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BEST REVERSAL PATTERNSDuring the existence of the market, a large number of technical analysis figures have been found. They all work with varying degrees of accuracy. Such a large number of patterns can confuse anyone, especially a beginner. Today we will look at just two models that are quite common and, with proper trading, can bring you big profits. Both models are united by one idea – breakouts. Beginning. First, the price goes down, creating new lows below the previous ones and new highs below the previous ones. At some point, the sellers' strength ends and the market turns around almost immediately, or it stops before accelerating upwards. For profitable trading, a trader must learn to catch this moment when the strength of the trend is extinguished and the price is preparing for a reversal. Confirmation. Stopping the previous trend is not a reason to enter a trade, you need to wait for confirmation. Confirmation will be a new maximum, higher than the previous one, after which the price will try to start moving down again, making a pullback down, but there will not be enough forces for further fall and the price goes up. The entry point will be the moment when the price returns to the breakout line, bounces off it and goes up. Stop loss. Very often, such formations will give you a lot of movement and big profits. But do not forget about the stop loss, which can be set below the breakout line (risky, since there may be an earlier close) or below the previous minimum. You can find a lot of trading opportunities on the market every day, but beginners are advised to study a couple of patterns and learn how to trade them correctly. Take your time and luck will definitely find you! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩
Education
by Lingrid
12
BIG SHORT STRUCTUREToday we will consider a frequently occurring formation that can bring you big profits. Beginning It all starts after breaking through the resistance line of the lateral movement. Lateral movement is nothing but the accumulation of force for subsequent takeoff. Upward movement After the breakdown, the price goes up, creating new highs, correcting from time to time. All this continues until the last peak is formed – the head. Head The head is characterized by a large price rise in the beginning, after which there is a sharp drop. The fall is characterized by large volumes that grow until the breakdown of the left shoulder line. Right shoulder. After that, the formation of the right shoulder begins. In this situation, the price may break through the line of the 50-day moving average several times. The ray point of entry. After several breakthroughs of the moving average, the price will make a dash down. The ideal entry point will be the last breakout of the moving average. It is very difficult to determine and enter the position at the ideal point, so you can try to enter after breaking the neck line or a little higher. Conclusion Such situations are common in all markets, giving a huge opportunity to make a profit if everything is done correctly. Sometimes the price can fall even below the sideways movement that started it all. Don't forget about the risks, good luck! ------------------- Share your opinion in the comments and support the idea with Like. Thanks for your support!
NSE:NIFTYEducation
by DeGRAM
3
METHODS FOR SETTING STOP LOSS. PART 2.We continue to study! Moving Average method When choosing this type of stop loss setting, the moving average indicator is used. The moving averages indicator has long been known in the forex market and many traders use it in their trading, since trading on this indicator is simple and reliable enough. The strategy of setting a stop loss on the moving average indicator is very simple: We need to wait for the price to rebound from the long-term average and put a stop below the indicator line, or above it, if we are talking about a rebound down (short). Fibonacci Levels In addition to the moving average indicator, Fibonacci levels can help you with setting a stop loss. These two methods are somewhat similar and both are quite easy to use. All you have to do is first measure the market phase and wait for the rebound from the Fibonacci levels. After rebounding and opening a position in the appropriate direction, set a stop loss below or above the 78.6 level. The simplicity of these methods lies in clear rules, it is difficult to get confused in them, so these methods are effective. Trailing Stop A trailing stop is a stop loss that follows the price by a certain percentage, points, or dollar amount when the price moves in your direction. Thanks to the trailing stop, the risk will decrease, protecting your profit and preventing a profitable position from turning into a negative one. Usually a trailing stop is set when the price has already moved in the direction we need and in order not to lose profit, we set a trailing stop. But be careful, do not place your stop too close to the price, do not forget about corrections, give the price room to accelerate. High/Low Method This method is most often used by swing traders. The essence of the method is that the stop is placed behind the minimum/maximum of a pre-selected day. In addition, the stop can move if the price shows a new high/low the next day. This method is considered not the best, but it exists, and you should know about it. Be careful when using. Conclusion There are many ways to set stop losses, but which one to choose? As is often the case in trading, you should choose the method that suits you, your character and your strategy. Do not forget that excessive stop-loss setting can lead to premature closing of a position. Frequent repetition of this error can lead to the loss of all capital. Stop loss should not be set at any point you like on the chart, it should be set according to the method and logic of price movement. Do not forget about volatility, which can knock you out of position, and then turn around in the direction you need. In addition, it is not necessary to set the stop loss clearly at the support/resistance level. The price often passes these levels and returns back. Don't forget about it. Setting a stop loss in each position is an important rule. This should become your habit. You should know before opening where you will put your stop loss. Do not forget about the rules, follow them and then you will succeed. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩
Education
by Lingrid
13
