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High probability Supply and demand Hello Traders. Just to share one of the concepts that has grabbed my attention. General we turn to look for high probability areas of interests that the price can pull back to before resuming with original trend. I have marked possible scenarios that turn to occur from time to time. obviously this goes hand in hand with premium and discount; valid BOS or CHOCH; Momentum and IMB. Not preaching but i do hope this can clear out your views
Education
by Ocean98
1
Capital Distribution by Time and Portfolio - CryptoHey traders, In this post, I'll be sharing a simple capital distribution strategy that I use for my crypto portfolio. This strategy is designed to help you allocate your capital across different timeframes and asset types in order to maximize your potential returns while minimizing your risk. Capital Distribution Strategy Here's how I break down my capital: 40% - HOLD (Monthly chart): This capital is allocated to long-term investments that I believe have the potential to appreciate significantly over time ( BITSTAMP:BTCUSD mostly). I typically enter these positions based on a combination of fundamental and technical analysis. 30% - Long Term (Weekly chart): This capital is allocated to assets that I plan to hold for a period of 3 to 6 months. I typically enter these positions based on technical analysis and market sentiment. 20% - Spot (Daily chart): This capital is allocated to short-term trades that I plan to hold for 1 to 2 weeks. I typically enter these positions based on technical analysis and market momentum. 10% - Futures (1-4 hourly chart): This capital is allocated to leveraged trades that I plan to keep for up to 3 days. I use futures trading to amplify my potential returns, but I also recognize that it comes with increased risk. I typically enter these positions based on technical analysis and market volatility. Choosing Entry Points As you can see, the entry points for my different capital allocations vary depending on the timeframe and asset type. This is because the risk tolerance and potential rewards associated with each type of trading are different. HOLD and Long Term : For these long-term investments, I take a more conservative approach and focus on fundamental analysis to identify projects with strong potential. I also use technical analysis to confirm my entry points and manage my risk. Spot and Futures : For short-term trades, I rely more heavily on technical analysis to identify trading opportunities. I use a variety of indicators and chart patterns to spot potential entry and exit points. Benefits of this Strategy This capital distribution strategy has several benefits: Diversification: It helps to diversify your portfolio across different timeframes and asset types, which can help to reduce your overall risk. Flexibility: It allows you to adjust your capital allocation based on your market outlook and risk tolerance. Potential for Growth: It has the potential to generate significant returns over time, as you can benefit from both long-term and short-term trading opportunities. Disclaimer Please remember that this is just a general strategy, and it may not be suitable for everyone. It's important to do your own research and understand the risks involved before making any trading decisions. Additional Tips for New Traders Start small: Don't risk more money than you can afford to lose. Learn the basics: Take the time to learn about technical analysis and fundamental analysis. Practice on a demo account: Before you start trading with real money, practice on a demo account to get a feel for the market. Manage your risk: Use stop-loss orders and other risk management techniques to protect your capital. Be patient: Trading is a marathon, not a sprint. Don't get discouraged if you don't see results immediately. I hope this post has been helpful. If you have any questions, please feel free to leave a comment below. Happy trading!
CRYPTOCAP:TOTAL2Education
by alorse
1
Rotation Games: Endless FunMarket makers control and manipulate prices and they make money all day long day after playing these games. MMs distribute shares they have accumulated at lower prices to retail traders and Joe Investor. We hold their bag! Once distribution of one asset is accomplished, MMs then re-accumulate it and begin distribution of other assets. You see the same movement in and out of R2K, the small caps play the same game. Notice on days when NQ100 is weak, RUT may be strong, will move up 1% when NQ goes off 1%. Retail needs to understand when they buy these assets at inflated prices, they are bag-holding for big money players.
TVC:DJIEducation
by DaddySawbucks
MAX HEALTHCARE - Preparing for a MOVE - Bar by Bar AnalysisBar by Bar Analysis - Learning VSA Bar A - Here there is a definite attempt to move towards the price rejection zone after a small consolidation. We have a widespread up bar closing at the top. This closing was near the boundary of the rejection zone. Bar B - we can see it was a clear attempt to “Jump across the supply”. But it met with supply and it was pushed back into the price rejection zone. The volume remained high which means there has been good amount of supply here. Bar C - Again there is an attempt to move up on above average volume but lower than the two previous days. Bar D - You can see that there was no effort to push up the price rather it was more of an attempt to absorb whatever supply that could be there. But the supply also did not step in here. Again, the prices pushed back into the price rejection zone. In the next bar you can see that it is almost like a doji with a long wick indicating supply still there but the volume is still below average. It was not real attempt to push the prices up here rather it was the supply being absorbed. Bar E - In the Bar you can see we had a widespread up bar closing up on the top but the volume remained quite low here. The supply did not step in and the buyers were able to push up the price without much resistance. Bar F – The bar opened above the previous high and moved up. But supply overwhelmed and we had clear up thrust bar trapping many Breakout traders. Bar G – The next two bar are down bars on very low volume. The supply was very low. Clearly the smart money is absorbing the selling from the trapped BO traders. The current down move with low volume and Upthrust Trap move would indicate that the Smart Money could soon make a strong attempt to move up the price. The relative Strength has been positive. Money flow has been positive as well. Then we will see the real BO and the price move much higher. A good close 910 will be significant now. A stock to watch
NSE:MAXHEALTHEducation
by karthikmarar
Continuation Wedge A Continuation Wedge (Bullish) represents a temporary interruption to an uptrend, taking the shape of two converging trendlines both slanted downward against the trend. During this time the bears attempt to win over the bulls, but in the end the bulls triumph as the break above the upper trendline signals a continuation of the prior uptrend. This bullish pattern can be seen on the following chart and was detected by Trading Central proprietary pattern recognition technology.
