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Psychology

Having a bias doesn't mean having a trading opportunityHaving a bias doesn't mean having a trading opportunity. We all have a bias on the market, that is defined by our experience and trading approach. And it's not wrong or bad to have it. Problem starts when we're holding onto it too much and when we start to think we know almost for sure where and more importantly - how - the market will move into certain direction. Indeed, it's pretty easy to read basic trends and "predict" the direction of the market. However, it's basically impossible to tell how the market will do it. And it can move in a number of ways. For example, even though we might be right on overall bullish direction, market can make numerous manipulations to the downside before making a move higher ("Ha! See, I told you it will move higher!"). Or it can move higher, but in a very unclear, rangy fashion. Add flats, accumulations and distributions, fundamental factors etc. So, objectively, anything can happen and no one really knows the outcome of any particular trade. Having a bias doesn't mean having a trading opportunity. What one knows is if he's following the backtested process of finding and executing on setups. So we can say if the decision is good in the moment of placing trade, not after the outcomes happened. This uncertainty is how we can ease our greed, fear, pride or shame.. Because if no one really knows, and that's the only truth, than what's the point of getting so serious about our bias. It's not that WE predicted some market move or moved it with our trend lines, zones and any other concept. No one actually did. What we did is worked and explored to understand approximate patterns and than executed on something familiar, having only one realistic expectation - that we don't know how the price will develop.
BITSTAMP:BTCUSDEducation
by Yelli_trades
RISK MANAGEMENT the most important setting?Trading without a structured risk management strategy turns the market into a game of chance—a gamble with unfavorable odds in the long run. Even if you possess the skill to predict more than half of the market's movements accurately, without robust risk management, profitability remains elusive. Why? Because no trading system can guarantee a 100% success rate. Moreover, the human element cannot be disregarded. Over your trading career, maintaining robotic discipline, free from emotional or impulsive decisions, is challenging. Risk is inherently linked to trading—it represents the potential for financial loss. Continually opening positions without considering risk is a perilous path. If you're inclined to take substantial risks, perhaps the casino is a more fitting arena. In trading, excessive risk doesn't correlate with greater profits. This misconception often leads beginners to risk excessively for minimal gains, jeopardizing their entire account. While eliminating all risk is impossible, the goal is to mitigate it. Implementing sound risk management practices doesn't guarantee profits but significantly reduces potential losses. Mastering risk control is pivotal to achieving profitability in trading. A risk management system is a structured framework designed to safeguard trading capital by implementing specific rules. These rules aim to mitigate potential losses resulting from analytical errors or emotional trading decisions. While market predictions can be flawed, the margin for error in risk management should be minimal. Key Principles of Risk Management: 1. **Implement a Stop Loss:** - While this might seem elementary, it's often overlooked. - Many traders, especially when emotions run high, are tempted to remove or adjust their stop loss when the market moves unfavorably. - Common excuses include anticipating a market reversal or avoiding a "wasted" loss. - However, this deviation from the original plan often leads to larger losses. - Remember, adjusting or removing a stop loss is an acknowledgment that your initial trade idea might be flawed. If you remove it once, the likelihood of reinstating it when needed diminishes, clouded by emotional biases. - Stick to your predetermined stop loss and accept losses as part of the trading process, void of emotional influence. 2. **Set Stop Loss Based on Analysis:** - Never initiate a trade without a predetermined stop loss level. - Placing a stop loss arbitrarily increases the risk of activation. - Each trade should be based on a specific setup, and each setup should define its stop loss zone. If there's no clear setup, refrain from trading. 3. **Adopt Moderate Risk Per Trade:** - For novice traders, a recommended risk per trade is around 1% of the trading capital. - This means that if your stop loss is hit, the loss should be limited to 1% of your total account balance. - Note: A 1% risk doesn't translate to opening a trade for 1% of your account balance. Position sizing should be determined individually for each trade based on the stop loss level and total trading capital. By adhering to these risk management principles, traders can build a solid foundation for long-term success in the markets, safeguarding their capital while allowing for growth opportunities. In the scenario of a losing streak—let's say five consecutive losses—with a conservative risk of 1% per trade, the cumulative loss would amount to slightly less than 5% of your trading capital. (The calculation of 1% is based on the remaining balance after each loss.) However, if your risk per trade is set at 10%, enduring five consecutive losses would result in losing nearly half of your trading capital. Recovering from such losses, especially with a high-risk approach, presents a significant challenge. The table below illustrates this challenge: if you lose 5% of your capital (approximately five losing trades), you would need to generate a mere 5.3% profit to break even—equivalent to just one or two successful trades. However, if you overextend your risk and suffer, for instance, a 50% loss, you would need to double your remaining capital to restore your original deposit. 4. Utilize a Fixed Percentage of Risk, Not a Fixed Amount for Position Sizing Position sizing should be dynamic, tailored to both your predetermined risk percentage and the distance to your stop-loss level. This approach ensures that each trade is individually assessed and sized according to its unique risk profile. In the following section, we will delve into the methodology for calculating position size for each trade. 5. Maintain Consistent Risk Across All Positions While different trading styles like scalping, intraday, and swing trading may warrant varying risk levels, it's crucial to cap your risk at a reasonable threshold. A general guideline is to not exceed a 5% risk per trade. For those in the early stages of trading or during periods of uncertainty, a risk of 1% or less is advisable. The table below offers an illustrative example of the outcomes achievable by adhering to risk percentages tailored to individual trades. Regardless of your confidence level in the potential profitability of a trade, maintaining consistent risk per trade is paramount. 6. Avoid Duplicating Trades Based on the Same Setup Opening identical trades based on a single setup doubles your exposure to risk. This principle is especially pertinent when dealing with correlated assets. If you identify a favorable combination of factors across multiple trading pairs, opt to execute the trade on the pair where the setup is perceived to have a higher probability of success. 7. Aim for a Risk-to-Reward Ratio of at Least 1:3 The Risk-to-Reward (RR) ratio measures the potential profit of a trade relative to its inherent risk. A RR ratio of 1:3 signifies that for every 1% risked through a stop-loss activation, a trader stands to gain 3% of their deposit upon a successful trade. With a 1:3 RR ratio, a trader doesn't need to be correct on every trade. Achieving profitability in just one out of every three trades can result in a net positive outcome. While RR ratios of 1:1 or 1:2 can also be profitable, they typically require a higher win rate to maintain profitability. For instance, if you're willing to risk 1% to gain 1%, you'd need at least 6 out of 10 trades to be profitable to yield a positive return. It's worth noting that a high RR ratio doesn't guarantee profitability. It's possible to have trades with a 1:6 or greater RR ratio and still incur losses if the win rate is insufficient.
Education
by truepersonal
1
What you can do and what you shouldn't do nowThe market is red! Let's figure out what you can do and what you shouldn't do - We have an investment portfolio (investments are not a month or even half a year), we invest for the period of a bullish cycle or until a specific zone of interest for the sale of a certain token! We have an accumulation area and a distribution area! Regardless of what happens in the market, our areas of interest do not change. If, for example, your zone of interest for DYDX is 1-2 dollars and below, then you just sit and wait for your zone of interest, if the token falls into this zone, you decide to buy additional coins, or you’ve already had enough! You buy with the amount that is comfortable for you during this period of your life! If you have already collected enough coins into your investment portfolio and DYDX Now 2.6 you don’t just need to click buttons, you stick to your plan! The market is a place of probabilities, the market owes nothing to anyone, and we can easily update all historical lows on altcoins. What you don’t need to do is sell off your accumulated investment portfolio in a panic in the hope of buying back all the accumulated coins cheaper. The market may not give you a better entry point than you already had! If the entry point was too high and you are ready to buy additional assets, you can DCA your position without fuss! Further, if you have concerns about some asset, or you have an overestimated risk in terms of the volume of invested funds, at +100% of your entry point it will never be a mistake to take your invested money and leave free coins! - As I said earlier, if you trade intraday, you must have an investment portfolio and an amount of money allocated for trading with leverage or just on spot! Every time, no matter what happens in the market, you use the main rule - stop loss! This is what we can control in the market, our losses that we are ready to accept if the market goes against our entry point! 0 emotions, stop loss it’s just part of the job, business costs and expenses! The market is green, you shouldn't care, the market is red, you shouldn't care either, you're looking for intraday entry points for short-term trading! - For coins after listing, the market once again proves to us that you don’t just need to click buttons randomly! You build a strategy and areas of interest for entry! If a coin comes into your zone using this strategy, such as Portal, Nibi, Bbl, Defi, W and dozens of other coins that I showed on the channel, you make a decision whether to buy or not! If you initially targeted this zone for buying, then why should you feel discomfort when the price comes to this price and the market is red! You were waiting for these prices to buy, what has changed now? For swing trading you also have a dedicated capital that you distribute among the coins, you cannot buy all the coins, we do not have an unlimited stablecoins, let's not fool ourselves! You buy the coins that you have chosen and set reminders for yourself! In each video there are 2 zones for purchase, OK zone and Best zone! Nothing changes, I don’t make random clickbait videos, just for views, there is a clear plan, and don’t forget that there is invalidation of the idea, so plan can be right or wrong! Its okay. Alt, Manta, Ena looks like this coins will not drop to my zones of interest and im ok, im skip this coins for swing trade! There are no win-win strategies or super trading plans with a 99% win rate in the world! If it were that easy, everyone would be a trillionaire! We work with our own capital, our own decisions, losses and profits! Therefore, the psychological component is 50% of success! - We are not here for entertainment; any financial market is serious work and you need to work with your discipline, change your attitude towards charts, work more seriously with your capital and educate yourself! Hope you enjoyed the content I created, You can support with your likes and comments this idea so more people can watch! ✅Disclaimer: Please be aware of the risks involved in trading. This idea was made for educational purposes only not for financial Investment Purposes. --- • Look at my ideas about interesting altcoins in the related section down below ↓ • For more ideas please hit "Like" and "Follow"!