FOREX TRADING SESSIONSThe forex market operates 24 hours from Monday to Friday and is divided into three trading sessions: Tokyo Session ( Asian ) London Session ( European ) New York Session ( American ) Each session has its own characteristics and its own time, in addition, at certain times the sessions overlap each other. Let's take a closer look at the sessions. Asian session. This session is characterized by a small trading volume, compared to other sessions. At this time, there are few major players on the market, so the price may move sideways for a long time. There are many other countries present during the Asian session, such as Russia, China, New Zealand, and Australia. Due to such a large number of countries and different opening hours, it is considered that the Asian session lasts from 11 p.m. to 8 a.m. GMT. This session is suitable for those who do not like sudden movements. The session is characterized by smooth and slow movement, without strong bursts and without unexpected jumps. With the right direction, your stop loss will rarely be affected by market noise. European session. The London session is the most important. Most of the financial world turns on at this time. This trading session is considered the largest in terms of trade volume, accounting for 34% of trade. In addition to London, other major markets participate in the European session – the markets of Germany and France, because of this, it is considered that the working time of the European session starts from 7 a.m. to 4 p.m. GMT. Large trading volumes are due to the fact that three sessions intersect at this time: the Asian one, which will close soon, the American one, which is about to open, and the European one itself. This session is suitable for people who are not afraid of big movements and huge volatility. At this time, the market is as active as possible, there are many opportunities to earn, but do not forget about the risks, strong price movements can deprive you of all the capital in an instant. At this time, there is a frequent knocking out of stop-losses of retail players, after which the price often accelerates in the opposite direction. American session. At this point in time, New York is included, with a market share of 16%, the second largest trading market. The American and European sessions overlap each other, creating a large amount of liquidity. The US dollar and the Pound are the most traded currencies, occupying a huge part of all transactions on the market, because of this, volumes are increasing. At this time, important economic news often comes out, which adds strength to currency movements. New York opens at 1:00 pm and runs until 10:00 pm. What time is considered the most active? The most active moments in the market are the moments when two sessions overlap each other: New York and London: from 1:00 pm to 5:00 pm Sydney and Tokyo: from 12:00 am to 7:00 am London and Tokyo: 8:00 am to 9:00 am When two sessions overlap, it is profitable to trade the main currencies of these sessions. For example, trading in EUR/USD, GBP/USD currency pairs will give good results when the European and American sessions intersect from 1:00 pm to 5:00 pm. Conclusion Markets can move very fast, making big jumps, knocking out your stop losses, on the other hand, there may be a market situation in which the market moves very slowly and if you don't know how to wait, you won't be able to earn in such situations. Choosing the right time that suits your style is an important component of a trader's work.
NSE:NIFTYEducation
by DeGRAM
METHODS FOR SETTING STOP LOSS. PART 1.The market is volatile and very unpredictable, it is impossible to constantly correctly guess the future direction of the market, and in order not to lose everything in one transaction, a stop loss was invented. Stop loss, like the trend, is our friend. Without a stop-loss strategy, there can be no profitable trading strategy. The ability to correctly find the stop loss zones will help each trader to avoid unnecessary losses and not to exit the position ahead of time. Let's look at these strategies. Methods for setting Stop Loss PERCENTAGE METHOD The interest method is a method in which the stop will be equal to a percentage of the capital, depending on your risk management. At the same time, a large number of professionals recommend not to risk 1-2% of the capital in one transaction. And this method is very popular because of its simplicity and ease of calculations. For example, if your capital is $ 10,000, and the risk management in each transaction is 1%, then the stop loss will be $ 100, everything is very simple. CHART STOP This method is based on placing a stop loss behind the support and resistance levels. After several bounces from the levels, you can set a stop loss above the resistance or below the support, because if the price breaks through these levels, then potentially the deal can go strongly against you. Such levels will be our protection, because it will be very difficult for the price to break through strong levels, but even if there is a breakout, we will be protected by a stop loss. TIME STOP Another method of setting a stop loss is a method based on time parameters. This method will be of interest to those who do not want to leave their deals overnight or want deals to close at the end of the week and not remain open on weekends. Everyone knows about the uncertainty that arises on weekends. At this time, it is impossible to close a position, and the news can be dangerous and you can suffer big losses at the opening of a new trading week, in order to avoid all this, this method was invented. VOLATILITY STOP Each currency pair has its own volatility value. Some couples walk fast and a lot, some walk less. If a trader knows the average daily range of a particular pair, then he can set his stop loss slightly above this value so that the position is not closed prematurely due to market noise. For example, if we imagine that GBP/USD has an average daily movement range of 100 points, then setting a stop loss by 20 points is likely to lead to premature closing of the position. But, if a trader puts a stop above the daily range, you can thereby protect yourself from accidental price spikes. This method forces you to place large stop-losses, thereby giving you space to work so that the price is not closed prematurely. Conclusion Setting a stop loss is a vital condition for any trading strategy. Without a stop loss, you will inevitably lose capital. In the next part, we will look at other methods of setting a stop loss. Good luck to everyone! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩💻
Education
by Lingrid
17