OTC:AOIFFEducation
by jdouglas020
Trade Like A Sniper - Episode 51 - JPYTHB - (25th June 2024)This video is part of a video series where I backtest a specific asset using the TradingView Replay function, and perform a top-down analysis using ICT's Concepts in order to frame ONE high-probability setup. I choose a random point of time to replay, and begin to work my way down the timeframes. Trading like a sniper is not about entries with no drawdown. It is about careful planning, discipline, and taking your shot at the right time in the best of conditions. A couple of things to note: - I cannot see news events. - I cannot change timeframes without affecting my bias due to higher-timeframe candles revealing its entire range. - I cannot go to a very low timeframe due to the limit in amount of replayed candlesticks In this session I will be analyzing JPYTHB, starting from the 2-Month chart. If you want to learn more, check out my profile.
Education
by Road_2_Funded
Interpreting a Potential Wave 5 in BTC/USDHere's how you can analyze the daily chart of BTC/USD to identify a potential wave 5 uptrend using Elliott Wave Theory: Confirmation of Uptrend: Analyze the higher timeframe charts (weekly or monthly) to confirm a dominant uptrend. Completion of Wave 4: Identify the end of the corrective wave 4. It should ideally be shallower than wave 2 and shouldn't breach the bottom of wave 2 in a strong uptrend. Wave 5 Characteristics: Look for the following signs in the daily chart that might suggest wave 5: Renewed upward momentum with increased trading volume. Price surpassing the highs of wave 3, indicating a continuation of the uptrend. Potential application of Fibonacci extensions, particularly the 1.618 extension applied to wave 3 or the entire wave 1-3 movement, to identify possible price targets for wave 5. Essential Considerations: Wave 5 can be deceptive: It might be weaker than anticipated due to profit-taking by earlier trend participants or exhaustion as the trend nears its completion. False breakouts: Sharp price increases that fail to hold and reverse can trap traders expecting wave 5. Confirmation is key: Always seek confirmation from other technical indicators like volume analysis, support/resistance levels, and trend indicators before entering a trade.
BITSTAMP:BTCUSDEducation
by ParabolicP
11
How Prospect Theory and the Disposition Effect Influence Prices█ Prospect theory, the disposition effect, and asset prices In the research paper "Prospect Theory, the Disposition Effect, and Asset Prices," authors Yan Li and Liyan Yang delve into the implications of prospect theory on asset pricing and trading volume through the lens of the disposition effect. The disposition effect, a tendency to sell assets that have increased in value while holding onto assets that have declined, is a well-documented behavioral bias among investors. Results: The study finds that diminishing sensitivity predicts a disposition effect, price momentum, reduced return volatility, and a positive return-volume correlation. Conversely, loss aversion generally predicts opposite outcomes. █ Background and Theory ⚪ Agency theory examines the relationship between principals (owners) and agents (managers), focusing on aligning their interests through contracts and incentives. ⚪ Prospect theory , introduced by Kahneman and Tversky (1979), is a behavioral model that describes how people make decisions involving risk and uncertainty. Unlike traditional utility theory, prospect theory suggests that people value gains and losses differently, leading to risk-averse behavior for gains and risk-seeking behavior for losses. Explanation of Risk Aversion and Loss Aversion Risk aversion is the tendency to prefer certainty over a gamble with a higher or equal expected value. In contrast, loss aversion implies that losses loom larger than gains, making individuals more sensitive to potential losses than to equivalent gains. This phenomenon is captured by the S-shaped value function in prospect theory, which is concave for gains and convex for losses. █ Methodology The research uses a comprehensive model to understand how psychological factors like fear of losses and changing sensitivity to gains and losses affect trading and market behavior. This model looks at both diminishing sensitivity (caring less about bigger changes) and loss aversion (fear of losing money) together. The study's data comes from traders and managers at four big investment banks, including people with different levels of experience and jobs. This gives a broad view of how trading behavior works at these banks. █ Findings Disposition Effect What's Happening: Investors tend to sell stocks that have gone up in value and hold onto stocks that have gone down. Why: Because they are highly sensitive to gains but less sensitive to losses. Evidence: The study shows that people are about 15% more likely to sell stocks that have gone up than those that have gone down. Price Momentum What's Happening: Because of the disposition effect, stock prices keep moving in the same direction for a while before correcting. Why: Investors sell winning stocks quickly and hold onto losing ones, so prices don’t adjust immediately to new information. Evidence: Stocks that performed well continue to do better than those that performed poorly, by about 1% per month over six months to a year. Higher Equity Premium What's Happening: Investors demand higher returns for holding riskier stocks due to fear of losses. Why: Loss aversion makes them want more return to compensate for the risk. Evidence: Historically, stocks have returned about 6% more per year than risk-free assets, which is known as the equity premium puzzle. █ Practical Implications for Retail Traders Retail traders can derive several practical applications from these findings to improve their trading strategies: Risk Management: Understanding that loss aversion may lead to holding losing stocks longer, traders should implement strict stop-loss policies to mitigate this bias. Profit-Taking Strategies: Recognizing the reversed disposition effect, traders should establish clear profit-taking rules to avoid prematurely selling winning stocks. Market Volatility Awareness: Being aware that market volatility can exacerbate loss aversion effects, traders should seek higher returns to compensate for perceived risks. █ Applying Knowledge from the Study Retail traders can apply the knowledge from this study in several effective ways: Implementing Stop-Loss Orders: Setting automatic stop-loss orders helps circumvent the emotional impact of loss aversion, ensuring losses are capped at predetermined levels. Regular Review of Holdings: Periodic reassessment of stock holdings can help overcome the inertia caused by loss aversion, enabling more rational decision-making. Diversification: Diversifying the portfolio can mitigate the impact of loss aversion on individual stock performance, reducing overall portfolio risk. Education on Cognitive Biases: Educating themselves about cognitive biases like loss aversion and the disposition effect can help traders recognize and counteract these biases in their trading behavior. █ Reference Li, Y., & Yang, L. (2013). Prospect theory, the disposition effect, and asset prices. Journal of Financial Economics, 107(3), 715-739. doi:10.1016/j.jfineco.2012.11.002 ----------------- Disclaimer This is an educational study for entertainment purposes only. The information in my Scripts/Indicators/Ideas/Algos/Systems does not constitute financial advice or a solicitation to buy or sell securities. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on evaluating their financial circumstances, investment objectives, risk tolerance, and liquidity needs. My Scripts/Indicators/Ideas/Algos/Systems are only for educational purposes!