BITSTAMP:BTCUSDEducation
by Crypto4light
The whole truth about trading - playing against fateIt is apparent that your interest in trading stems from a desire to transcend the conventional 9 to 6 work regimen or to establish an additional revenue stream for enhanced financial stability. Regardless of the impetus, trading imbues one with a sense of hope—a hope for attaining financial autonomy and catering to the exigencies of one's familial responsibilities. Nevertheless, hope unaccompanied by acumen proves inadequate in the realm of trading. Are you prepared to delve into the intricacies of trading in its entirety? Can you harness the mechanisms of trading to your advantage and prosper therein? Trading is a means of slow enrichment For many, the following assertion may not be warmly received, yet it warrants acknowledgment: Trading serves as a gradual enrichment scheme. While anecdotes exist of traders who commenced with modest capital and ascended to seven-figure balances, such instances are rare. The reality is stark: the odds of such success are exceedingly slim. The allure of amassing substantial wealth swiftly is tempting, but it often necessitates assuming excessive risk. Only those blessed with exceptional luck may realize significant gains in short order. Conversely, the vast majority—99.99%—who pursue this path find themselves depleting their initial investment. Merely a fortunate minority attain even modest profits, and their success is often attributed more to chance than skill. Consider the perspective of Warren Buffett, whose wealth is renowned: "My wealth is a product of American residency, fortuitous genetics, and the power of compound interest." The crux lies in compound interest—the gradual accumulation of profits over time. Buffett's ascent to becoming the world's wealthiest investor spanned decades, not mere weeks or months. Hence, if one views trading as a shortcut to affluence, disillusionment is inevitable. You need money to make money from trading One of the most pervasive trading fallacies is the belief that possessing a profitable trading strategy guarantees the potential to amass millions in the market—a notion that has ensnared many traders. While it is feasible to develop a lucrative strategy, its profitability alone does not guarantee the attainment of vast wealth. Why? Because the magnitude of your initial deposit plays a pivotal role. Consider this scenario: Suppose you possess a trading strategy yielding a 20% annual return. With an account balance of $1,000, your potential earnings amount to $200 per year. With $10,000, your potential earnings escalate to $2,000 annually. Scaling up further, with a $1 million account, potential earnings soar to $200,000 per year. This illustrates that while a trading strategy is undeniably significant, it represents only one facet of the equation. Equally crucial is the size of your trading account. This elucidates why hedge funds attract vast sums—often in the millions, if not billions of dollars—since substantial capital is indispensable for maximizing returns from trading endeavors. Trading is one of the worst ways to earn a regular income Trading is often sought out by individuals seeking an alternative income stream, aiming to liberate themselves from the confines of a conventional 9 to 6 job in pursuit of pursuing their passions. However, it is crucial to confront a sobering reality: trading stands as one of the least reliable avenues for securing a consistent income. Why? The dynamics of financial markets are inherently mercurial. A strategy that yields profits one week may falter the next. This isn't to suggest that such strategies become entirely obsolete, but rather that market conditions necessitate adaptability. Realigning a strategy to suit evolving market dynamics demands time—a commodity not readily available in the fast-paced world of trading. This adjustment period could extend over several weeks or even months. Consequently, anticipating profits on a daily, weekly, or even monthly basis proves unrealistic. Success in trading hinges upon one's ability to capitalize on market opportunities as they arise, accepting the yields bestowed by the market, and refraining from unrealistic expectations of consistent returns. You're always studying the markets Continuous learning is indispensable for success in trading. Reflecting on my own journey, I initially gravitated towards indicators and price action trading, convinced that these tools alone would suffice for profitability. However, this mindset hindered my progress, as I neglected broader market perspectives. Recognizing the limitations of my approach, I embarked on a journey of exploration. I delved into the practices of accomplished traders, discovering diverse strategies such as trend trading, system trading, and mean reversion trading. Today, my repertoire encompasses multiple trading strategies across various markets. This diversified approach has engendered a more consistent capital curve, enhancing my overall returns. The pivotal lesson gleaned from this experience is clear: achieving profitability in trading does not signify the culmination of one's learning curve. On the contrary, ongoing education and exploration of the markets remain imperative for sustained success. How do you become a successful trader when all the odds are against you? Embrace Existing Solutions: Attempting to forge your own path in trading can prove both time-consuming and costly. Instead, seek out established trading algorithms equipped with tested and proven trading rules. Consider investing in algorithms like mine, which come backed by historical testing results. Maintain Financial Stability: Relying solely on trading for income places undue psychological pressure on yourself. The imperative to generate monthly income often leads to hasty and ill-advised trading decisions. Many seasoned traders, therefore, diversify their income streams. For instance, some engage in mentorship or operate hedge funds that levy management fees irrespective of market performance. By securing a stable income through alternate means, you can focus on trading without financial anxiety. Harness the Power of Compound Growth: Albert Einstein hailed compound interest as the eighth wonder of the world. Yet, I propose introducing you to the ninth wonder: the regular infusion of funds to augment profits. Consider this scenario: with an initial $5,000 investment earning an average annual return of 20%, you would amass $191,688 over 20 years. However, by adding an additional $5,000 to your account annually and compounding profits, your total would skyrocket to $1,311,816 over the same period. Witness the transformative potential of consistent contributions and compounding gains.
Education
by truepersonal
3
Why Traders Should Learn From Cristiano RonaldoCristiano Ronaldo is a soccer legend. He has won the Ballon d'Or five times, which is an award for the best player in the world. He's scored more than 700 career goals, and he's won league titles in England, Spain, and Italy. Not to mention, he's also won the Champions League, Europe's top club competition, five times. Ronaldo is known for his incredible work ethic, athleticism, and his drive to win. He's one of the greatest soccer players ever. Traders can learn greatly from Cristiano Ronaldo. How? Let's go back to his past. When Ronaldo was getting ready to make a big jump in his career to join Manchester United, he had to make a huge choice. Top teams like Barcelona and Inter Milan also wanted him. But Manchester United's coach, Sir Alex Ferguson, promised him something special: he'd get to play in lots of games, at least 50% of total matches in the season. An offer which he agreed to take. Even when Ronaldo was still young he wasn't oriented about getting rich or famous fast. Ronaldo picked Ferguson's team because he wanted to get better at soccer by having more opportunities to play. He believed in process. This decision helped him become the star we all know now. This is a good story to think about for anyone starting to trade. Trading isn't just about making fast cash. It's about learning how the market works and making smart choices. Think like Ronaldo did: focus on practicing and getting better, not on the money you could make today or tomorrow. Now, let's go to another field. Let's look at example from a doctor who is about to perform surgery. The doctor was faced with a critical decision: A 55-year-old man with a serious heart condition needs surgery to continue working and living without pain. The operation has clear benefits, potentially extending the patient's life from age 65 to 70. However, there's an 8% risk associated with the surgery, meaning that there's a chance the patient may not survive the operation itself. The doctor, knowing these odds, decides to go ahead with the surgery, and thankfully, it's a success. This situation parallels the decisions traders make. They analyze market conditions, evaluate potential risks and rewards, and make their best judgment call on whether to buy or sell an asset. Much like the doctor who bases their decision on medical knowledge and the patient's condition, a trader relies on economic data, company performance, and market trends. But even with the best analysis, the outcome is not guaranteed. The doctor's decision should not be judged solely on the outcome—the patient's survival—because it was made with the best information available at the time. Similarly, in trading, a decision should not be judged only by the profit or loss that results. A trade made on sound analysis can still lose money if the market goes the other way, just as a profitable trade could result from an ill-informed decision that happens to get lucky. It’s like running past a dynamite factory with a lit torch. If you make it past and nothing blows up, it might seem like a good decision because you’re okay. But was it smart to run with that torch in the first place? Not really. That's what traders have to watch out for: not tricking themselves into thinking a risky bet was smart just because they didn't lose money this time. For new traders, the best thing to do is make a trading plan and stick to it. Write down why you're making each trade. Later, you can look back and learn from what you did right or wrong. It’s not about quick wins; it’s about getting better over time. Another example is if you're learning to cook. You don’t expect to be a great chef right away. You start with simple recipes and get better with practice. And if a dish doesn’t turn out perfect, it doesn’t mean you're a bad cook. It's part of learning. In trading, remember the idea of outcome bias. This is when you think a decision was good just because things ended up okay. This can really mess with your head, making you overconfident or too scared to make your next move. So, traders should be like athletes or chefs, caring more about how they do their work than just the win or the perfect meal. Believe in the process because in the long run, it's how much you learn and get better that really matters.
SP:SPXEducation
by WayanEko
Mindfulness : The Zen approach to Trading SuccessMindfulness is a practice that involves being fully present and engaged in the moment, aware of your thoughts and feelings without judgment. It originates from ancient Buddhist meditation practices but has been adopted widely in various forms across the world for its mental health benefits. In this post, we'll dive a bit deeper into what it is, where it comes from, and how it can help you when trading. Some practical tips and where to start are included as well, so keep on reading till the end. ❔ What is mindfulness? Mindfulness is like having a special tool that helps you pay close attention to what's happening right now, in this very moment, without wishing it was different. It's about noticing the little things - how your breath feels going in and out, the way your body feels sitting or standing, or even the sounds around you. It's all about being fully present and aware, like watching a movie and noticing every detail on the screen without getting distracted by thoughts of what you will do later. When you practice mindfulness, you're training your brain to focus on the present moment. It's like when you use a magnifying glass to look at something closely; you see a lot more detail than you would if you were glancing at it. Mindfulness works the same way, but instead of looking at something outside, you're paying close attention to your thoughts, feelings, and sensations. By practicing mindfulness, you learn to respond to situations with more calmness and less knee-jerk reactions. Instead of getting immediately upset or stressed by something, you give yourself a moment to decide how you want to react. It's like pressing a "pause" button, giving you the chance to choose your response. In simple terms, mindfulness changes your mindset by helping you live more in the "now," handle your emotions better and be kinder to yourself. It's like having a secret garden inside your mind where you can go to find peace, no matter what's happening around you. ❔ Where does it come from? Mindfulness, originating over 2,500 years ago within Buddhist meditation practices, transcends its ancient spiritual roots to address a universal human need: the desire to be fully present and aware in our lives. This practice, once cultivated in the serene landscapes of ancient India, has evolved beyond its religious confines, finding a place in various Eastern traditions such as Taoism and Zen Buddhism . Each culture enriched the concept, emphasizing awareness, intention, and compassion, and highlighting mindfulness's universal appeal and applicability. The late 20th century witnessed a significant cultural bridge as mindfulness made its way into the Western world, largely thanks to pioneers like Jon Kabat-Zinn . His approach through the Mindfulness-Based Stress Reduction (MBSR) program at the University of Massachusetts Medical School showcased mindfulness as a powerful tool for psychological well-being, stress reduction, and enhanced quality of life, irrespective of its religious origins. Today, mindfulness is embraced across diverse fields for its profound benefits, embodying a timeless practice that enhances the human experience by promoting a deeper connection with the present moment. ❔ Why Mindfulness for Trading? Why is mindfulness important for trading? Think of trading like a big room full of buttons. Each button can make you feel something different – happy when you win, sad or scared when you lose. Mindfulness is like having a special guide in this room. This guide helps you walk through without hitting every button by accident. It teaches you to notice the buttons (your feelings) without having to press them all. This way, you can feel happy about the good things and not feel too bad about the not-so-good things, keeping your mind steady no matter what happens. Mindfulness helps you stay calm and clear-headed. When you're trading, it's easy to get caught up in the excitement or worry a lot. Mindfulness is like putting on a pair of glasses that helps you see everything more clearly. You learn to pay attention to what's happening right now, instead of getting lost in thoughts about what might happen next or what happened before. This can help you make better decisions because you're thinking clearly and not just reacting to your feelings. It's like having a secret weapon that keeps you feeling good and thinking smart, no matter how wild the trading world gets. ❔ How does it help in trading? Emotional Regulation : Trading can be an emotionally charged activity, with the potential for high stress, anxiety, and strong emotional reactions to wins and losses. Mindfulness helps traders recognize their emotional states without becoming overwhelmed by them, promoting a balanced approach to decision-making. Improved Focus and Concentration : Mindfulness enhances the ability to concentrate on the task at hand. For traders, this means being able to focus on analyzing markets, monitoring trades, and making decisions without being distracted by irrelevant information or internal chatter. Reducing Impulsive Behavior : By fostering an increased awareness of thoughts and feelings, mindfulness can help traders avoid impulsive decisions driven by short-term emotions such as fear, greed, or frustration. This can lead to more disciplined and considered trading strategies. Stress Management : The practice of mindfulness has been shown to reduce stress levels. Given that trading can be a high-stress occupation, particularly during volatile market conditions, mindfulness can help traders manage stress, maintain clarity, and avoid burnout. Enhancing Decision Making : Mindfulness promotes a state of calm and clarity, allowing traders to evaluate situations more objectively. This can improve decision-making by reducing the likelihood of decisions being clouded by emotions or cognitive biases. Learning from Mistakes : Mindfulness encourages an attitude of non-judgmental observation. This perspective can help traders view losses or mistakes as learning opportunities rather than personal failures, cultivating a growth mindset that is crucial for long-term success. Incorporating Mindfulness into Your Trading Routine Here are a few things you can do to build in mindfulness routines in your trading day. 🧘🏽‍♀️Daily Meditation : Start with just 5 minutes a day. There's a plethora of apps like Headspace or Calm to guide you. 🤯Setting Intentions : Each morning, remind yourself of your trading goals and how you want to approach the day mindfully. 😤Mindful Breathing : Feeling overwhelmed? Pause and take ten deep breaths to reset your mental state. ⏸️Mindful Pauses : Before you click that trade button, take a moment to ensure this decision feels right in the gut. ✍🏽Reflective Journaling : End your day by jotting down your emotional journey alongside your trades. You might be surprised by the patterns you find. 📚 Get started: Interested in expanding your mindfulness repertoire? Here are some resources to get you started: Jon Kabat-Zinn's " Wherever You Go, There You Are " for mindfulness 101. ISBN 978-0-7868-8070-6 The Headspace Guide to Meditation and Mindfulness by Andy Puddicombe for those looking to integrate mindfulness into everyday life. ISBN-10 1250104904 10% Happier for meditation skeptics who want practical insights. ISBN-10 0062265423 ✅ Takeaway Who knew that the path to trading success could involve a bit of Zen? By embracing mindfulness, you're not just becoming a better trader; you're investing in your overall well-being. So, here's to trading mindfully and finding that inner peace amidst the market's chaos. Remember, in the world of trading, the best investment you can make is in yourself. 📣 Join the Conversation! Now, it's your turn! Have you tried integrating mindfulness into your trading routine? Notice any shifts in your decision-making or emotional resilience? Or maybe you've got some mindfulness tips and tricks of your own to share. Drop your stories, insights, or even your skepticism in the comments below. Let's build a community of mindful traders, learning and growing together. Can't wait to hear about your experience!