TYPES OF TRADING STRATEGIESHello to all! Throughout the history of the forex market, several types of strategies related to the trading interval have been invented. Strategies have differences in the time of holding a position, and each trader must choose the type of strategy that suits him. SCALPING Scalping is a well-known style of short-term trading, using technical analysis. Scalpers, as a rule, enter into impulse movement, on breaking through levels or rebounding from them, in areas where large volumes of orders have accumulated, and close positions immediately after the end of the first impulse. They do not sit out in a position and do not hold it for a long time. Positions are usually closed within a minute. Scalpers use tick or minute charts for analysis. Impulse movements can be born during the period of news release, so the trader should follow the news. Since scalpers take a small number of pips, their profit also depends heavily on the spread, so they trade liquid pairs. Day Trading Day traders open and close positions within the day. They do not transfer transactions to the next day. 5- 30 minute charts are used for analysis. Day trading differs from scalping by holding a position for a longer time, up to several hours, if the trend allows. Day traders profit only from intraday fluctuations, so they can afford to use higher leverage levels than long-term traders. SWING TRADING Swing trading is a method of trading with holding a position from several hours to several days, that is, positions can be left overnight. Swing traders use hourly and higher charts to analyze the chart. Much attention is paid to trading formations and levels, indicators are used. Swing traders can profit from both trends and corrections, because the profitability may be higher than that of trend traders. NEWS TRADING Such traders pay attention to the news more than anyone else. The opening of a position is made during the release of important news that can push the market against the trend or, conversely, disperse it. As a rule, such traders do not leave their positions overnight. The idea is that during the release of important news, market volatility increases and it is here that traders who trade on the news earn. They wait for this liquidity, open positions before the news comes out and hold them under any circumstances. TRADING ON TREND Trend trading is a very well-known type of trading and perhaps the most profitable. Everyone remembers the rule: Trend is our friend. And this friend can bring big profits, without serious emotional burden. This type of long-term trading implies the ability to identify a trend with the help of technical analysis and opening positions in the direction of the trend. The main indicator for trend traders is the trend itself, so holding a position can be from several days to several months until the trend stops. Often, in order not to lose profit, a treling stop is used. To analyze charts, traders of this type use daily and weekly charts. They often use long-term models and resort to using fundamental analysis to open and hold positions. The spread does not bother them, as positions are opened for a long time, so trend traders can afford to trade illiquid pairs. Conclusion It is not enough to know what types of trading strategies there are, it is very important that the strategy suits you. Maybe you like to take profits quickly and leave the market? Or do you like to hold positions for a long time and you don't like to follow sharp short-term price fluctuations? Every trader should understand himself first, and only then choose a strategy.
Education
by DeGRAM
2
CORRELATION COEFFICIENTS on FOREXHello everybody! Professionals have been aware of correlation for a long time and use it profitably. The essence of correlation is not difficult to understand and using it in trading can significantly increase your profit. Correlation coefficient of currency pairs – what is it? Correlation is a statistical relationship between two or more random variables. The correlation coefficient is an index of the interdependence of quotations of different currency pairs. Correlation of currency pairs is divided into two types: direct (positive) and inverse (mirror or negative). A positive correlation is a similar movement of quotations of different currency pairs. Inverse correlation is the reverse movement of the exchange rate of different currency pairs. For example , EUR/USD and USD/CHF are in a mirror correlation because both European currencies are against the dollar. Any change in the euro affects the franc exchange rate and vice versa, on the chart, the price of the euro and the pound moves the other way around because in the EUR/USD pair, the dollar is in second place, and in USD/CHF in the first. Method Analysts have come up with a method that makes it easier to understand the correlation, it is called the correlation coefficient. Using it, you can understand in which range each pair is relative to the other, where +1 is a complete correlation, and -1 is the opposite. The stronger the link between the economies, the stronger the value tends to unity. Let's consider the main ranges of coefficient values and their impact on the currency pair: • 1 - Denotes the same movement of currency pairs. * From 0.9 to 0.5 – High dependence of currency pairs among themselves. * From 0.5 to 0.1 – There is a decrease in correlation. * 0 – There is no correlation, the instruments do not depend on each other. * From 0.1 to -0.5 - Characterized by a decrease in correlation. * From 0.5 to -0.9 – An increase in correlation and a change in the direction of movement of currency pairs in the opposite direction. * -1 – Inverse dependence of currency pairs. One price is going down, the other is going up. Trading options Novice traders often think that they reduce risks when they invest in different currency pairs, but at the same time they do not understand that a large number of pairs correlate with each other. Forgetting about the correlation, you can start getting double losses. Correlations can be used to confirm signals. For example , the analysis of the EUR/USD chart showed growth. To make sure that the forecast is correct, you need to get a reverse confirmation for USD/CHF. Sometimes, to confirm trading signals, a comparison of three assets that are minimally related to each other is used. Take for example EUR/USD, USD/JPY and EUR/JPY. • If EUR/USD is predicted to go up, then the forecast for the reverse currency pair USD/JPY should signal a fall. In the event that there is no signal for USD/JPY, then it is necessary to carefully study the behavior of EUR/JPY. No matter what tactics a trader uses, you always need to remember about correlation and use several pairs with positive and negative correlation in the analysis to increase the accuracy of the forecast. In addition, correlation helps to hedge transactions. Having decided to invest in one currency pair, you can divide the investment amount into two parts and invest the second part in a currency pair with Time interval in correlation analysis The correlation has the ability to change depending on time. It may be that the daily correlation = 0.6, but when switching to a monthly interval, this value increases and shows a strong correlation. There may be an inverse situation, when the correlation drops relative to the selected interval. Pay attention to this when analyzing. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩💻
Education
by Lingrid
16