OANDA:DE30EUREducation
by Zeiierman
HOW to SPARK New Trading IdeasToday I want you to use your imagination. I want you to ignite new, profitable and powerful trading ideas. Let’s embark on a journey to ignite your trading creativity, transforming the mundane into the extraordinary. Speak to Traders – The Power of Conversation Nothing beats the raw, unfiltered insights you can gain from chatting with fellow traders. It’s like opening a portal to a universe brimming with unique strategies and perspectives. Whether it’s a casual coffee meet-up or a spirited discussion on trading forums, the exchange of ideas can light up that creative spark within you. As you know I’ll be doing a lot more videos and live events, you’ll have the opportunity to share your ideas, analyses and ask questions! Remember, every trader has a story, a battle scar, or a victory dance. These are not just tales; they are potential blueprints for your next big trade. Let Your Mind Wander – The Art of Creative Thinking In the hustle of tick charts, Bitcoin rallies, and economic news, your best trading idea could be waiting in the quiet. It’s time to get your creative juices flowing. Take a walk, meditate, have more showers or simply gaze out the window. It’s in these moments of apparent idleness that your brain connects the dots, craft strategies that you wouldn’t have thought of while staring at screens. Give yourself permission to dream, and watch as those dreams morph into actionable trading ideas. Explore Online – The Digital Goldmine The internet is a goldmine for traders seeking inspiration. With endless resources at your fingertips, from real-time market analysis to historical data, the possibilities are limitless. Take the opportunity to dive into financial news websites, scrutinize market trends on social platforms, or get lost in the vast ocean of trading blogs. Each click can unravel patterns and opportunities. And it will help propel you towards your next trading venture. Remember, the digital world is your trading oyster, and every piece of information is a potential pearl of wisdom. Trading Podcasts – Voices That Inspire In today’s fast-paced world, trading podcasts are the lighthouses guiding traders through the fog of information overload. They provide not just market insights but also foster a sense of community. Whether you’re on your daily commute or taking a break, tune into a trading podcast. Let the voices of experienced traders be the wind beneath your wings, propelling you towards new horizons. Write Down Ideas – The Might of the Pen An idea, until it’s written down, is like a spark that risks being extinguished by the slightest breeze. The simple act of writing can turn this spark into a flame. Keep a journal of your trading thoughts, no matter how fleeting or outlandish they may seem. Over time, this journal becomes a repository of your trading evolution, a place where ideas can be nurtured and refined. This practice not only sharpens your trading acumen but also serves as a beacon during times of doubt. FINAL WORDS: Remember, every great trader was once a beginner, armed with nothing but a passion for the markets and a willingness to learn. So, let your ideas flow, for in the world of trading, today’s whimsy could be tomorrow’s windfall. Let’s some up ways for you to ignite and spark new profitable and powerful trading ideas. Speak to Traders – The Power of Conversation Let Your Mind Wander – The Art of Creative Thinking Explore Online – The Digital Goldmine Trading Podcasts – Voices That Inspire Write Down Ideas – The Might of the Pen
TVC:SA40Education
by Timonrosso
Art of Trading - Trendlines 101First of all, I would like express my gratitude to all the followers and the support I have recently received from the community! This one is for everyone who has recently started with TradingView or are existing users but are very new to the art of trading. Today we'll be looking at "Trendlines" with a certain example that might leverage the importance of these lines. Before we get started, I want to mention a couple of qualities that are very essential for trading, -Patience -Resilience lack thereof which, the markets would definitely and repeatedly teach you! So, what is a trendline? Any two closes connected by a straight line can be called a trendline. Usually used in higher TF's (timeframes)but can also be used on smaller TFs. What is it's purpose? Once a certain trend has been established in a given TF and such line has been drawn, these can be used to identify supports or resistance where a probable bounce and continuation of the trend could occur. If the market is trending upwards, a line connecting the lows of two candles, usually the first breakout candle and the lowest pullback candle, can be established as a support trendline (see illustration). The same applies for a market that is trending downwards which will give us a resistance trendline. Trendlines in my opinion will always be respected by a market, and also act as, for the lack of a better word, magnets, pulling the asset towards it. So when an asset is hovering around a support trendline, chances are that the asset is pulled towards it. If the trend is strong enough the asset bounces, it not it breaks through. Once broken through support becomes resistance and vice versa. There will be of course instances when the asset breaks through a trendline but still closes above the trendline, faking participants out of the market, usually referred to as shaking out weak hands. But that's a topic for a different time. Now that you are aware what Trendlines are, what can you infer from the illustration above? Leave a comment! If you like this sort of posts, hit boost, so I can prepare more such content. I'm also only human, and still learning, and if you think the information I provide is erroneous, please let me so I can correct and learn together with you! Learning never stops! See you in the next one, peace! ______________________________________________________________________________________ Please use my referral link if you are looking to start a subscription! I would definitely recommend it as it provides the best tools to enable you become the best version of the trader that you deserve to be! www.tradingview.com Also if you want me to analyse any asset, feel free to leave it in the comments or dm, I'll make sure to share my opinion on it!