Editors' picks
COINBASE:BTCUSDEducation
by Nico.Muselle
50
Why does investor behaviours never change?The consistency of investor behaviors stems from the fundamental aspects of human psychology, which remain largely unchanged over time. Achieving proficiency in investing requires not just a surface-level understanding of psychology, but a deep and nuanced comprehension that can only be acquired through years of observation and study. And you need work with your own mindset. Market dynamics are driven by the actions of its participants, who are essentially human beings. Whether in the short term or the long term, market movements are a reflection of human behavior. This doesn't diminish the importance of analytical skills in investing; rather, it underscores the crucial role that understanding human behavior plays. Even someone with exceptional analytical abilities may struggle to succeed in investing without a keen insight into human psychology. Because human behavior tends to remain consistent over time, investor behavior also remains consistent. As a result, markets will continue to exhibit familiar patterns and tendencies as long as they are driven by human participation. Throughout 2022 - 2023, a common narrative has permeated discussions: * We will see 2008 financial crisis. * Interest rates are poised to increase * The belief is that the Federal Reserve will no longer intervene to rescue the markets. * Btc its just a cat bounce, sp500 should go down to 2800 * There is no new alt season * AI trend its a Dot com bubble And many other. people love to find some LOGIC or patterns, because its will be much easier play the games in "experts" Yet, there's a fundamental flaw in this narrative: human behavior. We have a tendency to forget lessons learned and revert to our previous habits. As global crises begin to recede, history shows that we often resume our previous patterns. In other words, we revert to our old ways: buying, buying, and buying once again. Human nature and the market are constants that remain unchanged over time. Understanding our typical behaviors, whether good or bad, is essential. To excel as an investor, one must delve beyond just grasping the fundamentals or technicalities of investing; it's crucial to delve into human behavior. This entails studying not only market behavior but also human behavior in general. By releasing expectations of instant wealth in the market, we can appreciate its intricacies. The market serves as a remarkable platform where one can glean insights into money, business, psychology, history, and, most significantly, oneself. It's a rigorous system that penalizes errors but also bestows rewards for wise decisions. At the end just reduce your expectations, and just simply trade assets not your wishes. Hope you enjoyed the content I created, You can support with your likes and comments this idea so more people can watch! ✅Disclaimer: Please be aware of the risks involved in trading. This idea was made for educational purposes only not for financial Investment Purposes. --- • Look at my ideas about interesting altcoins in the related section down below ↓ • For more ideas please hit "Like" and "Follow"!
BITFINEX:BTCUSDEducation
by Crypto4light
📖 Market Wizards: ResumePublished by Jack D. Schwager in 1989, "Market Wizards" marks the beginning of an indispensable series for traders and investors alike. Through engaging interviews, Schwager brings to light the experiences of titans such as Bruce Kovner, Richard Dennis, Paul Tudor Jones, Michael Steinhardt, Ed Seykota, Marty Schwartz, and Tom Baldwin, making learning from the best an enjoyable journey. To keep things short, we highlighted the most important parts of the interviews and came back with these key takeaways: There is no holy grail to trading success. The methodologies employed by the "market wizards " cover the entire spectrum from purely technical to purely fundamental and everything in between. The time they typically hold a trade ranges from minutes to years. Although the styles of the traders are very different, many common denominators were evident: 1. All those interviewed had a driving desire to become successful traders - in many cases, overcoming significant obstacles to reach their goal. 2. All reflected confidence that they could continue to win over the long run. Almost invariably, they considered their trading as the best and safest investment for their money. 3. Each trader had found a methodology that worked for him and remained true to that approach. Significantly, discipline was the word most frequently mentioned. 4. The top traders take their trading very seriously; most devote a substantial amount of their waking hours to market analysis and trading strategy. 5. Rigid risk control is one of the key elements in the trading strategy of virtually all those interviewed. 6. In a variety of ways, many of the traders stressed the importance of having the patience to wait for the right trading opportunity to present itself. 7. The importance of acting independently of the crowd was a frequently emphasized point. 8. All the top traders understand that losing is part of the game. 9. They all love what they are doing. Below we've gathered a list of opinions from the traders interviewed in the book: 1. Implementation is as IMPORTANT as direction: Getting the direction of the trade right is only part of a successful trade; putting the trade in the right way is critical. 2. You don’t get paid for being right. Many traders fail not so much because of the trades they make when they are wrong, but rather because of the trades they don’t make when they are right. 3. Sometimes it is what you don’t do that counts. “Music is the space between the notes.” – Claude Debussy. Analogously, the space between investments – the times one is out of the market – can be critical to successful investing. 4. Risk Control Many market wizards interviewed in this book consider risk control even more important than the methodology. 5. Trade size can be more important than the entry point. Traders focus almost entirely on where to enter a trade. In reality, the entry size is often more important than the entry price because if the size is too large, a trader will be more likely to exit a good trade on a meaningless adverse price move. Don’t let your greed influence position sizing beyond your comfort level. 6. Don’t try to be 100 percent right. The market is moving against you and you are well aware of the dangers of an unconstrained loss, but you also still believe in your position and you are worried about throwing in the towel before the market turns. You are frozen in indecision. 7. Flexibility is a critical trait. Flexibility is an essential quality to successful trading. It is important not to get attached to an idea and to always be willing to get out of a trade if the price action is inconsistent with your trade hypothesis. 8. The best remedy for a losing streak. When you are in a losing streak, you can’t turn the situation around by trying harder. When trading is going badly, often the best solution is to stop trading for a while. 9. When everything is going great, watch out! The worst drawdowns often come suddenly right on the heels of periods when just about everything seems to be working as well as if it had been optimistically scripted. In this case, a trader will be most susceptible to being lulled into complacency. 10. The market doesn’t care where you entered a trade. Don’t make trading decisions based on where you bought (or sold) a stock or futures contract. The market doesn’t care where you entered your position. A common error traders make when they realize they are in a bad trade is to commit to getting out, but only after the market returns to their entry level – the proverbial “I will get out when I am even”. The linkage of liquidation to entry level is one of the major causes of turning small losses into large ones. In conclusion , "The Market Wizards" by Jack D. Schwager serves as an illuminating guide into the minds and strategies of some of the most successful traders of our time. Through insightful interviews and analysis, Schwager provides invaluable lessons on trading psychology, risk management, and market tactics. However, this is just the beginning of the journey into the world of market mastery. To delve even deeper and expand your understanding, we highly encourage traders to explore the following volumes penned by Schwager: "The New Market Wizards" (1992), "Stock Market Wizards" (2001), "Hedge Fund Market Wizards" (2012), and "The Little Book of Market Wizards" (2014) . These sequels offer a rich tapestry of new interviews, anecdotes, and wisdom from a diverse array of trading luminaries, further enriching your knowledge and empowering your trading endeavors. Whether you're a novice or a seasoned trader, these volumes are indispensable companions on your quest for trading success. Dive in, absorb the wisdom, and let it guide you on your path to becoming a true market wizard.
OANDA:XAUUSDEducation
by financialflagship
Market Psychology: Why the Wall St. Cheat Sheet Still WorksI decided to apply the Wall Street Cheat Sheet to a chart of the S&P 500 during the Dotcom crash. It is impressive that it still works and holds so many lessons. The question you should ask yourself is, where are we now? Let me know your thoughts in the comments below. ------------------------------------------------------------- Understanding the implications of the Wall Street Cheat Sheet can be crucial for investors and traders looking to navigate the markets more effectively. It serves as a reminder of the recurring nature of market sentiment, highlighting that investor psychology tends to repeat itself in a cyclical pattern. Recognizing these patterns can help traders anticipate market movements and improve their decision-making processes. Although it's not a fail-proof guide to predicting market trends, the Wall Street Cheat Sheet is a tool that, when combined with other strategies and risk assessments, can provide insightful context to market indicators and behavior. The Wall Street Cheat Sheet encapsulates the variety of emotions investors go through during market cycles. Recognizing emotional cycles can inform risk assessment and trading strategies. The Wall Street Cheat Sheet serves as a roadmap for navigating the emotional highs and lows investors face during market cycles. Each phase reflects a collective sentiment that can influence financial markets and, subsequently, the price movement of stocks. Market cycles represent the recurrent fluctuations seen in the financial markets and can be identified through the price movements of stocks. These cycles are driven by a variety of factors such as economic indicators, corporate performance, and investor sentiment. The Wall Street Cheat Sheet encapsulates the typical emotional journey of investors through the different stages of a market cycle. The following phases are included: Hope: A period when optimism starts to grow, and investment decisions are made with the anticipation of future gains. Optimism: The phase where confidence continues to build, often leading to increased investments. Belief: This stage marks a commitment to the bullish trend, with many investors convinced of their strategy. Thrill: Investors experience a high, often accompanied by a sense of triumph. Euphoria: The peak of the cycle, where maximum financial risk is actually present but overlooked due to extreme optimism. Complacency: After reaching peaks, the sense of euphoria shifts to a state of denial once the market begins to turn. Anxiety: As market correction sets in, anxiety starts to replace complacency. Denial: Investors hold onto hope that the market will bounce back quickly, failing to acknowledge changing trends. Fear: Acknowledgment of losses sets in, and panic may ensue. Desperation: A feeling of helplessness might prevail, with investors looking for a way out. Panic: Rapid selling occurs, trying to exit positions to avoid further losses. Capitulation: Investors give up any previous optimism, often selling at a loss. Anger: The reality of financial impact hits, and investors question their decisions. Depression: Coming to terms with the financial hit and reflecting on the decisions made. Disbelief: Skepticism prevails even as the market may begin recovery, with many wary of another downturn.