ACCOUNT DRAWDOWN – HOW TO AVOID IT?Today I want to touch on a very important topic - account drawdown. Every trader will face this problem sooner or later, because losses in the forex market are inevitable. And if a professional knows what to do and has experience dealing with such a problem, then beginners often get lost when faced with a drawdown, which leads to even greater losses. What is a Margin Call? Margin Call - is a "call"-notification of the broker with a requirement to deposit additional funds to guarantee open transactions. If no additional funds have been received to the trading account after the Margin Call, and losses continue to grow, then when the price reaches a certain value, the Stop Out procedure will be launched, and the brokerage company will automatically close part, and possibly all transactions on the trading account. Causes of drawdown. There are two possible reasons. The first reason for the drawdown is a bad trading strategy. Each strategy needs to be checked and only then use it. No risk management will help if the strategy is unprofitable. The second reason is psychology. Even if you have a proven strategy, you can still lose money because you lose control of the situation. Discipline is the key to profitable trading. To act according to the strategy and even after a series of losses to adhere to the plan and not exceed the value of risk management - that's what a professional does and a beginner misses. Newcomers try to regain what they have lost by opening deals with a large volume, risking even more money, driving themselves into an even greater minus. First of all, you need to put up with losses, it is impossible to avoid them! Accept losses, do not lose your head, trade further according to the rules and then you will not only return, but also earn even more money. An important thought! Every beginner should remember that the more he loses, the more he will need to make profits in the future in order to reach zero. It is very difficult to make 50% of the profit to the capital in one transaction. It is almost impossible to make 100%, but beginners do not understand this and invest a lot of money, open positions with a large volume and lose even more. Losing 1% is not so scary, losing 10% you need to do 11% already to get to zero. Having lost 50% in the future, you will need to make 100% to go to zero! Don't bring your account to this. Remember: it's better to move up slowly than to fall down quickly and crash. Decide on the drawdown level. Professionals do not let their account fall below reasonable values. A beginner brings his account to exhaustion in two or three transactions. For a beginner, a drawdown of -50% or -70% occurs easily and quickly, a professional cannot afford this. Each trader must decide for himself how much percent of the capital he can lose and still remain calm. For each person, these values are different, someone cannot survive a 20% drop in the bill, and someone lives quietly with -50%. Drawdown levels up to 15% – normal working drawdown. 16-30% is not a reason to panic, but the time is coming to reduce the risks and intensity of trading. And it is also worth reviewing the state, dynamics of the market and the trading instrument. 31 - 60% is the beginning of the end. If the account is down by more than 30%, trading should be stopped and a break should be taken. After that, come back with a modified strategy for making trading decisions. Drawdown is an unpleasant thing, but the main thing is not to start it and not to delay the time after exiting it. If you have already fallen into a drawdown, then you need to follow the following rules: If you use a proven trading strategy that has repeatedly made a profit, then you just need to fix losses and continue trading using the same strategy, but with a more gentle money management system. If the trading strategy used is no longer effective, then you should fix the losses and look for a new working trading system. Due to the fact that there are no exceptionally accurate methods to exit the drawdown, your further actions will be reduced to the same trade. In this situation, the trader should identify weaknesses in his strategy and try to eliminate them. The revision of approaches to risk management and funds will also allow you to balance trading and avoid deep drawdowns in the future. Be disciplined, follow the money management, trade systematically, and the drawdown on the deposit will not bother you. ------------------- Share your opinion in the comments and support the idea with Like. Thanks for your support!
Education
by DeGRAM
6
PRINCIPLES OF DRAWING UP A TRADING PLANHello traders! Today we will talk about WHAT should be in the trading plan of any self-respecting trader. Many, as it turned out, do not know the basic principles of building a trading plan. This article will help beginners understand WHAT should be added to their trading arsenal. 1. Timeframe. The first stage of drawing up a trading plan is to determine the timeframe. Every trader should know in what time interval he is going to look for entry opportunities and build a trading strategy accordingly. As a rule, timeframes are divided into three types: 2. Risk management. Risk control is probably the most important issue in any trading plan. The ability to control risks and follow principles distinguishes a professional from a beginner. In this section, the best rule is rule 1-3% 3. Market structure. Every trader should have a trading strategy even before opening a position during periods when the market is trending or in a sideways movement and, of course, be able to correctly determine when the market is moving from one phase to another. 4. Markets. Each market has its own characteristics. Not every trader, for example, can approach the forex market. You need to know where you are trading and use the appropriate tools. It may be worth trying all the markets to understand what is right for you. Study the markets, gain experience. 5. Entry conditions. The entry point must be chosen by the trader according to the rules prescribed in the strategy. A trader should know when and under what conditions to enter a position. Strategies can be different: based on a pullback or a breakout of the level, or maybe you want to trade according to the intersection of the indicator lines. And, yes, no one forbids using all strategies at once, the main thing is not to get confused. 6. Stops. Placing stops is an important part of the strategy. A properly placed stop can protect you from premature closing of the transaction. Failure to place a stop order may result in the loss of all capital. In any case, the strategy of placing stops should be in every trading plan. You can set a stop according to some percentage you have chosen, or you can set a stop for the maximum or minimum, it's up to you, but you need to decide before entering the position. 7. Target. A correctly set goal and a set take profit helps a trader to take profit and not stay in a position until it turns from profitable to unprofitable. There are different ways to fix profits: fixed - the value you have chosen according to your trading strategy. Trailing stop is a slightly advanced method, the essence of which is that the stop will move along with the price at the distance you choose and will close when the price goes against you too much. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩💻
Education
by Lingrid
37