KRAKEN:BTCUSDEducation
by TulpenFieber
Options Blueprint Series: All-Time High Christmas Tree SpreadIntroduction As Nasdaq futures continue to show bullish momentum, traders are eyeing the potential for a new all-time high. With market conditions favoring upward movements, leveraging options strategies that maximize upside potential becomes crucial. One such strategy is the Christmas Tree Spread, traditionally used to limit risk while maintaining profit potential. However, in this article, we will explore a modified version where all strikes are Out-Of-The-Money (OTM), creating a setup that profit to the upside no matter how high Nasdaq goes. This approach aligns perfectly with the optimistic outlook for Nasdaq futures and sets the stage for potential gains. Strategy Overview The Christmas Tree Spread is a versatile options strategy that can be tailored to suit various market conditions. Traditionally, when using calls, it involves buying one call at a lower strike price and selling three calls at higher strike prices and buying two more calls at even higher strike prices, creating a balanced risk-reward profile. In this modified version, we adjust the strikes to all be Out-Of-The-Money (OTM), enhancing the bullish nature of the strategy. For this setup, while Nasdaq Futures are trading at 19,982.75, we select the following strike prices for Nasdaq futures options with an expiration date of September 2024: Buy one 20000 call Sell three 21500 calls Buy two 21750 calls By choosing these strikes, we position ourselves to benefit from any substantial upward movement in Nasdaq futures. All strikes being OTM ensures that the breakeven point is set above the current price, effectively betting on a new all-time high for Nasdaq. This configuration guarantees profit to the upside, regardless of how high Nasdaq futures rise. Strategy Rationale The rationale behind selecting an all OTM strike setup for the Christmas Tree Spread lies in the current bullish outlook for Nasdaq futures. As markets exhibit strong upward trends, the potential for Nasdaq to achieve new all-time highs becomes increasingly plausible. This strategy aims to capitalize on such a possible bullish scenario. Why OTM Strikes? Lower Cost: OTM options are generally cheaper, reducing the initial cost of setting up the spread. Increased Profit Potential: Since all strikes are set above the current market price, the profit potential is maximized for any substantial upward movement. Risk Mitigation: The structure of the spread inherently limits risk, as losses are capped while allowing for upside gains. Breakeven Point: The breakeven point for this modified Christmas Tree Spread is calculated based on the premiums paid and received for the options. Given the strikes selected (20000, 21500, and 21750), the breakeven point is above the current E-mini Nasdaq-100 futures price (20,465.62), aligning with the expectation of a new all-time high. Detailed Setup and Example Trade Setup Details: Buy one 20000: This is the lower strike option, purchased to gain exposure to significant upside potential. Sell three 21500 calls: These are the middle strike options, sold to offset the cost of the purchased call and to create a spread. Buy two 21750 calls: These are the higher strike options, purchased to cap the potential loss from the sold calls and complete the spread. Premiums Involved: Assuming the following hypothetical premiums: 20000 call: 683.38 points 21500 calls: 145.42 each (436.26 total for three) 21750 calls: 109.25 each (218.5 total for two) Net Cost: Total cost of buying calls: 683.38 (20000 call) + 218.5 (21750 calls) = 901.88 Total premium received from selling calls: 436.26 (21500 calls) Net cost: 901.88 – 436.26 = 465.62 Risk Profile and Reward-to-Risk Ratio: Maximum Risk: The maximum risk is limited to the net cost of the trade, which is 465.62 points. Maximum Reward: The maximum reward would take place at 21500 on expiration and is 1034.39 points. The structure ensures 534.39 points of profit as the index potentially climbs higher. Breakeven Point: The breakeven point is the initial cost added to the lower strike price, which is 20000 + 465.62= 20,465.62. Trade Scenario: To illustrate, let's consider the potential outcomes at expiration in September 2024: If Nasdaq is below 20000: All options expire worthless, and the net loss is the initial cost: 465.61 points. If Nasdaq is at 21500: The 20000 call gains 1500, the 21500 calls expire worthless, and the 21750 calls expire worthless. Net gain = 1500 - initial cost = 1034.39 points. If Nasdaq is at or above 21750: The 20000 call gains 1500, two of the 21500 calls each lose 250, and the 21750 calls expire worthless. Net gain = $1500 - 750 (total loss from sold calls) – 465.61 (initial cost) = 534.39 points. Risk Management Risk management is a crucial aspect of any trading strategy, especially when dealing with options. For the modified Christmas Tree Spread strategy on E-mini Nasdaq-100 futures options, several risk management techniques can be employed to ensure that potential losses are minimized and profits are protected. Use of Stop-Loss Orders: Stop-Loss: Implementing stop-loss orders can help limit losses if the market does not move as expected. Setting a stop-loss at a certain percentage below the purchase price can automatically exit the position, reducing the risk of holding losing trades. Hedging Techniques: Protective Puts: Purchasing protective puts can provide additional downside protection if the market moves significantly against the position. This can be considered if there are signs of a strong bearish reversal. Spreading Risk: Diversifying the strike prices or expiration dates can spread the risk and reduce the impact of a single adverse market movement. However, this needs to be balanced with the strategy's intent and market conditions. Avoiding Undefined Risk Exposure: Capped Risk: The strategy inherently caps risk by buying the 21750 calls, which limits the maximum loss from the sold 21500 calls. Ensuring that all components of the strategy are correctly implemented and monitored helps avoid unexpected risks. Regular Monitoring: Regularly reviewing the position and market conditions ensures that the strategy remains aligned with the trader’s expectations and risk tolerance. Adjustments can be made as necessary to manage exposure. By incorporating these risk management techniques, traders can enhance the robustness of the modified Christmas Tree Spread strategy, ensuring that potential losses are minimized while maximizing the chances of achieving the desired profit. Application with Micro E-mini Nasdaq Options The modified Christmas Tree Spread strategy can also be effectively applied to Micro E-mini Nasdaq futures options. Micro E-mini options offer the same strategic benefits but with smaller contract sizes (10 times less), making them more accessible for traders with smaller accounts or those looking to manage risk more precisely. Advantages of Using Micro E-mini Options: Lower Capital Requirement: The smaller contract size of Micro E-mini options means a lower initial cost, making it easier for more traders to participate. Fine-Tuned