CBOE:SPXEducation
by liberatedstocktrader
15
Understanding Trading PsychologyMastering the Mindset: A Comprehensive Guide to Trading Psychology Trading in the financial markets is not just about analyses and strategies; it’s equally about mastering one’s mind. The importance of trading psychology is often underestimated, yet it plays a pivotal role in shaping trading decisions and outcomes. This comprehensive guide delves into how to master trading psychology, offering insights and solutions for traders at all levels. Understanding Trading Psychology At its core, trading psychology revolves around understanding the influence of emotional and mental states on trading. Emotions like fear, greed, and overconfidence can cloud judgment, leading to impulsive decisions and potentially detrimental outcomes. 1. Greed: The Double-Edged Sword 🔍What is it? Greed in trading is the excessive desire for more profit, often leading to risky decisions. Imagine a child in a candy store. Given the chance, they might try to grab as much candy as possible, even if it’s too much to eat. In trading, greed works similarly. It’s the trader’s urge to make more money, ignoring the risks. 📖In 2000, during the dot-com bubble, many investors kept buying overvalued tech stocks, driven by greed and the hope that prices would keep soaring. When the bubble burst, many faced substantial losses. 2. Fear: The Paralyzing Emotion 🔍What is it? Fear in trading is the apprehension of loss, which can prevent traders from taking necessary risks. 🤔Think of a person so afraid of water they never learn to swim. In trading, fear can stop traders from making decisions that could be beneficial, worried they might lose. 📖During the 2008 financial crisis, many traders and investors sold their stocks in a panic due to fear, resulting in significant losses. Those who overcame their fear and held onto or bought quality stocks at lower prices eventually saw substantial gains as markets recovered. 3. Overtrading: The Trap of Too Much 🔍What is it? Overtrading is trading too frequently or excessively, often driven by emotion rather than strategy. 🧐It’s like eating too much junk food just because it’s there. In trading, overtrading happens when traders make more trades than necessary, often due to excitement or the urge to recover losses quickly. 🤑A day trader, excited by initial successes, starts making numerous trades daily without proper analysis. This leads to a series of small losses that accumulate over time, eroding their capital. 🧑‍💻 How to Master Trading Psychology Mastering trading psychology is a crucial step in becoming a successful trader. It’s about understanding and managing your emotions, biases, and behaviours to make sound decisions and avoid costly mistakes. Here are some key steps to help you achieve that: ⭐ Emotional Awareness and Regulation: 1️⃣ Identify Emotional Triggers: Recognize what drives impulsive trading decisions, such as the fear of missing out (FOMO) or the urge to engage in revenge trading after a loss. 2️⃣ Understand Cognitive Biases: Be aware of mental shortcuts that can lead to judgment errors, like overconfidence or being influenced too heavily by recent trades. 3️⃣ Separate Emotions from Trading: Focus on the mechanics of your trading strategy rather than the emotional highs and lows associated with the outcomes of individual trades. 👨‍💻 Developing Disciplined Trading Habits: 1️⃣ Implement a Robust Trading Plan: Clearly define your strategies for entry, exit, and risk management. Adherence to this plan should be paramount, irrespective of current market trends or emotional states. 2️⃣ Cultivate Patience: Avoid the temptation of chasing immediate profits or overtrading. Wait for the right opportunities that align with your strategy. 3️⃣ Normalize Losses: Understand that losses are an integral part of trading. Analyze them, learn from them, and refine your approach accordingly. 👨‍🔬 Strengthening Mental Resilience: 1️⃣ Engage in Mindfulness Practices: Techniques like meditation can enhance focus and emotional regulation, aiding in stress management and decision-making under pressure. 2️⃣ Maintain a Trading Journal: Documenting your trading journey helps in reflecting on both successes and setbacks, fostering continuous learning and self-improvement. 3️⃣ Leverage Mentorship and Community Support: Connect with seasoned traders for insights and advice. A supportive trading community can be invaluable. 👨‍🏫 Additional Strategies for Optimal Performance: 1️⃣ Regulate Screen Time: Limit exposure to constant market updates and commentary that might encourage emotional trading. 2️⃣ Prioritize Physical and Mental Health: A healthy lifestyle directly contributes to improved focus and decision-making in trading. 3️⃣ Utilize Simulation Tools: Practice with demo accounts to test strategies without financial risk, building confidence and skill in a controlled environment. 4 Tips To Mastering Trading Psychology Improving trading psychology is a crucial component of becoming a proficient trader. The psychological aspect of trading often determines the difference between success and failure. 1️⃣ Back Test Your Trading Strategy: ▪️ Relevance of Historical Testing: Backtesting your strategy against historical data is essential. It helps in understanding how your strategy would have performed in different market conditions. ▪️ Confidence in Strategy: Consistently backtesting and refining your strategy builds confidence, allowing you to trust your system and reduce emotional decision-making. ▪️ Identification of Weaknesses: This process helps identify potential flaws or areas for improvement in your strategy, making it more robust and effective. 2️⃣ Limit to Trade One or Two Currency Pairs: ▪️ Focus and Expertise: Specializing in one or two currency pairs allows you to gain in-depth knowledge and understanding of those markets, including their unique volatilities and correlations. ▪️ Reduced Overwhelm: Trading fewer pairs reduces the cognitive load and decision fatigue, enabling more focused and rational decision-making. ▪️ Consistency in Approach: Specialization fosters a consistent approach, essential for developing and maintaining a stable psychological state. 3️⃣ Trade in a Specific Time: ▪️ Consistent Routine: Trading at specific times can create a routine, which is beneficial for mental preparation and consistency. ▪️ Market Behavior Understanding: Different market sessions have unique characteristics. Trading in a specific window allows you to become familiar with and adapt to these patterns. ▪️ Life Balance: Setting specific trading times helps maintain a healthy balance between trading and personal life, reducing stress and burnout. 4️⃣ Adopt Your Trading Style According to Your Personality: ▪️ Self-Assessment: Understand your personality traits, risk tolerance, and emotional responses. This self-awareness is critical in choosing a trading style that suits you. ▪️ Alignment with Lifestyle: Your trading style should align with your daily routine and commitments. For instance, day trading requires more time and attention compared to swing trading. ▪️ Comfort and Sustainability: Ensure your chosen style feels comfortable. Trading in a style that aligns with your personality and life circumstances is more sustainable and less psychologically taxing.
Education
by Golden_Star1994
2
Predict the clarity of the price, not it's direction☝️The main purpose of my resources is free, actionable education for anyone who wants to learn trading and improve mental and technical trading skills. Learn from hundreds of videos and the real story of a particular trader, with all the mistakes and pain on the way to consistency. I'm always glad to discuss and answer questions. 🙌 ☝️ALL videos here are for sharing my experience purposes only, not financial advice, NOT A SIGNAL. YOUR TRADES ARE YOUR COMPLETE RESPONSIBILITY. Everything here should be treated as a simulated, educational environment.
CAPITALCOM:US100Education
by Yelli_trades
1
Three GOLDEN rules of tradingThree golden rules of trading 1. Learn when to stay out of the markets. This comes from the principle that it’s almost always good to do the contrary of what beginners do. Think for yourself, beginners tend to always search for an entry and predict any kind of price action, even the choppiest one. The truth is, sometimes markets are in condition when it’s just doesn’t make sense to trade and we need to wait. Some questions to ask ourselves: if I would enter 1000 trades like this, do I think it will be a consistent strategy? Do I really see a clear price action development now, or do I want to enter very early to not miss the initial move, which by the way will develop basically out of nowhere? It’s an illusion that we need to predict everything. We need to see clarity, not predict the chop. Realize, that what we often need to do in live markets is DO NOTHING. 2. Learn how to lose Most traders who are still learning, and after a loser, tend to become emotional (fearful, frustrated, angry etc.) and start to act based on emotions, not an actual plan they had. This can be conscious when you understand you’re making a mistakes, but emotional brain took over and you still overtrade, tilt or over risk. Or it could be unconscious when you believe you’re doing the right things. So how to do it? Be aware of your emotional triggers, have a mental journal and step by step learn to RESIST this desire to revenge and place another trade. It’s a long process, but with commitment, it’s possible to achieve. 3. Learn to actually follow the rules It’s a hard one to master. Beginners and even experienced trades tend to deviate from the rules of their strategy without proper testing. You constantly need to keep in mind that placing random trades will give you random results and it’s not sustainable long-term. The best way to do it is to start a rule-following challenge, when you tick day by day if you followed the rules. Most people didn’t follow their trading rules even for 5 days in a row! Just think about it.
OANDA:XAUUSDEducation
by Yelli_trades
1
📖Ultimate guide to feeling a little bit better after a loser.1The video is long, feel free to use speed settings :) Thanks for your interest in the last post about the Major mistakes traders do. Now let's talk about coping emotionally with losers. This is Part 1. 📖We all know this feeling, it feels awful, hopeless like something very valuable has been taken from us, like it destroys our work and plans and it feels BAD. Who am I to speak on this topic. 4 year of trading experience, lost maybe 25 funding challenges over the course of 3 years, got 2 times funded the previous year and lost these funded accounts. Had multiple losers, out of which many just stamped me emotionally. Over time I developed coping skills to better prepare for these -1’s and though I’m far from being really good at it, I’m definitely a bit better than I was some time before. And this is my ultimate guide to feeling a little bit better after a -1. 📖First of all, congrats - if you’re still here, it means you’re interested in the topic and by watching videos like these from me or other traders, and thinking, and trying to become better, you’ll do it eventually. Yes, with time you better find one source of education that really sticks to you, and for me, it’s the method.. but even other videos can build some foundation for your work in this direction. 📖As pointed out in the Mental Game of Trading, Our brain functions in 3 layers, so to say - automated habits, emotional brain, and rational. The thing is, emotions can really block rational thinking. It’s physical and happens in your brain. It literally changes our chemistry. Accept the fact we can't accept losers fully. It will always feel shite, but with time and a good strategy of preparation, it will get better. So this is a Stoic principle applied to trading, be prepared for the worst-case scenario, how? Expect it to happen, and know it’s inevitable and you’ll feel bad. Paradoxically, it allows you to feel a little bit better when it actually happens. 📖Notes and full diary, you want to know all about how you behave in the markets so that you recognize the build-up of emotions and can prepare better for the next inevitable loser, and in case you understand you need to stop because you’ll become too emotional - than you’ll be able to stop. How diaries work is that you know all your triggers, and patterns, in a way that nothing is new to you about how you feel about the market and how you react to certain situations. 📖Appreciate yourself and your work! gratitude - videos, practice, mooji. appreciate the work you did, especially if the loss comes out from a high-quality setup. Many people turn too much attentions to their flaws while forgetting recognizing their powerful sides. What’s your super power - holding to TP, sticking to max trades per day, not overrisking, really going through the checklist. 📖Awareness doesn’t equal control. You can control things only to some extent, but when emotions really kick in, it’s too late. That’s why people very often say: I understand everything, but I can’t stop. Yes, my friend this is how emotional brain works - it leaves with no control over the actions. Awareness doesn’t equal control. If you feel bad, you need to STOP, because in that state losers will feel especially bad. 📖Trade less, a lot less. Good traders and my experience. 📖Record a trade as a -1 in a journal once you started it - Ment’s video.
Education
by Yelli_trades
2
PORTO Basic Trend. Psychology. Volatility or super ticker?Logarithm. The time interval is 3 days. Cryptocurrency as an example. Cryptocurrency with high volatility (low liquidity) for dump/pump strategy. Primary trend — horizontal channel. Secondary trend — descending wedge. Local trend — consolidation after a wedge breakout. Line chart without “market noise” (volatility, squeezes). Immediately want to note that low-liquid cryptocurrencies better still trade on liquid exchanges, otherwise you are already your deposit succumb to a huge risk trading on exchanges with a small total turnover of funds (survivability, competition). Psychology. Volatility and market cycles are your friend, not the ticker name! . Notice what % the price slippage was. This was leaked to the market by the creators of the phantik (just in case), everything can be tracked on the blockchain, any sale at any price is profit. Everyone does it, but with such low liquidity, it's very visible on the chart as well as on the blockchain. It's not something "scary", it's normal behavior of smart people who "don't believe in crypto wrappers", not just someone else's, but even their own. Unlike stupid market participants who determine the value of a particular cryptocurrency, with the help of a particular cryptocurrency ticker (legend of usefulness to the industry). Because of this, there are thousands of phantoms and such market participants make up whole herd sects (they are entertained by selling "nothing" and making real money on the belief in crypto projects). I think every market participant has their own set of phonies in their portfolio. I'm sure a larger percentage of cryptocurrencies are the ones that "youtube and telegram bloggers are talking about" and not through their own independent analysis. But you have to realize that everyone's cryptocurrency combinations are different..... because there are more than 13,000 alts...... Generally, cryptocurrencies rise behind the general trend of the market, and some will occasionally "overtake the market" and then deflate to the general trend..... You can play around with this and "wait for the overtake". It is very important not to get attached to the ticker name (real or not real scam). The desire to get rich with a "special cryptocurrency" clouds the mind....
