember: The Fear and Greed Index is just one data point among many. Always conduct your own research and employ a comprehensive trading strategy before making any investment decisions.
INDEX:BTCUSDEducation
by CoreCrypto1
Paper Trading Challenge: Which Strategy Did the Best, Winner is The winner has now been decided! In this thrilling paper trading battle, we put four powerful trading strategies to the test: Harmonics Trading Strategy, Sentiment Trading Strategy, RSAI Blueprint Strategy, and Market Structure Strategy. Throughout this episode, we: Explained the fundamentals of each strategy. Demonstrated real-time application of each trading approach. Tracked and analyzed trades executed by each strategy. Compared performance metrics including win/loss ratio, average return, and overall profitability. Whether you're a seasoned trader or just starting out, this video offers valuable insights into the practical application of these popular trading techniques. Watch till the end to see which strategy emerges victorious and to learn tips and tricks you can incorporate into your own trading practice. 🔔 Don't forget to like, comment, and subscribe for more trading strategy battles and tutorials!
Education
by TruthakaWallStreetakaCookie
6 INEVITABLE Stock Market DownturnsIn the world of stock trading, and crypto trading, volatility is as much a part of the landscape. Whether you’re a day trader or a long-term investor you’re bound to undergo different degrees of stock market downturns, drops and crashes. And each level of downturn has its own set of characteristics, challenges, and strategies for recovery. Let’s dive into the nuances of market downturns, so you can navigate these stormy waters with confidence and savvy. DOWNTURN #1: Down -2%: A Ripple of Volatility Think of a -2% drop in the stock market as your morning coffee spilling over a bit—it’s unpleasant but hardly the end of the world. This level of decline is typically seen as a blip of volatility, a common occurrence in the stock markets that often corrects itself in the short term. DOWNTURN #2: Down -5%: The Pullback Perspective When the market drops by 5%, it’s is often referred to as a pullback and, while it might cause a bit of concern. However, if you look at the bigger time frame, you’ll see it might not signify a long-term trend. DOWNTURN #3: Down -10%: Entering Correction Territory A 10% drop is a clear signal that the market is in a correction phase. This is where the uptrend will come to a temporary halt and the market will drop and correct itself. You’ll see moving averages will cross down and the medium term trend will be showing downside. You’ll also most likely look for shorts (sells) and take advantage of the correction. DOWNTURN #4: Down -20%: The Bear Market Looms Now we’re in the territory of the bear market. This is generally characterized by a 20% or more drop. It might be time to look into more defensive stocks or sectors, such as utilities or consumer staples, which tend to be less affected by economic downturns. DOWNTURN #5: Down -50%: The Market Crash Crisis A 50% plunge is the equivalent of a financial earthquake, causing widespread panic and uncertainty. It’s quite rare, but when it happens, it’s all hands on deck. We saw this in the financial crisis. We saw this during the tech bubble. We saw this with the oil crisis. Silver Linings: Even in the darkest times, opportunities can be found. And whenever we’ve had a crash with world markets, they have turned up, made a come-back and moved to all time highs. DOWNTURN #6: Prolonged downside: The Depression This one I don’t have a number for you. Unlike recessions, which are typically shorter and less severe, depressions are rare and can last for several years, causing long-term damage to a country’s economic health. The most famous example is the Great Depression of the 1930s, which started with the stock market crash in 1929 and lasted for about a decade in most countries. During this period, unemployment rates soared, reaching as high as 25% in the United States, while industrial production, prices, and incomes plummeted. Conclusion: Steady as She Goes As I like to say. It’s important to know that the downtrends, downturns and downside will come. We need to be clued up and prepare for these situations. That way we’ll take advantage as traders of what to do. With the right approach, you can not only survive these downturns but emerge stronger and thrive profitably on the other side.