Risk Management: Smaller positions allow for more precise control over risk, as traders can scale in and out of positions more easily. Similar Profit Potential: While the absolute profit may be smaller compared to standard E-mini options, the percentage returns can be similar, providing an effective way to capture upside movements in E-mini Nasdaq-100 futures. Comparison of Standard E-mini vs. Micro E-mini Options: Standard E-mini options have larger contract sizes and are typically used by traders with more significant capital to invest. In contrast, Micro E-mini options offer smaller contract sizes, making them ideal for traders with smaller accounts or those who prefer to manage risk more precisely. Both options provide the same strategic advantages but cater to different levels of investment and risk management needs. Using Micro E-mini Nasdaq futures options provides traders with the same strategic advantage of capturing significant upside potential while managing risk effectively, aligning well with the bullish market outlook for E-mini Nasdaq-100 futures. Conclusion The modified Christmas Tree Spread strategy offers a robust and flexible approach to capitalizing on the bullish momentum of E-mini Nasdaq-100 futures. By strategically placing all strikes Out-Of-The-Money and targeting a new all-time high, this setup ensures profit potential to the upside, no matter how high Nasdaq climbs. With proper risk management and precise execution, traders can maximize their gains while minimizing risks. Whether using standard E-mini options or Micro E-mini options, this strategy provides a powerful tool for navigating the current market conditions and positioning for future growth. 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:NQU2024Education
by traddictiv
How Information Bias Can Affect Your Trading DecisionsHow Information Bias Can Affect Your Trading Decisions Split-second trading decisions can make or break portfolios, and information plays a key role in this. Traders rely on vast amounts of data to make their choices, but what happens when that information becomes tainted by bias? Information bias — the tendency to favour one piece of information over another — can be detrimental to trading decisions. It occurs when data is measured or interpreted incorrectly. This can be the result of an error, a deliberate distortion, or a subconscious need to filter information. This FXOpen article focuses on the most common information biases. You will find the definition, the types, and the real consequences of information bias for traders. What Is Information Bias? Information bias in trading refers to the distortion of information, which leads to incorrect data being used to make decisions. This information bias definition may seem a little vague; this is because it can manifest itself in various forms, from overemphasising specific sources to selective interpretation of data. Unbiased data is the foundation of sound trading. Traders rely on accurate and complete information to assess risks, identify opportunities, and make informed choices. Bias disrupts this balance by introducing a skew that misleads traders and results in suboptimal outcomes. Why Is Bias Bad in Research? Before looking at specific types of informational bias, it’s important to know why it harms research and trading. Simply put, bias distorts the ability to make decisions based on facts and evidence. Traders are susceptible to making decisions clouded by prejudice, which often leads to choosing assets poorly or using inappropriate trading strategies. Prudent traders try to avoid emotional and cognitive biases, as relying on these rather than reliable data is costly. Types of Information Bias Here are the most common examples of information bias. Confirmation Bias People tend to believe information that confirms their pre-existing beliefs. This bias stems from the tendency to seek confirmation and avoid cognitive dissonance, which occurs if people see something they don’t agree with. Confirmation bias occurs when people favour the facts that fit their preconceived notions and reject those that contradict them. Confirmation bias can either incline traders to reevaluate their pre-existing beliefs or just ignore contradictory data. If traders over-rely on data that confirms their existing views, they can skip important information. This myopic approach can lead to missed opportunities and increased risk exposure. Overconfidence Bias Overconfidence implies an overestimation of one’s own abilities and knowledge. Traders experiencing overconfidence may misjudge the accuracy of their analysis and undermine risks. This means traders believe that they can consistently outperform the market. Overconfidence leads to excessive risk-taking and poor trading decisions caused by a failure to carefully assess risks. This could result in financial losses when market conditions deviate from traders’ expectations. Anchoring Bias Anchoring bias occurs when people rely too heavily on the first information they receive. This initial data becomes an anchor that influences subsequent judgements. Inaccurate analysis and actions occur because traders inadequately consider information that contradicts what they found initially. With anchoring bias, traders fixate on irrelevant or outdated information. This impedes their capacity to adjust to evolving market circumstances. In turn, inflexibility can lead to missed trading opportunities and dissatisfactory results. Herd Mentality and Social Influence Herd mentality is the tendency of people to follow the actions of a large group, often without critical evaluation. You probably know of some cases when traders based their actions on what others were doing. This a way to make the most irrational trading decisions imaginable: no analysis or justification — consider it blind trading. Social influence reinforces herd mentality, as traders conform to the behaviour of the crowd. They are led by the actions and opinions of influencers rather than making independent choices. Herd mentality can lead to market bubbles and crashes, as well as exaggerated market movements based on subjective estimates posted on social media. Although this creates opportunities for savvy traders, it also causes unreasonable panic among the rest of the community. Media and Information Bias The media has the power to shape traders’ perceptions. For example, sensationalism and selective reporting amplify certain aspects of information, influencing market sentiment. Financial news, if not evaluated critically, also can perpetuate bias. People may react to news events without considering the implications for their own portfolios. To counter information bias caused by the media, traders can diversify their sources of information, cross-check news, and maintain a critical stance. Experienced traders strive to train alertness and understand the link between events and market movements. This helps to distinguish objective information from biassed narratives. Behavioural Finance To deal with bias, one way to go is to learn about behavioural finance. You may read how human behaviour affects financial decisions