Education
by SpartaBTC
2
☝️3 Main enemies of a trader and how to deal with them☝️☝️Dear traders, no one here has superpowers, and I'm just a human after all. Please take everything with a grain of salt. I'm sharing my view and one of the possible scenarios of price action, but mostly - my direct experience. When I enter I try to predict as little as possible and actually follow what the market is doing, joining the market and not arguing with it or forcing my will. Have good trading, keep a constant flow of self-awareness, and do your best. 🙌
CAPITALCOM:US100Education
by Yelli_trades
1
Trading BTC : Dunning Kruger Effect 🐸Hi Traders, Investors and Speculators 📈📉 Ev here. Been trading crypto since 2017 and later got into stocks. I have 3 board exams on financial markets and studied economics from a top tier university for a year. Daytime job - Math Teacher. 👩🏫 Have you ever wondered what it takes to be a good and profitable trader? Have you wondered how long it will take before you would have mastered the art f trading? Myself and Dunning Kruger will let you in on a little secret - the journey of pretty much every person that has ever started trading is explained in the chart above. The Dunning-Kruger effect, in psychology, is a cognitive bias whereby people with limited knowledge (in a given intellectual or social domain) greatly overestimate their own knowledge or competence in that domain relative to objective criteria or to the performance of their peers or of people in general. This happens in trading all the time. In fact, we probably all started there if we're being honest . So - What causes the Dunning-Kruger effect? Confidence is so highly prized that many people would rather pretend to be smart or skilled than risk looking inadequate and losing face. Even smart people can be affected by the Dunning-Kruger effect because having intelligence isn’t the same thing as learning and developing a specific skill. Many individuals mistakenly believe that their experience and skills in one particular area are transferable to another. Many people would describe themselves as above average in intelligence, humor, and a variety of skills. They can’t accurately judge their own competence, because they lack metacognition, or the ability to step back and examine oneself objectively. In fact, those who are the least skilled are also the most likely to overestimate their abilities. This also relates to their ability to judge how well they are doing their work, hobbies, etc. The Dunning-Kruger effect results in what’s known as a double curse : Not only do people perform poorly, but they are not self-aware enough to judge themselves accurately—and are thus unlikely to learn and grow. So how can we prevent ourselves from falling into this trap? Here's a few things to keep in mind: To avoid falling prey to the Dunning-Kruger effect, you should honestly and routinely question your knowledge base and the conclusions you draw, rather than blindly accepting them. As David Dunning proposes, people can be their own devil’s advocates, by challenging themselves to probe how they might possibly be wrong. Individuals could also escape the trap by seeking others whose expertise can help cover their own blind spots, such as turning to a colleague or friend for advice or constructive criticism. Continuing to study a specific subject will also bring one’s capacity into a clearer focus. 💭Practice these habits to ultimately escape the double curse: - Continuous learning. This will keep your mindset open to new possibilities, whilst increasing your knowledge over time. - Pay attention to who's talking about what. Is the accountant talking about bodybuilding? - Don't be overconfident. This is self explanatory. I hope you enjoyed this post today! Please give us a thumbs up 👌 _______________________ 📢Follow us here on TradingView for daily updates and trade ideas on crypto , stocks and commodities 💎Hit like & Follow 👍 We thank you for your support ! CryptoCheck
Editors' picks
Education
by CryptoCheck-
60
Happy New Year 2024| Learn Our Methods | Read Description|Happy New Year Everyone 2024: Let's first talk about CHFJPY then we will talk about how you can improve and learn some tips. CHFJPY in last six or seven months price overbought heavily due to JPY poor performance and government's zero intention to interfere in the market. However, many reports suggests that JPY will likely to be rebound in first quarter of 2024 in this case we can see a strong shift in price characteristics. Our first entry indicates, that we should expect price to continue the bearish momentum and drop from current area of the price. However, as we will having NFP in the first week of the month, it is likely to see some unexpected movement in the market. Second entry, is when price fill the gaps in the market and then drop smoothly, we will keep you updated. We want all of you to succeed in the forex or commodities trading. Here how you can improve: Firstly find one or two pairs that suits you: meaning if you focus on every single instruments available to trade in the market, you will never succeed instead focus on one or two pairs and master them, know how and when these pairs move, what factors influence them in the market and trade swing highs and lows. Secondly, use longer time frames to have a better vision, have a longer vision which will help you catch the big moves, yes, it is time consuming but if you are beginner then focus first in this and then along the way you will learn intraday trading. Lastly, learn more about consolidation, accumulation and distribution: before the big reversal, price first will consolidate then accumulate and distribute, you should be looking to enter in phase of accumulation and take every enter when price consolidate which leads to a breakout. If you learn above information in details and practice, your chances of becoming a successful trade increase. There is no overnight success, it is all hard work, if you believe in your self and focus on above things you will one day be proud of yourself. Happy New Year and Trade Safe 2024. We wish all of you all the best. Team Setupsfx_
Education
by Setupsfx_
11
Definitive guide to starting day tradingIntroduction: Day trading is a controversial modality that involves short-term operations on the stock market. Many people are interested in this way of investing, but they do not know that it requires a very rigorous behavior and discipline. In addition, there are several myths and truths about day trading that need to be clarified. One of them is that large corporations do not make intra-day trades. Does that mean that day trading does not work? To answer this question, it is necessary to understand a little about how the financial market works. There are different types of markets, such as the derivatives market and the spot market. Spot market: It is the most popular among stock market investors, working in a relatively simpler way than other markets. The spot market represents the operations of buying and selling shares at the prices determined by the supply and demand of the moment. Derivatives market: Derivatives are financial instruments whose prices are linked to another instrument that serves as their reference. For example, the oil futures market is a type of derivative whose price depends on the transactions carried out in the spot oil market, its reference instrument. Within the derivatives market, we have: Futures market: It is the environment where futures contracts are traded, a type of derivative. In a few words, futures contracts represent the commitment to buy or sell a certain amount of a certain good on a future date and at a pre-defined price. Forward market : Is a negotiation in which two parties - buyer and seller - assume a long-term commitment. Thus, it is determined that today a number X of shares (for example) will be bought, and that the payment will take place on a future date. Options market: Are investments that guarantee the investor the right, for a determined period, to buy or sell an asset - usually shares - for a pre-determined value on a specific date in the future. It is a type of derivative, because the price of the options varies according to the price of the assets to which they are linked. The futures market is one where contracts are traded that establish the price and the date of delivery of a certain asset in the future. For example, a coffee producer can sell a coffee futures contract to guarantee their profit and protect themselves from price fluctuations in the spot market. The spot market is one where assets are traded now, such as the shares of a company. The futures market is one of the best markets for day trading, as it offers higher liquidity, leverage and volatility. Large corporations, however, do not usually do day trading in the futures market, as they have other goals and strategies. They use the futures market to hedge, that is, to protect themselves from the risks of the spot market. They also have a very large volume of operations, making it difficult to enter and exit the market quickly. In addition, they need to follow rules and regulations that limit their investment possibilities. This does not mean that day trading does not work for large corporations. They can do day trading in other ways, such as using the high-frequency market. This market is based on algorithms and automated systems that perform thousands of operations in fractions of seconds. This way, they can take advantage of the opportunities and fluctuations of the market with greater efficiency and speed. Therefore, day trading is a modality that works for different profiles of investors, as long as they know how to use the appropriate tools and methods. Day trading is not an investment, but rather a form of speculating in the financial market. It involves risks, but it can also bring good results for those who have knowledge, discipline and emotional control. In a centralized market, all offers to buy and sell securities are directed to the same trading channel. In this system, the observable prices of different assets are the only prices available to the public. A notable example is the New York Stock Exchange (NYSE), where all buy orders are matched with sell orders in a central exchange. This provides greater security to market participants, as transactions are carried out in an organized and regulated environment. Let’s first understand how the centralized market works : The centralized market is a way of organizing financial transactions in a single trading channel, where the prices of the assets are public and regulated. This type of market offers greater security to investors, by having various defense mechanisms that prevent fraud, defaults and extreme fluctuations. In this text, I explain how the centralized market works and what are some examples of defense mechanisms in the main stock exchanges in the world. What is the centralized market and how does it differ from other types of market? In a centralized market, all offers to buy and sell securities are directed to the same trading channel. In it, the offers related to the same asset are exposed to acceptance and competition by all parties authorized to trade in the system. In other words, in the centralized market of the stock exchange, the observable prices of different assets are the only prices available to the public. A well-known example is the New York Stock Exchange (NYSE), where all bids (buy orders) are matched with sales (sell orders) in a central exchange. This provides greater security to market participants, as transactions are carried out in an organized and regulated environment. A centralized market differs from other types of market, such as the decentralized market or the over-the-counter market. In a decentralized market, there is no single trading channel, but rather several locations where offers can be made. For example, the foreign exchange market (forex) is a decentralized market, where participants can trade currencies among themselves on different platforms, banks or brokers. In an over-the-counter market, transactions are made directly between the parties, without the intervention of an exchange or an intermediary. For example, the derivatives market is an over-the-counter market, where participants can trade customized contracts that are not standardized or regulated. These types of market can offer greater flexibility and privacy, but also involve higher risks and costs. What are some examples of defense mechanisms in stock exchanges? Stock exchanges are institutions that manage the centralized market and that establish the rules and procedures for trading. They are also responsible for ensuring the security and efficiency of transactions, using various defense mechanisms that protect investors from possible losses. Some of these mechanisms are: Central Clearing: Or clearing House is an intermediary entity that acts between buyers and sellers in the financial market. Its role is to facilitate trading and ensure the integrity of transactions. It records, clears, manages risk and settlement of operations, requiring participants to deposit margins (guarantees) to cover possible losses. This reduces systemic risk. An example of an exchange that uses central clearing is the CME Futures (Chicago Mercantile Exchange), which trades futures and options contracts on commodities, indices, currencies and other assets. Price Limits: Are maximum and minimum ranges that asset prices can vary in a given period. They prevent extreme fluctuations that harm investors or the functioning of the market. If the price of an asset reaches the upper or lower limit, trading is suspended or limited until the price returns to an acceptable level. An example of an exchange that uses price limits is the CME Futures, which sets daily limits for the prices of futures contracts. Circuit Breakers: Are mechanisms that temporarily interrupt trading in case of excessive volatility. They aim to avoid situations of panic, manipulation or imbalance in the market, giving time for investors to reassess their positions and make more rational decisions. Circuit breakers can be triggered by different criteria, such as the fall or rise of an index, an asset or a sector. An example of an exchange that uses circuit breakers is the NYSE, which suspends trading if the S&P 500 index falls or rises more than a certain percentage in a day. Opening and Closing Auctions: Are moments when operations start and end on the stock exchange. They help to stabilize the prices of the assets, by concentrating the demand and supply in a short time interval. During the auctions, buy and sell orders are recorded, but not executed, until a balance price is found that satisfies the largest number of participants. An example of an exchange that uses opening and closing auctions is the NYSE, which holds the auctions at 9:30 am and 4 pm (New York time). Market Makers: Market makers (or market makers) are agents who commit to buy and sell certain assets at any time, providing liquidity and continuity to the market. They make money from the difference between the buy and sell prices (spread) and from the commissions they receive. They also help to reduce volatility and improve price formation. An example of an exchange that uses market makers is the NASDAQ, which is fully electronic and has more than 500 market makers who trade more than 3,000 stocks. Electronic System: The electronic system is a way of carrying out financial transactions through digital platforms, without the need for a physical location or a human intermediary. This allows greater speed and efficiency in operations, as well as reducing costs and errors. The electronic system also facilitates access and participation of different types of investors, from institutional to individual. An example of an exchange that uses the electronic system is the NASDAQ, which was the first stock exchange to operate fully online, since 1971. Margins : are values deposited by participants to cover possible losses in futures contracts. They help to reduce the risk of default and ensure the integrity of the market. The CME futures contracts have specific guarantees, which vary according to the traded asset, I will explain more later. The price limits are maximum and minimum ranges that the prices of the assets can vary in a given period. They prevent extreme fluctuations that harm investors or the functioning of the market. If the price of an asset reaches the upper or lower limit, trading is suspended or limited until the price returns to an acceptable level. The CME establishes two types of price limits: Daily Price Fluctuation