Principles Of Risk Management One of the main topics, and perhaps the most important, is the topic of risk management and risk reward. Beginners often do not take this topic seriously, trying to hit the jackpot in every transaction, risking all or almost all of the capital and not realizing what the consequences of such actions may be. Whatever trading style you use, whether it's day trading or scalping, the way you manage risk will still be decisive in the question of whether you will be profitable at a distance or not. Margin trading gives a lot of advantages, but most often it ruins newcomers who open deals with a large volume and quickly lose money when the price goes against them. The ability to manage risks correctly will help you stay in the game for a long time and be profitable at a distance. Focus on protecting what you have. In the pursuit of profit, traders forget about risks, forget about capital protection. It is important to remember that after each loss, the percentage of profit that needs to be returned to breakeven increases exponentially, depending on how much you lose. Fundamentals of Risk Management The market is changing every second and at any moment there may be news that will make the price go against you. The desire to risk everything in one transaction leads to the closure of novice accounts, instead, it is better to manage risks and stay in the game for a long time, making a profit. Anything can happen in the markets and it is simply unwise to risk everything in one transaction. You must remember: 1. You should not risk more than you can afford to lose. 2. Each trade must be opened with the correct risk reward ratio. (RRR) The Risk Reward Ratio (RRR) is how much you are willing to lose, compared to the expected profit in each trade. You should strive for a ratio of less risk / more profit. One of the best ways to manage risk is the 1% method. This method of risk control means that in each transaction a trader risks 1% of his capital. This is correctly used even by managers of large hedge funds and they do it for a reason. Do not think that only 1% of the capital can be traded. You can use at least all your capital for trading, but your stop loss should be no more than 1% - this is your risk. You can use leverage if you need to, but don't lose more than 1% in one trade if you want to become a professional. The Best Risk-Reward Ratio For Trading Before opening a position, you should know how much you can lose and how much you expect to win, and the ratio should not be lower than 1:1. A ratio below 1:1 means that you lose more than you can win, and this is an extremely dangerous activity that can eventually lead to the loss of the entire account. If the ratio is 1:1, you will be at breakeven, even if 50% of your trades are unprofitable. If the ratio is higher than 1:1, then you will be in the black, even if more than half of your trades are closed in the negative. Do not forget that it is impossible to win in every transaction and without proper risk management, such a game will lead to big losses. Do not forget about the rules of risk management, use a profitable strategy and act according to the rules, do not give in to emotions and then success awaits you. ------------------- Share your opinion in the comments and support the idea with Like. Thanks for your support!
Education
by DeGRAM
1
TRADING PRINCIPLES THAT EVERYONE SHOULD KNOW. PART 2.Hello traders! Today we will continue to explore the principles that every trader should know and do. READ THE NEWS. The impact of news on ALL markets is enormous. Every news can turn the market against you and break any trading plan. Read news, professional analytics, reports, any information that may be useful. You should always be up to date with the latest news in order to correctly assess future movements. MAKE A TRADING PLAN. Every trader should have a well-built strategy and a clear plan of action. Before each trading session, the trader analyzes the market and outlines the possible direction of the market and opportunities for opening positions. Even before the market opens, you should be ready and know what you will do. After each trading day, you have to analyze positions and work on mistakes. BE RESTRAINED AND DISCIPLINED. Do not give in to emotions. Don't go into a new position often. Don't change your mind every five minutes. Don't forget about the risks! A good strategy will help you not to drown in this emotional storm. ACCEPT YOUR LOSSES AND MOVE ON. There are thousands of profit opportunities on the market every day. But if you lose all your money in the pursuit of winning back the lost money, you will not have the opportunity to trade for a long time and will not have the opportunity to become a successful trader. Trading is a long distance where you need to be able to stay on track, be able to accept losses and move on. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩💻
Education
by Lingrid
12
UNSUCCESSFUL vs. SUCCESSFUL TRADERUnsuccessful Trader You are trading without a Specific Trading Strategy The main reason for opening positions for you is not clear strategy rules, but your own intuition. And even after several failures, you continue to repeat your mistakes due to the lack of discipline and the lack of a trader's trading journal. You often over-trade and get Margin Calls Your instincts make you trade too much, open new positions again and again, forgetting about the risk and thus getting frequent margin calls. Because of such disorderly market entries, you become very emotional, lose control and lose money quickly. You get attached to Open Positions Following your own emotions, you often hold on to an open position for too long, hoping that the profit will become even greater, while forgetting about the take profit that you set yourself. As a result, a profitable position becomes unprofitable, and you begin to believe and expect that it will become profitable again, overstaying the unprofitable position. You're Too Emotional Your mood changes with every price reversal. Forgetting about the analysis, you often open new positions and lose more than your risk management can afford. Successful Trader You have an Effective Trading Plan You have written on a piece of paper a strategy of actions for any market situation and always follow the rules prescribed in the strategy. You often analyze your trades in a trade journal and always remember your mistakes and hits. You Understand What Risk Is You have clear rules of risk management. Even before opening a position, you know how much you can lose in this trade and do not lose more than allowed by the rules of risk management. You don't move your stop loss and you don't act emotionally. You Control Your Emotions You clearly follow your strategy, leaving no room for emotions. Even before opening a deal, you have analyzed everything and know exactly what to do – you have a plan of action. You always fix a part of the profit You do not forget to protect your capital, so you close part of the position in plus or zero, and let the rest of the position grow further. Now you will not only not lose your money, but you can also earn. ------------------- Share your opinion in the comments and support the idea with Like. Thanks for your support!