TVC:SA40Education
by Timonrosso
Why you need to have rules in your trading careerHello, The importance of rules cannot be underestimated in any business. This must not be different in trading/investing since it must be viewed at all times as a business. Below are my rules as a wave trader. Wave trading is a trading strategy that combines technical analysis with Elliott Wave Theory to identify and predict future market movements. This approach involves analyzing market price patterns to understand the cyclical nature of market trends and capitalize on these patterns for trading opportunities. Below is an example of how markets move in waves Rules are very important (Our trading rules) Identify Impulse & Correction The first step in trading is to identify the impulse and correction phases in the market. An impulse phase is characterized by strong, directional price movement, indicating a clear trend. Corrections, on the other hand, are smaller, counter-trend movements that typically follow an impulse. By recognizing these phases, you can better understand the market's structure and prepare for potential trading opportunities. Below is an example of impulses & corrections identified Identify the Pattern Formations Once you have identified the impulse and correction, the next step is to look for specific pattern formations. These patterns, such as head and shoulders, double tops, or triangles, provide clues about future price movements. Understanding and recognizing these formations can significantly enhance your ability to predict market direction and make informed trading decisions. Below are patterns identified that can be tradeable Most of these patterns can nowadays be identified for you using Tradingview under indicators, metrics & strategies. Identify Entry Points After identifying the patterns, the next crucial step is to pinpoint entry points. This involves determining the optimal moment to enter a trade based on your analysis of the market. Entry points should be chosen carefully to maximize potential gains while minimizing risk. Look for confirmations, such as breakouts from patterns or specific technical indicators, to ensure a higher probability of success. Below is an example with a risk free entry We shall be looking in another post on different types of entries. Look for Targets Setting targets is essential for effective trading. Targets help you establish your profit goals for each trade and ensure that you remain disciplined in your approach. These targets can be based on various factors, such as previous support and resistance levels, Fibonacci extensions, or measured moves from the identified patterns. Clear targets allow you to exit trades strategically and lock in profits. Below is our clear target for the entry we made with a clear stop loss as well Look for Exits in Case the Trade Doesn't Go Your Way Not all trades will go as planned, so it's vital to have exit strategies in place for unfavorable scenarios. This involves setting stop-loss levels to limit potential losses and protect your capital. By defining these exits beforehand, you can remove emotional decision-making from your trading process and adhere to a systematic approach, ensuring long-term success and sustainability in your trading business. I trust that these rules can help you in your trading journey. You can think of having them written somewhere. That way you can look at them & follow them for each trade you make. All the best
Editors' picks
NYSE:BACEducation
by thesharkke
10
Get EducatedSimple but important levels and concept. Black Arrow = Resistance Blue Arrow = Support there are two parallel lines. the upper parallel line has been acting as both support and resistance shown with arrows. right now this upper trendline is acting as resistance and the next support is the lower trend line which is around 56k-58k, which means price has broken below support and we must fall to the next level of support, which is the lower trend line, so before listening to scammers and crypto moonboys, have a look at these levels. i dont care what you do with them, i just know youll need this info.
Education
by SforShiraz
Why Bear Shares are NOT InvestmentsPrice of SOXS since inception. Price in 2012 is not a typo. Adjusted for reverse splits, shares declined from $11.1m to $3. Eleven million, one-hundred thousand dollars became three dollars in twelve years. Bear etf funds do not contain equities. They consist entirely of futures contracts, which suffer time decay and expire. This is the effect of time decay on short sale of futures in a rising market. Can you make money on SOXS? Sure, if you buy it the day before a crash. Good luck with that! Other lousy ETFs include UVXY, SPXS, TZA, SDOW, SQQQ. But Sawbucks, just last month you posted you were buying some of those?! Yes, you buy them when market is extreme overbought condition and hold for no more than a week. One day is often long enough. These are NOT investments, they are purely speculative high-risk instruments. After just a week in these etfs you can notice the time decay, you will see index return to a price it held last week, but the bear fund will be a nickel or even a dime less than it was at the same price. DO NOT HOLD LONG-TERM!!