Limit: Prevents offers with prices that vary too much in relation to the previous day’s settlement price. Each contract has an upper (high) and a lower (low) limit. Fluctuation Limit: At the opening, there are fluctuation limits for each expiration month. If exceeded, trading is temporarily suspended. These mechanisms protect price formation and prevent extreme movements. The New York Stock Exchange does not use margins like the CME futures contracts. On the spot market, assets are not subject to price limits. Instead, it uses a "circuit breaker", which temporarily suspends trading when prices fall. The circuit breaker is based on the S&P 500 spot index. It also uses opening and closing auctions, times when trading begins and ends on the exchange. These help stabilize security prices by concentrating demand and supply in a short period of time. During the auctions, buy and sell orders are registered, but not executed, until an equilibrium price is found that satisfies the largest number of participants. Auctions take place at 9.30am and 4pm (New York time). The technology exchange mainly brings together shares in technology companies. It has no daily price limits, but uses other mechanisms to safeguard the individual behavior of securities, such as auction tunnels and rejection. It is completely electronic and has more than 500 market makers trading more than 3,000 shares. Market makers are agents who commit to buying and selling certain securities at any time, providing liquidity and continuity to the market. They make money from the difference between the buying and selling prices (spread) and from the commissions they receive. They also help to reduce volatility and improve price formation. Explaining the stock exchange auctions The stock auction is a protection mechanism of the Stock Exchange that occurs when there is a sudden change in the price of an asset. It aims to prevent large fluctuations in prices, protecting investors. In this text, I will explain how the stock auction works and what are its benefits and challenges. What is the stock auction and how does it work? The stock auction is a process that happens when the price of an asset undergoes a significant change in relation to its previous value. This change can be caused by various factors, such as news, events, rumors or speculations. During the auction, the shares leave the traditional trading floor and continue to be traded in a closed system of buy and sell offers. In this system, the orders are recorded, but not executed, until a balance price is found that satisfies the largest number of participants. The auction lasts a few minutes, but can be extended if there is a lot of demand or supply. The auction ends when the balance price is found or when the time limit is reached. The stock auction is also important because it allows investors to have time to evaluate their decisions and trade their assets with more confidence. It also prevents the prices from being manipulated or distorted by malicious agents, or by irrational movements of the market. In addition, it ensures that transactions are carried out in a transparent and secure manner, following the rules and norms of the Stock Exchange. What are the main types of auctions on the Stock Exchange? There are three main types of auctions on the Stock Exchange, which occur at different times of the trading session. They are: Extraordinary Auction: Activated in case of appreciation or depreciation from 10% in relation to the closing price of the previous day, or to the opening price of the day. This type of auction is used to protect investors from sudden changes in the prices of the assets, which can be caused by external or internal factors. For example, if a company announces a financial result much above or below the expected, the price of its share can rise or fall very quickly, generating an extraordinary auction. Pre-Opening Auction : It happens 15 minutes before the opening of the trading session. This type of auction is used to test the prices and the formation of the assets at the beginning of the trading session, considering the information and expectations of the market. For example, if there is relevant news about the economy or politics, the price of the assets can change before the opening of the trading session, generating a pre-opening auction. Closing Auction: In the last five minutes of the trading session. This type of auction is used to determine the closing price of the assets, used as a reference for the next day. Only the shares that are part of some index of the Stock Exchange can participate in this auction. For example, if a share is part of the S&P 500, it participates in the closing auction, which defines its final price of the day. You already know how the centralized market works, where all buy and sell offers are directed to the same trading channel. This prevents the large participants from manipulating the prices of the assets as they please. This is because the market dynamics ensure that the game is fair to everyone. But how to understand this market dynamics? How to know what other participants are doing and how it affects the prices of the assets? For this, you need to know the market microstructure, which is the study of the interactions between buyers and sellers, influencing the price formation of the assets. For traders, especially scalpers, understanding the microstructure is essential. Here are the main points about the market microstructure: Efficient Market: The efficient market theory suggests that all available information about assets is already reflected in the prices. This hypothesis does not consider human complexity and subjective interpretation of information. In practice, some participants have privileged access to information and use specific techniques. This creates momentary imbalances in supply/demand, generating price movements. Market Reality: To understand the market reality, you need to observe three essential tools: the order book, the aggressive volume and the times and sales. We explain what they are and how they relate to the market microstructure. Why are they so important? To understand the dynamics of the financial market, you need to know three essential tools: the order book, the DOM (Depth of Market) and the volume of the trade history. We explain what these tools are, how they work and how they can help you in your operations. Order Book: Is a record of all buy and sell orders of a financial asset at a given time. It allows you to track the liquidity of the market, that is, the ease of buying or selling a share. The order book shows information such as the name of the asset, the best buy and sell price, and the traded volume. Each asset has its own book, updated as new orders arrive. The order book helps to identify the supply and demand of the asset, as well as the support and resistance levels. For example, if there are many buy orders at a certain price, this means there is a strong demand for the asset, which can make the price rise. The opposite also applies to sell orders. The order book is essential for Tape Reading, which is a technique that analyzes the flow of aggression and liquidity in the market. DOM (Depth of Market): Is an advanced version of the order book. It shows the depth of the orders at each price level, that is, how many orders there are in each price range. It allows you to visualize the available liquidity and the aggressors, the participants who execute the orders in the market. The DOM helps to identify the trend and the strength of the market. For example, if there are more aggressive buyers than sellers, this means there is a positive flow of money, which can make the price rise. The opposite also applies to aggressive sellers. Volume of Trade History : Is the record of all transactions carried out on the stock exchange for a given asset. It shows the price, quantity, time and direction of each transaction. The volume of trade history helps to understand the dynamics of the market, as it reveals the intensity and speed of trading. It can also reveal important patterns and trends, such as breakouts, reversals and consolidations. These tools are crucial for traders and investors who want to have a broader and deeper view of the financial market. They allow you to track the liquidity, supply, demand, trend and intensity of the market, as well as identify opportunities and risks in your operations. With them, you can make more informed and assertive decisions, increasing your chances of success. bid/ask is the difference between the offer price and the sale price of the asset. The ESZ22 is a derivative of the S&P 500 index that expires in December 2022. The order book of the ESZ22 is a record of all buy and sell orders for this future operation at a given time. Each value level in the book represents a buy or sell offer for a certain number of derivatives. but before we understand how the futures contract works: the expiration letters ES= asset code, Z expiration month letter and 22= 2022 Example of the expiration months of the contracts: January (F) February (G) March (H) April (J) May (K) June (M) July (N) August (Q) September(U) October (V) November (X) December (Z). The S&P futures contract uses only 4 months, having a duration of 3 months each contract, using the letters H, M, U and Z and between one expiration and another there is something called liquidity rollover: Why does this happen? This happens because large corporations are always building positions in futures contracts, since the main objective of a futures contract is hedging, so consequently there are large positions being made in these futures markets. Imagine that you have a portfolio of stocks or cryptocurrencies, but unlike the futures market, these assets do not expire, they stay there until you get rid of them, now imagine that you paid a price for these assets, then your position will be where your participation in that paper was made. Unlike you, large corporations, investment banks, insiders in large companies have large buy or sell positions in papers, and also in futures contracts, but these futures contracts expire every 3 months in the American market. Every expiration happens always on Friday of the third week of the month of the letter that is in force, but the dismantling of positions takes a week due to the number of participants or the number of lots that are positioned. In the example of the S&P the ESZ2 (for rithimic data) or EPZ22 (for CQG Continuum data) are this week migrating the positions, opportunities during the rollover are bad due to the toxic flow that enters these 2 contracts, since the 2 are in operations, what happens is that for sure you will lose money, energy or time. The liquidity rollover in the American assets affects the world so much that European assets such as Dax and euro stoxx 50 futures contracts roll over the liquidity at the same time, which can harm operations even in markets that are not to expire like ibovespa futures or dollar futures.(excerpt from my article on liquidity rollover that is written in Portuguese), usually the recommended is to stay away from this week: Margin and construction of the current order book Each tick is the smallest possible variation in the value of the derivative. In the case of the ESZ2, each tick is equal to 0.25 points, equivalent to 12.50 dollars per derivative. The volume consumption occurs when an order is executed in the market. When a buy order is executed, it consumes the volume of the sell offers in the book. example of a scenario where the market was with spread 4571.75/4571.50 and walked to 4570.50 displacing consuming all price levels that follow. the lot consumed becomes volume and goes to the trade history. That is, it becomes volume in the market. The Time and Sales is a record of all the transactions performed on a given financial asset at a given time. It is used in technical analysis to understand the market behavior. It can be accessed through a trading platform displayed in a separate window. The window shows a list of all the transactions performed for a given asset in a tabular format. Each main component of the Time and Sales is organized into columns, such as date/time, value/change and volume. The data lines are often color-coded to indicate whether the transaction occurred on the bid or ask. Margin and construction of the current order book The bid-ask spread of a financial asset is the difference between the offer price and the sale price. The first is the maximum value that a buyer pays for an asset, while the second is the minimum value that a seller accepts to sell the same asset. This information is very important in the price table, as it indicates how close or far the prices are. The smaller the bid-ask spread, the more trades occur and the orders are executed faster. The way the market is made and developed is the reason why large players do not do day trading, because, in fact, they do not need to do that, because their priority is others. We will understand what priority would be: Priority is a term that refers to something that has more importance or relevance than another. In the area of medicine, priority is a situation that requires preferential or anticipatory attention. For example, heart attack, stroke and trauma are considered priority situations. On the other hand, emergency is when there is a critical situation, with the occurrence of great danger and can become an urgency if not properly attended. Dislocations, sprains, severe fractures and dengue are considered emergencies. The order book is a record of all buy and sell orders for a given financial asset at a given time. Each value level in the book represents a buy or sell offer for a certain number of derivatives. Each tick is the smallest possible variation in the value of the derivative. In the case of the ESZ2, each tick is equal to 0.25 points, equivalent to 12.50 dollars per derivative. The volume consumption occurs when an order is executed in the market. When a buy order is executed, it consumes the liquidity of the sell offers in the book. Likewise, when a sell order is executed, it consumes the liquidity of the buy offers in the book. The Time and Sales is a record of all transactions performed on a given financial asset at a given time. It allows investors to track the liquidity of the market and the need for a large company to lock their positions on the stock exchange is usually based on factors such as volatility, movement and investment strategy. When an event or catastrophe occurs, the need can increase significantly, depending on the nature of the event and the impact it can have on the stock exchange. For example, a natural disaster can affect the production of a company, which can lead to a drop in the value of the shares. In this case, a large company may need to act quickly to protect their positions on the stock exchange. And within this need, it has to adapt to the limitations of the exchange's security mechanisms. Knowing your place in the stock market: My size and the size of a large corporation in the stock market are totally different, because I can at any time open my terminal and execute a transaction in the current bid/ask spread, but a large player cannot do that and if he, for example, needs to act with 5000 S&P 500 contracts he would need to move the value until he completes all his necessary transactions. The comparison of a price maker and a common investor is like comparing an Antonov plane with a person. Price makers and market makers may face limitations when entering the bid/ask due to their size. When a large investor enters the exchange, he can have a significant impact on the value of the financial asset. The Commodity Futures Trading Commission (CFTC) of the United States has strict regulations to prevent manipulation of the exchange. The CFTC closely monitors the activities of the exchange and can take legal action against anyone who violates its rules. Imagine the difficulty of a giant aircraft carrier passing through a canal, everyone will notice that he is there, so if he wanted to hide it would be difficult to go unnoticed. That’s how a giant in the market is. Price makers and market makers use various strategies to enter the stock market without facing legal issues of price manipulation. One of the most common strategies is trade distribution, which involves splitting a large trade into several smaller trades and distributing these trades at different price levels in the order book. This helps to avoid the price of the financial asset being significantly affected by a single trade. Another common strategy is algorithmic trading, which