Education
by DeGRAM
2
TRADING PRINCIPLES THAT EVERYONE SHOULD KNOW. PART 1.Hello traders! For a long time, the Forex market has created a large number of trading methods. Finding your strategy that suits you specifically is one of the main steps in achieving success in the Forex market. And it is worth remembering that successful traders do not use anything magical in their trading. Everything has been invented for a long time for both a novice trader and a successful trader. The main task of beginners is to choose a fairly easy strategy and strictly follow its principles and rules. So what does a beginner need to know in order to trade profitably? Price levels. It is difficult for a beginner to determine price levels and trade them correctly. There are no specific rules in this topic, since the price does not draw clear points, but forms zones. Many traders use support and resistance levels in their trading and for beginners, the main task at the beginning of the journey will be the concept of selling from resistance and buying from support. There are three types of trading systems based on price levels. 1. If the price moves within the framework of a sideways movement, the trader can sell from resistance and buy from support. 2. If there is a prevailing trend in the market, for example, bearish, a trader can sell from resistance and expect support to break through. 3. The same rules work in the bull market, only in a different direction. If the price breaks through the resistance, then this zone becomes a support from which you can buy. Consider the principles of trading from price levels. #1 Understanding the market context. The key to profitable trading from the levels is the ability to correctly understand the market context. Bearish pressure leads the market movement through an impulse movement that breaks through support and creates new lows – in this context, selling strategies will not work well. That is why it is so important to follow the concept of the market context: When the market falls, creating new highs and lows, we are talking about an impulsive bearish context. The correction is created by an impulse that is weaker than the main trend. A sideways movement occurs when both demand and supply are approximately equal and the price cannot move in a certain direction. As soon as the bulls or bears take over, the price will make an impulse in the direction of the strong side. #2 Top-Down Analysis The market is ruled by big money, which pays great importance to large timelines. And it is vital for an ordinary trader to know where smart money is pushing the market. To do this, it is worth noting strong levels on the monthly-weekly-daily timeframes in order to know exactly where the price is most likely to rebound. On the other hand, if the price is above the key levels, then the market is bullish. #3 Candlestick Patterns Almost every trader uses candlestick patterns in his analysis, which are a very strong analysis tool. Reversal candlestick patterns create an excellent opportunity to enter a trend reversal. The higher the timeframe on which the pattern was formed, the stronger its signal will be. Knowing candlestick formations is a very important part of a trader's professional growth. #4 Risk Management Any trader should be aware of the risks and be able to control them. Although this topic goes beyond the definition of the market context, it is still very important. There are many ways to control risks. An important rule is to set a stop loss and risk in each position, as recommended, no more than 2% percent. Hedge fund managers risk an even smaller percentage in each transaction, sometimes 1% or even lower. It is better to grow slowly than to fall quickly. If you lose 2% of the capital, in the next transaction, in order to get your money back, you will already need to make 4%, which in general is not difficult to do. But if you lose 50%, you will need to make 100% profit already, which is almost unrealistic. Conclusions Summarizing the above, you can make the following sequence of actions: Identify the key support and resistance levels. Wait for the candle to form in the desired direction. Stop loss above or below the candlestick pattern. Take profit is placed at the following support or resistance levels. Always make sure to use proper money management for each trade, and never take on a risk that exceeds the return. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
113
BEST CANDLESTICK PATTERNSCombinations confirming the reversal of the "bearish trend" 1. Inverted hammer and combinations of hammers. The hammer has a large shadow under the small green body, and the inverted hammer has a large shadow over the small red body. It appears, like all subsequent combinations, at the base of the downtrend, before the reversal. 2. "Bullish harami" consists of two candles: the first with a long red body, which covers the second with a short green body. A distinctive feature is that this model assumes a price gap. The fact is that "harami" in Japanese means pregnant, so if you look closely at the drawing, you will see that the body of the right candle is, as it were, inside the body of the left candle. 3. Short candles in the "star position". A "star" is a candle with a fairly small body, formed after the break with the closing of the previous candle, usually having a large body. Therefore, in this model, the candle should appear at the bottom of the downtrend, have a short body and open with a break down compared to the previous candle. The third red candle with a short body should close above the first candle. 4. "The morning star in the position of three candles." Here, the first candle should be red, which indicates a strong downward movement, the second has a short body and is formed with a gap relative to the first candle, and the third candle is necessarily green, the price of which has increased to at least a value at the level of half the body of the first candle. Ideally, the morning star should have a gap before and after the second candle, but the gap between the second and third candles is rare. 5. A short candle in the "harami" position. This combination is similar to the "bullish harami" that we described earlier, only in this case the second candle is short and red, but it is also located in the body of the first candle. The third candle is necessarily green. Combinations confirming the reversal of the "bullish trend" 6. "Bearish harami" is the same as "bullish harami", only a long green body should appear first, and a short red body should appear second, and the body of the right candle is absorbed by the body of the first candle. The next candles go out. 7. "Bearish absorption". Here, the first is a short green candle, and the second is a long red one, and if you look, the body of the left candle is inside the body of the right candle. After that, the price decreases. 8. "Shooting star" is a short candle with a missing lower shadow and a very long upper one. 9. The bear cross "harami" is formed when the first candle is long and green, and the second candle ("child") is a "doji". 10. "A three-line star in thought" or in another way "the repulsed offensive of three white soldiers". This combination reflects a gradual steady increase in prices and consists of three candles, the opening price of each of which is located inside or near the previous green body. The closing price of candles is equal to or approaching the maximum prices. If the second and third candles (or only the third candle) show signs of weakening, that is, their bodies gradually decrease or relatively long upper shadows form, then the "repulsed offensive of three white soldiers" model is formed. This pattern should cause particular alarm if it appears after a long uptrend.