AMEX:SOXSEducation
by DaddySawbucks
16
Analysing a Wedge Within a WedgeTitle bar: NR7: Harness the Power of Price Compression Content: Imagine having a tool in your trading arsenal that can help to predict expansive directional price movement with remarkable accuracy. The NR7 pattern , though often overlooked, offers this very capability. Let's delve into the power of NR7 and how it can applied to real-world trading scenarios. What is NR7? NR7 stands for “Narrowest Range 7.” It identifies a session where the trading range (the difference between the highest and lowest prices) is the narrowest compared to the previous seven sessions. This term was introduced by Toby Crabel in his classic book, Day Trading With Short-term Price Patterns and Opening-range Breakout. Crabel's work emphasised statistical relationships between the size of the prior days range and effective conditions for short-term trading, making NR7 a crucial pattern for price action traders. NR7 Pattern: Daily Candle Chart Past performance is not a reliable indicator of future results Why is NR7 So effective? The NR7 pattern leverages the cyclical nature of price compression and expansion. Markets often go through periods of low volatility (price compression) followed by high volatility (price expansion). Recognising these cycles can provide traders with significant advantages. Here's why this is important for trading: Predicting Trend Days: An NR7 condition sets the market up for potential trend days. Following an NR7 day, there is a higher probability that the next session will have a larger than normal range and more directional intraday action. This helps traders anticipate significant moves. Timing Entries: By identifying periods of price compression, traders can time their entries more effectively. Entering trades as the market transitions from low volatility to high volatility can create trade setups that have attractive levels of risk-to-reward. The Potential for Multi-Day Expansion An NR7 pattern doesn't just signal potential moves for the following day; it can also precede multi-day expansions. When a market breaks out of a narrow range, the subsequent move can extend over several days. This provides opportunities not only for intraday traders but also for swing traders looking to capitalize on extended trends. NR7 Pattern’s Leading to Multi-Day Expansion: Daily Candle Chart Past performance is not a reliable indicator of future results Combining NR7 with Other Indicators While effective on its own, the NR7 pattern becomes even more effective when combined with other technical indicators. Here are a few ways to enhance its use: Support and Resistance Levels: Identifying key support and resistance levels can help set realistic targets and stop-loss levels. A breakout from an NR7 pattern that also clears a significant resistance level can indicate a strong move. Keltner Channels: Keltner Channels wrap 2.5 ATR’s (average true ranges) around a 20 period exponential moving average (basis). NR7 day’s that form near the basis of the Keltner Channel can often lead to a break into the upper or lower channel. Compression Patterns: NR7 day’s can often be part of multi-day compression patterns such as bull flags, ascending triangles, and wedge patterns. Always view the NR7 day within the context of the bigger picture pattern. Momentum Indicators: Indicators like the Relative Strength Index (RSI) or Moving Average Convergence Divergence (MACD) can help gauge the strength and sustainability of the breakout. If these indicators are in alignment with the breakout direction, it adds another layer of confirmation. Example: FTSE 100 Before: FTSE 100 Daily Candle Chart The FTSE 100 forms two consecutive NR7 daily candles beneath a well-defined area of resistance. Collectively the candles are part of a small ‘bull flag’ pattern which is forming near the basis of the Keltner Channel, and the RSI indicator is holding above 50. Past performance is not a reliable indicator of future results After: FTSE 100 Daily Candle Chart In the days that followed, the FTSE 100 index moved higher – breaking out of the NR7 ranges, the bull flag, and above resistance. The breakout saw the RSI indicator surge above 70 and prices push into the upper Keltner Channel. Past performance is not a reliable indicator of future results Conclusion The NR7 pattern is an effective yet simple tool that has the potential to enhance your trading strategy. By recognising periods of price compression and anticipating subsequent expansions, traders can position themselves for potential trend days and multi-day moves. Combining NR7 with other technical indicators can provide additional confirmation and improve the accuracy of your trades. 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. 80.84% 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.
Education
by Capitalcom
Psychological Levels and Round Numbers in Technical Analysis When traders analyze the key levels, quite often then neglect the psychological levels in trading. In this article, we will discuss what are the psychological levels and how to identify them . What is Psychological Level? Let's start with the definition. Psychological level is a price level on a chart that has a strong significance for the market participants due to the round numbers. By the round numbers, I imply the whole numbers that are multiples of 5, 10, 100, etc. These levels act as strong supports and resistances and the points of interest of the market participants. Take a look at 2 important psychological levels on EURGBP: 0.95 and 0.82. As the market approached these levels, we saw a strong reaction of the price to them. Why Psychological Levels Work? And here is why the psychological levels work: Research in behavioral finance has shown that individuals exhibit a tendency to anchor their judgments and decisions to round numbers. Such a decision-making can be attributed to the cognitive biases. Quite often, these levels act as reference points for the market participants for setting entry, exit points and placing stop-loss orders. Bad Psychological Levels? However, one should remember that not all price levels based on round numbers are significant. When one is looking for an important psychological level, he should take into consideration the historical price action. Here are the round number based levels that I identified on AUDUSD on a weekly time frame. After all such levels are underlined, check the historical price action and make sure that the market reacted to that at least one time in the recent past. With the circles, I highlighted the recent reaction to the underlined levels. Such ones we will keep on the chart, while others should be removed. Here are the psychological levels and proved their significance with a recent historical price action. From these levels, we will look for trading opportunities. Market Reaction to Psychological Levels Please, note that psychological levels may trigger various reactions of the market participants. For instance, a price approaching a round number may trigger feelings of greed, leading to increased selling pressure as traders seek to lock in profits. Alternatively, a breakout above/below a psychological level can trigger buying/selling activity as traders anticipate further price momentum. For that reason, it is very important to monitor the price action around such levels and look for confirmations . Learn to identify psychological levels. They are very powerful and for you, they can become a source of tremendous profits. ❤️Please, support my work with like, thank you!❤️