involves using algorithms to execute trades automatically based on specific conditions of the stock market. These algorithms can be programmed to execute trades at specific times or in response to certain events of the stock market. Moreover, big players can also use other strategies, such as high-frequency trading and statistical arbitrage, to enter the stock market without attracting much attention. Trade distribution is a strategy used by price makers and market makers to avoid significant impacts on the price of the financial asset. It involves splitting a large trade into several smaller trades and distributing these trades at different price levels in the order book. This helps to avoid the price of the financial asset being significantly affected by a single order. Another common strategy is the use of iceberg trades , which are large trades split into several smaller and hidden trades, usually by using an automated program, aiming to conceal the actual amount of the trade. The term “iceberg” comes from the fact that the visible parts are only the “tip of the iceberg” given the larger amount of limit trades ready to be placed. They are also sometimes referred to as reserve trades. Big player is can also use other strategies, such as algorithmic trading, high-frequency trading and statistical arbitrage, to enter the financial activity without attracting much attention. Price makers and market makers can do day trading, but they usually focus on long-term investment strategies. This is because day trading involves buying and selling financial assets in a short period, usually within the same day. As big players usually trade large volumes of capital, they may have difficulty entering and exiting the activity quickly without significantly affecting the valuation of the financial asset. Why long term? Precisely due to the limitations that exist in the activity. The stock activity is already more attractive for long-term positioning, as it has many lots per valuation levels, but the protection auctions in the NYSE stock market are a mechanism that aims to prevent the valuations of the stocks from suffering excessive variations in a short period. They are triggered when the stocks reach a fluctuation limit, being a maximum or minimum variation in relation to the closing valuation of the previous day. When this happens, the negotiations are suspended for a few minutes and the transactions are grouped into an auction, which determines the new equilibrium valuation of the stocks. This process aims to protect investors from sudden movements of the activity and ensure the liquidity and transparency of the operations. The maximum fluctuation of a paper per day depends on the type and liquidity of the stock. The NYSE establishes different levels of fluctuation limits for each stock, which can vary from 5% to 20%. These limits are adjusted periodically according to the conditions of the activity. You can consult the values of the fluctuation limits on the NYSE website or in the file “Daily Trading Fluctuation”. So the fluctuation ceases to be a concern for the big players where they focus on the long term, thus ceasing to worry about the microstructure of activity to worry about more complex issues such as macroeconomics, and macro-founded information. In addition, day trading has become competitive every day that passes, as big players in addition to the long term also manage to benefit from day trading using high-frequency algorithms entering and exiting the operation quickly. Why is the complexity of Day trading so high? We understand that today it involves several variables that we need to understand before we can start working with it. The first of these variables is a number of participants, of the market, these participants are divided into some profiles. They are classified between: Individual investors are ordinary people who allocate their own money in the market. They can buy papers, bonds and other financial products through intermediaries of values. Legal entity investors are companies that allocate their money in the market. They can buy papers, bonds and other financial products through intermediaries of values. Investment funds are groups of investors who pool their money to buy papers, bonds and other financial products. They are managed by professionals from the financial market and charge a fee for the services provided. Investment clubs are groups formed by individuals who join together to invest jointly in the market. They are managed by their own club members with a maximum limit of 150 participants. Investment robots are software that use algorithms to make investment decisions in the market. They are created by companies specialized in financial technology and can be used by individuals or legal entities. In other words, there is not just one type of profile that is behind the market. Now imagine NYSE: according to B3, the Brazilian trading, in 2022 there were about 5 million individual investors in Brazil, representing 1.4% of the total investors in the NYSE. Assuming that the proportion of individual investors in the NYSE was similar to that of Brazil, it estimated that the total number of investors in the NYSE was about 357 million. Of this total, about 74% were institutional (funds, clubs, companies, etc.) and 26% were individual (individuals and legal entities). Therefore, it estimated that the number of institutional investors in the NYSE was about 264 million and the number of individual investors was about 93 million. Nasdaq: in 2022 there were about 4,000 companies listed on the trading, with a total market value of more than 17 trillion dollars. It did not find specific data on the number of investors by type in the Nasdaq, but according to an from CNN Brasil, in 2020 about 55% of adults in the United States invested in the stock market. Considering that the adult population of the United States was about 209 million in 2020, it estimated that the number of individual investors in the Nasdaq was about 115 million. It did not find data on the participation of institutional investors in the Nasdaq, but assumed that it was similar to that of the NYSE, and estimated that the number of institutional investors in the Nasdaq was about 230 million. CME Group: In 2022 there were more than 10,000 products traded on the trading, with an average daily volume of more than 19 million contracts. It did not find specific data on the number of investors by type in the CME Group, but according to a from the own trading, in 2020 about 35% of the traded volume came from North America, 28% from Europe, Middle East and Africa, 25% from Asia-Pacific and 12% from Latin America. Estimating that the total number of investors in the CME Group was about 54 million, being about 19 million in North America, 15 million in Europe, Middle East and Africa, 13 million in Asia-Pacific and 6 million in Latin America. That is, there are several participants with different types of decision making. Fundamental analysis: is a way of evaluating the financial health and growth potential of a company, using indicators such as profit, revenue, debt, equity, etc. This study will identify the intrinsic value of a stock and compare it with its market price, to find buying or selling opportunities1. P/E, ROE, revenue: are some of the indicators used in fundamental analysis. P/E/ROE: P/E is the acronym for price/earnings, which represents the ratio between the price of the stock and the earnings per share. ROE is the acronym for return on equity, which represents the profitability of the investment in a company. Revenue is the total value of the sales of a company in a given period. Correlation: is a statistical measure that indicates the degree of relationship between two variables. In the financial market, correlation can be used to analyze the dependence between two assets, such as stocks, currencies, commodities, etc. Correlation ranges from -1 to 1, where -1 indicates a perfect inverse relationship, 0 indicates a null relationship and 1 indicates a perfect direct relationship. Hedge: is a strategy that consists of performing a financial operation that aims to protect an asset or a liability against the variations of quotation, interest rate, exchange rate, etc. The hedge works as an insurance, that reduces the risk of losses in case of adverse fluctuations of the market. Arbitrage: is a strategy that consists of taking advantage of the differences in quotation of the same asset or of equivalent assets in different markets, or moments. Arbitrage aims to obtain profits without risk, buying the cheaper asset and selling the more expensive one simultaneously. Lock: is a strategy that consists of setting up a combination of operations with options, aiming to limit the risk and the return of the operation. A lock can be bullish or bearish, depending on the expectation of the investor about the variation of the quotation of the underlying asset. Based on greeks options: is a strategy that consists of using the greeks of the options to evaluate the risks and the opportunities of the operations with options. The greeks are measures derived from the pricing model of the options, that indicate the sensitivity of the options to the variables of the market, such as quotation of the underlying asset, time until expiration, volatility, interest rate, etc. The main greeks are delta, gamma, theta, vega and rho. Technical analysis (trend follower Elliot): is a method of studying the behavior of the quotations of the stocks, using graphical and statistical tools. This method aims to identify patterns, trends, supports, resistances and other signals that indicate the future movements of the market. One of the techniques of this method is the Elliot wave theory, which proposes that the movements of the quotations follow a fractal pattern composed of impulsive and corrective waves. Technical analysis (with indicators): is a way of analyzing the behavior of the stock prices, using graphical and statistical tools. This way aims to identify patterns, trends, supports, resistances and other signals that indicate the future movements of the market. One of the features of this way are the technical indicators, being mathematical formulas applied to the prices or the volumes of the stocks. Some examples of technical indicators are moving averages, Bollinger bands, MACD, RSI, stochastic, etc. Technical analysis (mean reversion): is a way of studying the behavior of the stock prices, using graphical and statistical tools. This way aims to identify patterns, trends, supports, resistances and other signals that indicate the future movements of the market. One of the strategies of this way is the mean reversion, which consists of using the moving averages as a reference to identify entry and exit points of the operations. The idea is that the prices tend to return to the mean after moving away from it. Technical analysis (price action): is a way of studying the behavior of the prices of the stocks, using graphical and statistical tools. This approach will identify patterns, trends, supports, resistences and other signals that indicate the future movements of the market. One of the techniques of this analysis is the price action, which consists of using only the prices as a source of information, without resorting to technical or fundamental indicators. The price action is based on the reading of the candles, being graphical representations of the opening, closing, high and low prices of each period. For example, a bullish candle indicates that the price closed above the opening price, showing the strength of the buyers. Technical analysis (patterns of nature) is the use of numerical or geometrical sequences inspired by nature, such as the Fibonacci sequence, being a series of numbers that follows the rule that each term is the sum of the previous two. The Fibonacci sequence can be used to draw retracement and extension levels of the prices, which can work as reversal or continuation points of the trends. For example, if the price of a stock falls from R$ 100 to R$ 80, and then rises to R$ 89, it is making a retracement of 50% of the previous movement, which is one of the Fibonacci levels. Besides the techniques based on charts, there are other ways of analyzing the financial market, such as the patterns and the seasonal behavior. These phenomena affect the fluctuation of the values of the stocks, related to the periodicity or the seasonality of some economic, social or natural factors. They are repetitive and predictable movements of these assets, with variable durations, from daily to annual. The seasonal variation is the fluctuation of them according to seasonal factors, such as weather, holidays, events, etc. For example, some may perform better in the summer than in the winter, or in certain months of the year. A famous case is the January effect, being the tendency of the stocks to rise more in that month than in the others. Cycles and seasonality: is the agricultural market, which trades agricultural commodities, such as grains, coffee, sugar, cotton, etc. The agricultural market is influenced by several factors, such as supply and demand, weather, pests, public policies, exchange rate, etc. Investors can operate in the agricultural market through futures contracts or options of these commodities. For example, if the investor believes that the price of coffee will rise in the next month, he can buy a coffee futures contract and profit from the difference between the purchase price and the sale price. Quantitative analysis: is a way of evaluating the performance and risk of the financial assets, using mathematical and statistical models. Quantitative analysis aims to identify patterns and anomalies in the historical or current data of the assets, to create investment strategies based on algorithms. Quantitative analysis can involve the use of artificial intelligence, machine learning or big data. For example, a quantitative analyst can use a linear regression model to estimate the relationship between the price of a stock and its earnings per share, and use this information to decide whether it is worth buying or selling that stock. Tape reading: is a way of following the flow of orders of the financial market in real time, using tools such as the order book and the times and trades. The tape reading aims to identify the intentions of the big players of the market, such as banks, funds and financial institutions, to follow the same direction or anticipate the changes of trend. For example, if the tape reading shows a large volume of buy orders of a stock at a certain price, this may indicate that there is a strong demand for that stock, and that its price tends to rise. Macroeconomic analysis: is a way of analyzing the national and international economic scenarios, using indicators such as GDP, inflation, interest rate, exchange rate, trade balance, etc. Macroeconomic analysis aims to understand the impacts of economic policies and geopolitical events on the financial market and the sectors of the economy. For example, if the interest rate rises, this can negatively affect consumption, investment and economic growth, and consequently, the performance of the stocks of companies linked to these sectors. Conclusion: The financial market is not for amateurs, nor for aspirants. There is no point in taking away the merit of those who operate and do day trading, because that does not make you better than them. Those who are consistent in the stock market are because they understand the participants, the microstructure and the variables of the market. Because all this is only 10% of the trader’s formation in the financial market, because he still needs to combine all this with an intelligent decision making where he divides it into Traders are athletes of the mind, who need to have discipline and psychological strength to operate and work with this every day. That’s why nature selects only the best, and they don’t have time to waste. Do you want to be one of them? Study, seek knowledge, learn the environment in which you operate, practice. A market professional takes years to evolve, that’s why day trading will never have pity on you. If the great minds of the world are in the market with the best technology available, why would you, who are a beginner, overcome them all? With time, the trader will have gone through psychological evolutions over time, so keep firm and always seek knowledge. For this, you need to know your size, know that you don’t move the price, know your place in the market. Also know that the market changes, and you should always swim towards the market and never against it.