in our blog in more detail, and here’s its condensed version. - Behavioural finance recognises that traders can be irrational, and their decisions can be influenced by biases. - The study of trader behaviour includes researching heuristics — the process by which people use mental shortcuts to form judgements quickly. - Exploring the different types of biases, cognitive errors, and the underlying emotions, as well as their impact and strategies to mitigate them, is paramount. - Knowing the cognitive factors that lead to failures during trading helps traders develop well-designed strategies and make more objective decisions. The theory states that technical and fundamental analyses may help traders overcome bias and base their decisions on price data and effective, time-tested indicators. You can use them on the TickTrader platform. Final Thoughts Information is power, but biassed information can be a double-edged sword. By understanding the psychological foundations of biases, diversifying information sources, and staying educated, traders may navigate the markets with greater precision. It’s critical to ensure that information bias does not compromise your overall performance. If you want to trade in over 600 markets with tight spreads from 0.0 pips and commissions from $1.50, you can open an FXOpen account. 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:XAUUSDEducation
by FXOpen
2
ADVANTAGES OF DEX: A New Era in Cryptocurrency TradingDecentralized exchanges, or DEXs, revolutionize the way we conduct transactions by empowering counterparties to directly interact with each other without the need for a central authority. In contrast to traditional centralized exchanges (CEXs), where all transactions are controlled by a single entity, DEXs operate on the principles of smart contracts, ensuring the autonomy and decentralization of the transaction process. This decentralized approach eliminates the risk of a single point of failure, promoting a more secure, transparent, and community-driven trading experience. Binance, the world's largest centralized exchange by capitalization and trading volume, is a prime example of a traditional centralized exchange. With a clear chain of command, ownership, and management structure, this type of exchange operates under the oversight of its administrators. In contrast to DEXs, Binance requires users to undergo mandatory verification procedures, including facial recognition and recording, and stores user funds in its own accounts. This level of control and oversight makes it a prime target for regulatory bodies, which are increasingly seeking to establish clear guidelines and standards for the global crypto market. 💡 DIFFERENCES BETWEEN DEX AND CEX 🗝️ THE KEY POINTS OF CEXs: ➡️ Centralized Exchanges operate under the umbrella of a centralized organization, where a clear chain of command and management structure governs all operations. This means that the exchange has direct control over user assets, with specific individuals responsible for overseeing day-to-day activities. ➡️ The registration process for CEXs typically involves verification of identity (KYC) and compliance with regulatory requirements. While some exceptions may be made for marketing purposes, such as allowing withdrawals up to a certain amount without verification, this is not the norm. As a result, exchanges may be compelled to disclose transaction data and customer account information to tax authorities, courts, or other parties upon request. ➡️ In terms of ease of use, CEXs often feature a familiar interface and rapid transaction processing times. They can also act as intermediaries, providing a guarantee for transactions and blocking funds until the trade is complete. ➡️However, this centralized approach also introduces security risks. With user assets stored on the exchange, CEXs are vulnerable to hacking attacks, which are unfortunately all too common. The hacking of centralized exchanges has become a frequent occurrence, making it essential for users to prioritize security when choosing a platform. One notable example of a centralized exchange is FTX, which was once among the top 5 largest exchanges by capitalization. However, its collapse serves as a stark reminder of the risks associated with centralized exchanges. The exchange's management was accused of misusing funds, leading to its eventual bankruptcy. In a devastating blow to users, their assets were locked, leaving them without access to their money. This incident highlights the importance of regulatory oversight and accountability in the cryptocurrency space. Centralized exchanges, like FTX, are often touted for their ease of use and security features, but they also concentrate user assets, making them vulnerable to mismanagement or even theft. The collapse of FTX is a cautionary tale for investors and users alike, emphasizing the need for due diligence when choosing a platform and the importance of transparency and accountability in the crypto industry. 🗝️ KEY POINTS OF DEXs: ⚡️ Decentralized exchanges, on the other hand, operate on a different principle. Transactions are facilitated by smart contracts, which ensures that users retain full control over their assets at all times. Unlike centralized exchanges, there is no management or authority figure that can exert influence or control over the platform. Instead, developers work alongside the cryptocurrency community to maintain and improve the operation of the exchange. ⚡️ One of the significant benefits of decentralized exchanges is the lack of need for identity verification. Users can trade directly with their cryptocurrency wallets, ensuring complete anonymity and privacy. Additionally, decentralized exchanges do not require users to register an account, making it a more convenient and secure option. ⚡️ Transparency is another key advantage of decentralized exchanges. All transactions are recorded on the blockchain, providing a public ledger of all activity. While it may be challenging for average users to access this information, it at least ensures that there is no room for abuse or manipulation. ⚡️ However, decentralized exchanges are not without their risks. Since users retain control over their assets, the risk of hacking is significantly reduced. However, vulnerabilities in smart contracts can still pose a threat to the security of the platform. Despite this, decentralized exchanges offer a more secure and transparent alternative to traditional centralized exchanges. 💡 ADVANTAGES OF DEXs 📍 One of the most significant advantages of decentralized exchanges is asset control. Unlike traditional centralized exchanges, users maintain full control over their funds, storing them securely in their own wallets. This means that users are not reliant on a third-party exchange to manage their assets, reducing the risk of hacking or theft. 📍 Another major benefit is the enhanced security offered by decentralized exchanges. Since there is no central storage of funds, the risk of an exchange being hacked is significantly reduced. This provides an added layer of protection for users, giving them greater peace of mind when trading. 