FOREXCOM:XAUUSDEducation
by VasilyTrader
1
Is It Possible to Define the Probability of an Effective Trade?Is It Possible to Define the Probability of an Effective Trade? Traders are constantly trying to figure out the secret of effective trading. However, the inherent unpredictability of markets minimises the ability to accurately determine the probability of an effective trade. This FXOpen article focuses on the many variables that contribute to the dynamism and uncertainty of financial markets. Let’s consider why it is impossible to estimate the chance of lucky trade and what can be done instead. Why Is Defining Trading Outcomes Difficult? Trading involves a multitude of variables, which make it challenging to define the probability of an effective trade. Economic indicators, earnings reports, news releases, and geopolitical events all contribute to trading results. Economic indicators that reflect the state of the economy are subject to revisions and unexpected changes. Geopolitical events, from political tensions to trade agreements, can quickly change the market trajectory. Market sentiment, influenced by news, social media, and psychological factors, introduces a human element that cannot be accurately quantified. That’s why it’s a challenge to define probability in trading. Factors Influencing Trading Outcomes Trading the odds is not an effective approach. This implies an attempt to determine market movements intuitively and believing in the best. However, by relying solely on the illusion of predicting the odds, traders gain a false sense of security and overlook other influential factors. Still, there are several factors that surely influence the results of trading, including market conditions, risk management, and trader psychology. For instance, volatility and liquidity significantly impact trading. Then, building a risk management strategy and using stop-loss orders may help mitigate potential losses. Lastly, understanding trader psychology, including emotional regulation and discipline, plays a vital role in making objective and consistent decisions. The Role of Market Analysis It’s unlikely that someone will be able to fully explain how lucky trades work. But it’s definitely possible to identify how trades built on analysis work and why they’re smarter. Market analysis, such as technical, fundamental, and sentiment analysis, provides insights into market movements. Technical analysis examines historical price patterns and indicators, while fundamental analysis delves into economic factors. Sentiment analysis gauges the mood of market participants through various indicators, such as social media trends. Trades based on an understanding of charts, fundamentals, and reasons for price movements are much more reliable and more likely to be effective than guessing. However, traders should not forget about the complexity of defining trading outcomes. Even using advanced indicators, one cannot analyse future price movements with 100% precision. Markets are not static entities, and adaptability and risk management are key. Risk-Reward Ratio and Win Rate The risk-reward ratio is a critical tool for improving trading performance. The R/R ratio is a mathematical calculation used to measure the expected gains for every unit of risk undertaken. However, it’s important to note that this is a risk management tool rather than a measure of probability. Traders often fall into the trap of solely focusing on historical high win rates, believing this guarantees success in the future. However, the efficacy of a trade doesn’t solely hinge on the win rate. A high win rate may be effective when paired with favourable risk-reward ratios, potentially creating a sustainable trading strategy. Historical Performance Historical performance analysis involves scrutinising past market data, price movements, and trading patterns to identify trends, correlations, and potential signals. Traders use this analysis to make informed decisions about future market movements based on the belief that historical patterns can repeat themselves. Analysing historical performance gives traders a valuable perspective on potential future movements. Chart patterns, support and resistance levels, and key technical indicators become tools for analysing market behaviour based on past events. However, retrieving information from past market behaviour comes with limitations. Relying on historical data without considering current market dynamics may lead to misguided conclusions. Additionally, the occurrence of black swan events can disrupt established patterns. The Influence of Trader Skill Trader skill — a combination of experience and knowledge — plays a key role in overcoming uncertainty in trading. Experienced traders can interpret market signals with higher precision. Through exposure to diverse market conditions, traders develop a nuanced understanding of when to adhere to strategies and when to adapt. However, even the most seasoned traders are not immune to market unpredictability. While trader skill empowers individuals to make informed decisions, it does not ensure infallibility. Final Thoughts Ultimately, no one can determine the lucky trade chance. But while there are no guarantees, managing risk and maintaining a long-term perspective are crucial elements for traders. Analysing charts that can be found on the TickTrader trading platform, relying on indicators, adaptation, and getting as much practice as possible may improve performance in the market. In any case, one should not rely on luck alone. To continue gaining experience, you can open an FXOpen account and enjoy the exciting trading conditions available in the market. 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.
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