Education
by DeGRAM
2
Trading strategies, Part 1: First stepsWelcome to a series of videos called Trading Strategies. In the next couple of weeks, we'll talk about different strategies one can use to maximize gains: Market psychology, trading tools, trading styles, technical analysis. Today, the first steps: 1- Defining who you are: Are you an investor or a trader 2- Educating yourself: Knowledge is the best tool someone can have on the market 3- You can't win all the time 4- Don't be greedy Stay tuned for more content
BITSTAMP:BTCUSDEducation
by KairoiCapital
1
Loss aversion: the biggest “sin” in trading "Losses loom larger than gains" - this expression is a good illustration for the term "Loss aversion" - a key concept in the Prospect Theory (Kahneman and Tversky, 1979). The Prospect Theory is a psychological theory that has built foundations for the modern field of Behavioral Finance. It is the work Kahneman received a Nobel prize for in 2002. According to the Prospect Theory, the psychological pain of loss is nearly twice as intense as the pleasure of the equal size gain. People hate losses and are more prone to take risks when they try to prevent losses. But in trading, accepting small losses is an inevitable and necessary part. Everyone knows that to be profitable in trading, you must cut losses fast and let profits grow. But in fact, traders do everything exactly vice versa over and over again. The reason is loss aversion. Traders let a losing trade live too long, hoping that it will get back to the green zone. At the same time, they close profitable positions too early, not letting the profit grow. People tend to fear losing the earned profit more than missing the opportunity to increase it. Though the abovementioned behavior may work for some particular positions, in the long run, it harshly worsens trading performance and is the surest way to ruin trading capital. Some people may think that this staying in losing trades is just another psychological trading mistake one should work on to get over. But Prospect Theory says that the problem is much deeper than it may seem. Loss aversion is how our mind works as a result of millions of years of evolution. And it is not clear if it is even possible to change this fundamental asymmetry in the perception of losses and gains. One can say without exaggeration that loss aversion is the "biggest sin" and the ultimate reason that people are bad at trading in general. And this is the psychological bias we always have to keep in mind and account for when trading. There are solutions how to decrease the negative impact of loss aversion. And they are well known but, as it often is, underestimating a problem leads to the same thing for the importance of its solution. The solutions are the following: In each trade, one should risk such an amount of money that does not trigger any pain in the case of loss, One needs to develop a system that has a statistical edge and then strictly stick to it. The other helpful tools to address this problem are automation and algorithmic trading. Algorithms can make many boring small trades systematically without getting tired and not affected by emotions. And various kinds of trading automation offered by state-of-art charting software help manual traders stick to their systems (real-time alerts, trading signals visualization, dashboards, etc.).
NASDAQ:TSLAEducation
by AstrideUnicorn
Psychology of the market circle Hello traders! Euphoria and Anxiety, Fear and Greed Psychology of the market cycle Any trader finds himself under the influence of changing market cycles. At favorable moments, investors feel joy and are overwhelmed with self-confidence. On dark days, the investor falls into despair and feels anxiety attacks. The only way not to succumb to such an emotional influence is to follow the clear rules of a properly compiled system. Unfortunately, most traders have no plan and no strategy. In order not to become a victim of emotions, a trader must have an idea of the emotional stages of the market cycle. Psychological stages of trading An uptrend is a trader's emotions. Optimism When the market is growing, the trader sees an opportunity to earn and invests money. The economy is growing, the price is rising, profits are growing. At such a moment, the trader feels confident, begins to open new positions after each pullback, which eventually turns into a kind of instinct. At this stage, the trader begins to forget about the risks. Enthusiasm and Abundance The market is starting to accelerate. Traders experience pleasant feelings of joy and enthusiasm. The trader begins to lose his head, confidence overwhelms him. Euphoria After that, the last stage of the upward trend comes - Euphoria. Money comes very easily, the trader is overwhelmed with confidence in his actions and decides to open positions using leverage. At some point, the trader begins to think that he is a professional analyst, and it is not he who is following the market, but the market is following him. This stage in the market helps large investors to discount their shares to self-confident traders who buy everything in a row, believing in the continuation of the upward trend. In fact, this phase is the most risky, after which the trend is reversed. Emotional stages of a Downtrend in the market Anxiety The price is starting to slow down, there are fewer and fewer sellers, bears are gaining momentum. For a trader blinded by luck, this phase looks like another correction. But the market can no longer create new highs and falls, forming new lows. Such a fall creates anxiety in the trader's soul, easy profits begin to melt. Denial and Fear Fear fills the market, traders are afraid to be wrong, because recently they ruled the market. At this stage, the trader denies that he is wrong and tries in every way to justify holding unprofitable positions. Like any beginner, a trader believes that sooner or later the price will not only return, but also go beyond the maximum. Denial brings the trader to a state of helplessness and inaction, from misunderstanding of the situation on the market. The trader gets lost, not knowing what to do and waits without knowing