📍 Decentralized exchanges also offer unparalleled anonymity. Users can trade without having to provide personal information, allowing for a level of privacy that is not typically found with centralized exchanges. 📍 Furthermore, decentralized exchanges offer a unique advantage when it comes to geographical restrictions. With no central authority, there are no restrictions on countries or regions for users, making it accessible to a global audience. 📍 Finally, decentralized exchanges provide a range of tools for earning money. While they may not offer the same breadth of options as centralized exchanges (such as margin trading, bi-currency investments, and liquid staking), they do provide a platform for buying and selling cryptocurrencies, giving users a way to engage with the market and potentially generate returns. 💡 DISADVANTAGES OF DEXs 📍 While decentralized exchanges offer many benefits, they also come with some drawbacks. One of the main limitations is speed and scalability. Due to the load on the blockchain, transactions can be slower and more expensive, which can be frustrating for users who need quick and seamless transactions. 📍 Another challenge is the interface. Decentralized exchanges often have a more complex interface compared to centralized exchanges, which can be overwhelming for new users. This may require a steeper learning curve and more technical knowledge to navigate. 📍Liquidity is also an issue with decentralized exchanges. Often, the liquidity is lower compared to centralized exchanges, resulting in higher spreads and less attractive prices for users. This can make it harder for users to find the best deals and execute trades efficiently. 📍 Furthermore, decentralized exchanges require a certain level of technical expertise from users. To use these platforms effectively, users need to have a basic understanding of cryptocurrency wallets, how they interact with the blockchain, and other technical aspects of decentralized finance. This can be a barrier to entry for those who are new to the space. 📍 Finally, decentralized exchanges are not immune to vulnerabilities. Smart contracts, which power these platforms, can be vulnerable to errors in their code. This means that risks are associated with possible errors in the code, which could compromise the security and integrity of the platform. While developers work hard to ensure the security of these contracts, it's essential for users to remain vigilant and aware of potential risks. ✅ CONCLUSION Decentralized exchanges are often referred to as "shadow exchanges," but they don't belong to the gray market category. As the cryptocurrency community continues to grow, there is a growing trend towards adopting DEXs, which operate through wallets. The benefits of this approach are numerous. For one, users don't have to worry about regulatory interference, as there is no centralized authority to govern their transactions. Secondly, users are free from the risk of their accounts being blocked or their money being refused by the exchange. On the other hand, DEXs can act as an arbitrator in disputes that may arise during transactions, providing an added layer of security and trust. However, it's essential to note that transactions conducted through DEXs are fully the responsibility of the participants involved, and any errors or frauds would fall on the shoulders of the individual parties. Ultimately, using DEXs requires a higher level of technical expertise and responsibility from users. It also means that users must take steps to withdraw their funds to instruments controlled by regulators, such as banks or other financial institutions. Despite these added complexities, the appeal of DEXs lies in their ability to offer a decentralized, secure, and transparent way to buy and sell cryptocurrencies. As the cryptocurrency market continues to evolve, it's likely that DEXs will play an increasingly important role in shaping its future. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment 📣
Education
by Lingrid
1
How I improved my Situational Awareness - Market Update 6/23/202This weekend I pulled up the sleeves and did a lot of post-trade analysis to realize what my biggest weakness was in trading: situational awareness. I developed a market timing model, backtested it on my own trades and on the market and the results were shocking to me. If I had only been trading in good periods, I would have already been profitable. This is despite the fact that I still make a TON of mistakes in execution and risk management. After all the saying is true - anyone can make money in a good market. Now that I know how to identify a good market for my strategy, I developed rules around it in terms of risk management. This will not only help me to reach profitability, but probably also have more peace of mind as I won't be swimming against the currents. Markets are still not the best for longer term swing trading, so I will focus on shorter trends and potentially risk reversal trades, of which my strategy is still to be developed.
AMEX:IWMEducation
by BenedekBokor
10 TIPS for trading Bitcoin - What I learned after 6 yearsHere are key points of the way I approach Bitcoin, that I feel are unique and worth mentioning. 1. The vast majority of bitcoins movement is caused by stop loss orders cascading one into the next, and performing pre-determined chain reactions as they are filled. The market is dominated by futures trading; and this has a major effect on the spot price of Bitcoin. A trader using $100 for a long at 100x is leaving in the form of his stop loss; a $10,000 limit sell order that fills ONLY if price crosses over / below. Unique to limit orders that fill automatically if price is at a premium or discount, stop losses stay in tact until price passes them. Retail traders and those placing orders are only crawling the market along until it begins hitting those stop losses. That’s why bitcoin volatility comes at odd times - the reality is, it’s not caused by human engagement. It’s caused by the decisions traders have made in the past. 2. Exchanges and market makers profit off of liquidation fees and interest on leverage. Stop loss placement is protected information for a reason; the exchanges and market markets communicate this information, to allow themselves to benefit and you to commit more money to the market. 3. The Bitcoin chart works on trendlines that cut through - this is often when we see as price consolidation. Bitcoin easily weaves inside and outside of these trendlines due to stop losses sending price to fill the order chains. The invalidations are simply a phenomenon of futures trading prominence. Eventually, one side catches just like a normal trendline - in an abnormal relationship because price is never neatly contained inside or outside - that’s what makes bitcoin prediction so difficult. 4. DXY is still the best predictor of Bitcoin volatility and as to which direction listed in point 3 will execute. Especially when DXY is approaching a major pivot or direction change, Bitcoin reacts very well with moves to liquidate the opposite side before DXY has a lengthy downward or upward movement (Bitcoin generally moves in opposition). 