what, without closing unprofitable positions. Despair and Panic The price continues to fall, and the trader falls into despair, because the confidence in holding a losing position is already beginning to disappear. This phase is the most painful, because the severity of losses presses too hard to stay calm. Surrender The unprofitability of the position is increasing, traders can no longer tolerate this pain. In this phase, traders have to capitulate just to stop these torments. Traders are starting to close positions and it is here that large companies are included, for which this moment gives a new opportunity for large profits. Asset buying begins, because a reversal is possible soon. Despondency and Confusion As it often happens, as soon as a trader has closed a position, the market begins to grow. It looks like the law of meanness. This phase drives the trader into despondency, because the position was closed a moment before the rise. It is here that newcomers begin to think about whether it is worth investing further. Hope The market is starting to revive. The price shows new highs and the investor has hope. It seems that here it is, a new opportunity. The trader begins to enter the market, forgetting about the past, without drawing conclusions. A trader enters the market when the price has already accelerated, at points where the risk is again close to a critical value, the cycle begins again. Traders should keep this cycle in mind. Such emotional roller coasters can ruin anyone. A well-designed strategy can help avoid these painful blows. Remember the risks, remember the cycles, work on the mistakes, and victory will not take long to wait. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
40
Formation of distribution to Wyckoff Phase A - The moment the previous trend stops. The dominant force up to this point was demand, but now the balance is changing in favor of supply. The capitulation of the bulls has not yet happened, but it is at this stage that the bears begin to struggle to reverse the trend: • PSY - pre-delivery - at this stage, a big stock reset begins, after a strong growth. There is an increase in volumes, while the price movement begins to expand. • BC - the end of purchases - the volume increases greatly, the price soars sharply. Large players need to close their long positions without a strong change in the exchange rate, so at this moment news about profits or losses usually come out, which encourage retail traders to buy stocks en masse, which are dumped by big players. • AR - automatic reaction. The price falls under the influence of decreased purchases and retained sales - AR is formed. The minimum of movement in the AR phase is the lower bound of the TR distribution. Phase B - Creating conditions for a new trend. Smart money starts dropping long positions and opening short ones, while trying not to push the price too much in order to get a better price: • ST - secondary (repeated) test , in which the price returns to the BC area again, to check the difference in supply/demand. The supply at such a moment must exceed the demand to confirm the top. There is a decrease in volume and spread. The secondary test (ST) can sometimes be formed in the form of an upward movement (UT). At such a moment, the price may pass the BC resistance line before turning sharply. Often, after UT, the price tests the lower bound of TR. Phase C - This is a test of the remaining demand . The price can update the maximum, thereby collecting stops and a new portion of energy for the fall. This moment may turn out to be a trap for bulls who believe that the bullish trend has gained strength again. Big players will push the price against the crowd to close their positions in the footsteps, so it is quite dangerous to trade in this phase: • UTAD - uptrast after distribution. In the last phases of TR, a test of new demand is possible, after the breakdown of resistance. At the same time, UTAD does not necessarily have to appear on the chart. Phase D - breakdown of the TR line and confirmation of the bears' strength. It is here that it becomes finally clear - bulls have lost the fight and bears are pushing the price in the direction they need. Small short-term rises will often appear which can serve as good points for opening positions. The proof of the bears' strength will be the breakdown of support and a further fall in the price: • SOW - a sign of weakness. At this point, the price falls below TR or stops a little higher. All this is happening because there is more supply than demand. • LPSY - is the last power point. The weakness of growth is clearly observed when the price bounces and tries to move up, after the SOW test. The reason for such weakness may be a lack of demand or a large supply pushing the price down. In the LPSY phase, there is a wave of the last distribution of major players, after which a stronger fall will begin. Phase E - acceleration of a new downtrend. The accumulated force breaks through the TR line and a strong downward movement begins, which, however, may temporarily switch to a return to the resistance line. This moment can serve as another opportunity to enter. ------------------- Share your opinion in the comments and support the idea with Like. Thanks for your support! info taken from WyckoffAnalysis
Education
by DeGRAM
6
Bitcoin Simple Psychology PatternsThe times I leave money on the table as a swing trader are the times when I over estimate the human crowd psychology in thinking the ease and obviousness of a continued pattern playing out again would be...just TOO predicable. Afterwards, I "woulda shoulda coulda"... and then remember that humans rarely change their ways. And when they do, it happens slowly. Because let us be honest, your slob of a friend Joey isn't going to wake up today and suddenly feel inspired to help clean the house. I mean sure - those moments happen. But the odds don't favor the new and unpredictable behavior as much as it favors the old conditioned habits. But one day your friend may actually have a real awakening. Any risk management system that doesn't account for that possibly as well, is broken.
BYBIT:ETHUSD.P
by EsotericTrading