5. Market manipulation is subtle and occurs with consolidation. Price is contained and controlled, by MM placing counter orders to balance the price moving too far into a particular direction. The consolidation periods attract futures positions for their stop loss orders - and that’s the function that makes moving Bitcoin in the favour of the exchanges / MM in a way that benefits them and also in a way that’s legitimate - as it’s in fact caused by traders own choices. The counter balancing / controlled consolidation is a practice that on paper “prevents manipulation” and “increases liquidity to reduce volatility”. Quite clever. 6. Since stop loss orders are limits placed in the chart that don’t fill automatically if price is above or below - we can analyze the open gaps on the chart along with consolidation periods to develop a good sense of the stop loss orders in the chart and where price is likely to move. 7. Stop Loss orders helps us to predict not only direction, but also the speed and distance Bitcoin will move. The more stop losses; the greater the speed of the compounding movement and cascading effects. The longer the consolidation periods, and the larger the gaps are that price has not recovered; the more stop losses are in place. In other words, the movement of Bitcoin is predetermined and thought of like a chain of explosives that are fused together. As soon as that first stop loss triggers, the more exponentially the speed increases as the orders are already in place - and hence why we see many large wicks in Bitcoin. 8. The fiat conversion of Bitcoin is very fluid and not a firm metric for Bitcoins health. Liquidity can move in and out of the balloon of Bitcoin extremely fast. The finite quantity of Bitcoin and its scarcity and quantity, is not relative to the fiat conversion. One bitcoin is one bitcoin - whether it is at $10 or $100,000. The fiat evaluation of Bitcoin is more-so determined by the “online casino” of sorts that takes place inside the container of Bitcoin; giving us a volatile, moving fiat conversion that ultimately is not relative to the value of Bitcoin as it’s own entity - it’s only relative if Bitcoin is converted back into fiat. 9. There are several hard limitations that stock and equities share that Bitcoin does not. Company share values are limited by the anchors they have in the real world - IE employees and wages, product sales, infrastructure, supply / demand. The evaluation of these companies is not nearly as fluid as Bitcoin for these reasons. The companies are directly related and tied to the system of the economy. Bitcoin, on the other hand, does not have these reality anchors that provide floors and ceilings to price movement. 10. There is a degree of human intentionality behind Bitcoins chart and movement. In other words, more so than any other asset, its price projection is planned by human design. The market is funded upon liquidity from retail traders, predominantly in futures markets. The business of exchange leveraging is astronomical, and Market Makers control the great majority of liquidity via their automated systems and order placement services. Join that information with the profit structure and beneficiaries of our liquidations; and we can base a logical conclusion that there is a sole vested interest in the way Bitcoin’s price moves. That is; in favour of liquidating the common Joe and Jane. This allows us a unique advantage to be able to strategize with a business-focused mindset, more so that any other asset class. This is largely due to the lack of regulations and available information with international crypto exchange platforms and Market Makers.
Education
by DickDandy
Recommendations for new tradersNo matter the size of your deposit, begin trading with small amounts: $10, $100. As you gain experience, you can increase your deposit, but be ready to lose it. This will help you understand market participant behavior. - Trade only with funds you can afford to lose; losing them shouldn't affect your quality of life. - Don't rush to leave your main job; let trading be a hobby initially. It might turn into something more over time, but that's not guaranteed. - More trades don't equal more profit. Sometimes fewer trades can be more profitable than many daily trades. Without experience, it can be challenging to know when to stay out of the market. - Traders spend 90% of their time analyzing instruments and circumstances. Forget rushing; opportunities appear and disappear daily. Learn to wait. Begin with paper trading to get accustomed to the process. - Note the time spent as well as profit or loss. Regardless of your preferred timeframes, start with longer ones like monthly, weekly, and daily charts for an overall view. - Markets are cyclical; they don't rise or fall indefinitely. Reversals often happen unexpectedly. Base decisions on a well-thought-out plan, not emotions. - Develop your own strategy based on your data and temperament. Don't ask others where to buy or sell; they don't know. If an instrument has risen several hundred percent from the bottom, entering without stops is irrational. - If it has gained several thousand percent, avoid entering without waiting for a significant pullback. Even if indicators suggest a specific direction, always consider a 1% chance of the opposite happening to avoid significant losses. Always manage risks. - Regularly withdraw a portion of your profits. Understand why you're investing your time. Ideally, withdraw all your initial investment over time to make operating the deposit easier psychologically. - There are no universal strategies. Your strategy should be proven but flexible to market conditions. What works in a rising market may not work in a falling one, and vice versa. Adapt quickly and manage risks skillfully to make money.
CRYPTO:BTCUSDEducation
by Crypto4light
8
XAUUSD 1H - Consolidations Trading Setups - C.I.R.C. MethodThe chart above showcases various consolidations and their formation dynamics. Consolidation, Initiation, Retracement, Continuation (CIRC) Consolidations What are “consolidations”? Consolidations, often labeled as “ranges” in mainstream trading, hold a deeper meaning at T.T.T. Here, consolidations are the playgrounds of the BFI, zones where prices oscillate between highs and lows, as illustrated below. Within these confines, intentions simmer as BFI stack orders to propel future price movements. We confidently trade consolidations, fully aware of the intricate dynamics unfolding within the market’s underbelly.
TVC:GOLDEducation
by Anonymous_Analyst
Is the mexican index in danger?Even with great companies conforming this index, it's impossible to ignore the effect that Claudia Sheinbaum's victory had over the markets. It's shocking to see the pessimism of the markets after her victory. Unfortunately, this has now created an infliction point in the BMV:ME index. With no recent clear support, it could be possible for price to drop quite a bit more, opening great buying opportunities. However, if price does not begin to reverse this trend soon, it's possible that we will test lower lows.
BMV:MEEducation
by DarkMessiah777