NASDAQ:TSLAEducation
by Victoredbr
2
Understanding FOMO: A Psychological and Trading PerspectiveWhat is FOMO? FOMO, or the "Fear Of Missing Out," is a pervasive apprehension that others might be having rewarding experiences from which one is absent. This social anxiety is characterized by a desire to stay continually connected with what others are doing. It's rooted in the human instinct to be part of the tribe and not to miss out on opportunities for survival or enjoyment. The Psychology of FOMO Psychologically, FOMO is closely tied to feelings of envy and low self-esteem. It arises from situational or long-term dissatisfaction, where one’s current status feels insufficient compared to others'. Social media has exacerbated this phenomenon, providing constant insight into the highlight reels of others' lives, prompting self-comparison and the fear of not living to the fullest. FOMO in Everyday Life In everyday life, FOMO can manifest in various ways: an unwillingness to commit to social plans, constantly browsing social media, or an inability to disconnect from notifications. It can lead to overcommitment, stress, and ultimately, a paradoxical sense of disconnection and loneliness. FOMO in Trading In the trading world, FOMO takes on a more financially charged significance. It's the fear traders feel when they see a stock or asset skyrocketing and believe they must get in on the action to make quick gains. This fear is often fueled by hearing success stories of others who have profited from market movements. The Impact of FOMO on Trading Decisions FOMO can lead traders to make impulsive decisions, such as: Entering Trades Prematurely: Jumping into positions without proper analysis. Overtrading: Taking excessive trades to not miss out on perceived opportunities. Abandoning Strategy: Ignoring predefined trading plans in pursuit of quick profits. The Consequences of FOMO-Driven Trading Trading under the influence of FOMO can have several negative consequences: Increased Risk: Making larger or more frequent trades than one's risk management strategy allows. Capital Erosion: Quick losses due to poorly thought-out decisions can erode capital. Emotional Turmoil: Stress and anxiety from FOMO can lead to further poor decision-making and a vicious cycle of losses. Combating FOMO in Trading Overcoming FOMO in trading requires discipline and a robust strategy: Adhering to a Trading Plan: Having a clear plan and sticking to it can help negate the impulses that FOMO stirs up. Risk Management: Setting strict risk parameters ensures that FOMO doesn't lead to devastating losses. Emotional Control: Developing an awareness of one’s emotional state and recognizing FOMO as a natural, but controllable, reaction is crucial. Educational Growth: Continual learning can instill confidence in one’s strategy, reducing the tendency to chase the market. Conclusion FOMO is a natural human emotion, but in trading, it can be a dangerous adversary. Awareness and strategy are the keys to ensuring that FOMO does not derail one's trading journey. By acknowledging its presence and adhering to disciplined trading practices, investors can mitigate the risks associated with this emotional response and make more rational, profitable decisions.
BITSTAMP:BTCUSDEducation
by JS_TechTrading
Gamblers and a traders The difference between a gambler and a player, as well as the similarities between a player and a trader. The player and the gambler are very often confused; if we are talking about gambling itself, then this is a psychiatric problem. If you come across conditional roulette, then you will always catch the trigger, absolutely every time it will cause the same positive emotions that roulette caused you before and this will direct the Vector of your behavior and thinking towards trying to play again. That is, the only solution is to leave. If we are talking about players, that is, is the trader a professional gambler, I 100% agree with this. That is, a player is a person who wants to win, and for a gambler it’s a game for the sake of playing. When a person, so to speak, trades, he will form a certain technical picture in some market, he will see some specific situations that lead to a result that is understandable to him. Look for understandable patterns that lead to understandable, logical results! There will be a positive mathematical expectation and a negative one! Everyone remembers this story about 10 thousand hours! So, by analyzing charts and studying information, you can grow as a player and a trader, and if you just sit and look at the roulette wheel for 10 thousand hours where red and black appear, nothing will change, it will just be an accident! You also need to understand that there are gamblers in trading who open a trade for the sake of trading, in order to be in a position and feel some kind of emotion! This is already a problem! People who have lost regularly in casinos or sports betting will always deny that it was a problem for them! It’s the same in trading, if you open a thoughtless series of positions just to be in the market and feel emotions, this is already a problem, not gambling yet, but already a problem! Therefore, in trading, a large part of success is occupied by psychology and working on oneself! Mastering the technical side is much easier than defeating yourself! Therefore, it’s probably still self-analysis and the ability to critically evaluate one’s actions The results and actions that lead to these results are very important! In the game for the sake of playing it does not exist, the game is for the sake of the game, it is maintained due to emotional passion, in the moment only if you play longer and the moment stretches out, that’s all! Be attentive to your emotional state!
BITSTAMP:BTCUSDEducation
by Crypto4light
Influencers and trading Today I want to make a post about influencers and the crypto market.
 The most important thing for you to understand is that no one, absolutely no one can know the future. People who share ideas on any social media are ordinary people who analyze the market just like you. The only difference is they post it on social media. No one anywhere ever says and has never said that these people know more than you. A person who has 20 followers on X can have more correct ideas than someone who has 100,000 followers. And that's normal.
 You also don't need to listen to and believe everything that world magazines, excerpts and analysts tell you. Big hedge funds with billions in their accounts make wrong predictions and that's okay. It is important that at the distance you are in profit and not loss. This applies to both the investment portfolio and daily trades. Remember, all responsibility for YOUR money always belongs to YOU. All the actions you take or not take on the market, you do by yourself by pressing the buy or sell buttons or dont touching any button. If you give your funds to someone in trust management, it is only YOUR personal choice. If you follow and copy some trades of an influencer in copy trading, it is YOUR personal choice. No one is forcing you to follow anyone at all, copy their deals, or follow any signals. There is always a 50/50 probability of price movement in the market. All responsibility for your profit or your loss on YOU. Influencers are ordinary people who run their own blogs where they share ideas, to someone these ideas may be close to someone not, this does not mean that this ideas is bad or good. A person is simply sharing his ideas. No one is forcing you to watch videos or subscribe to channels or any accounts. All people can make correct and incorrect predictions by analyzing the market. The only question here is whether you have your own plan or not, because most likely the influencer has a plan for any result in the market. And he knows what he will do if the market goes down or up. If, after seeing an idea, you are not ready for a completely different scenario, this is your personal problem. Social media is free and people launch blog about training, cooking, painting, they share their experiences and ideas, so do traders share their experiences and ideas. 
No one influencer owes YOU anything. This is a person who runs his own blog, because social networks are a place to express his thoughts and ideas. If the influencer makes the correct forecast, he is well done, if not, everyone starts laughing at him. Everyone makes correct predictions and incorrect ones. This is normal. At least the influencer has his vision of the market, and if you don't have it at all, then the only loser in the market is you, because you don't know how to analyze the market at all, you don't know how to do it, and you watch dozens of bloggers to find out the Graal. I also noticed such a thing, if the forecast is correct and the idea worked, someone made money, for some reason no one writes the blogger, thank you for the idea, let me share % of the earnings with you, but if the idea turned out to be wrong, everyone blames the blogger for allegedly losing money because of him. This is the stupid nature of people who are always looking for people to blame for their mistakes in everything. No one owes you anything on the market. All your victories and defeats are solely your responsibility. Which influencers should definitely be avoided . Just an entertaining type of content where you are shown that trading is easy, no it is not easy. Trading is a profession and requires knowledge, skills, experience and daily analysis and work with oneself in terms of psychology. If an influencer simply posts every day “write 10 altcoins to buy now” “what you can buy $10,000 now shill me your tokens” this is just content for engagement. Many influencers earn more from referral links than from trading itself. Many exchanges offer conditions where traders conditionally trade with virtual funds and show their phenomenal trends, but these are not real funds, but simply luring new users to the platform, where the influencer will receive a % of each of your trades, whether it is successful or losing. It is good to be a partner with exchanges, because an influencer can help in case of blocking someone's account, can directly contact a representative of the exchange, help someone from the subscribers, has access to discounts and promotions on exchanges that give bonuses. It is important to understand that you do not need to follow a blogger just because he promises you some super discounts. It is not necessary to trust 100% of funds and believe in signal groups even if it is a free group. A person can simply give signals and they will be either true or false. All responsibility lies with YOU anyway. No need to pay for signal groups, no one is going to make YOU rich for $200 a month waiting for some signals. Do not be fooled by promises that in 2 weeks you will be able to trade in a profit. Avoid influencers who constantly send you some new tokens, always check the information yourself and do your own analysis. Very often, when a new token is created, an amount of money is allocated for marketing and scam projects pay influencers to advertise the token. It is possible that the influencer himself does not know the plans of the team, but be respectful and work on the power of the research in the future. Influencers and courses - The most valuable resource in life is time. There is no information in the world that you will not find in the public domain - this is a fact (well, we do not take various inside stories, very large connections, etc.). However, how long will it take you to obtain this information, find everything you need, gain experience, etc. I haven’t seen people who learn English from open sources; most go to a tutor. For what? You can open the Internet and learn a new language yourself. If a person values his time, he goes to study with a professional. Some may not succeed, some may not have two free years to fully study crypt, etc. Friends, it is normal to learn something. Buying training and courses if they are individual and personal is normal. But here, each person has his own approach. It’s easier for someone to learn everything on their own (for me its easier because I love learning something new by my own) , or it’s easier to learn information from a teacher, or it’s better to learn from books, or it’s better to learn from video lessons. Some need to take training offline, some need individual classes, and some need group classes. Before you buy any training again, analyze why you are buying it, what YOU need it for, and think about who you would like to get trained with. Now everyone want to be a coach so double check what courses you looking to join. Indicators . The indicators are a tool and not a charming money button. Standard tools and original products such as writing code, focusing on evidence and analytics. Indicators are the greatest additional tool for a trader because indicators can analyze data on different time frames in real time, providing more information for analysis and decision-making. The indicators does not carry the emotion of, they just show a picture of what is going on in the market now. The indicator cannot predict a new posts in media that can appear at any moment, the indicators cannot predict what Jerome Powell or Elon Musk will say in twitter next moment, the indicator is an excellent tool that you can successfully integrate into your trading strategy. On backtest you can find more confirmation from the indicators of your trading strategy and significantly improve the success of your trading. It show you wider picture and data to confirm or deny your technical analysis. Therefore, with proper use of indicators, they will become your reliable assistant, if not a charmer. The deposit amount is yours and that of the influencer. Don’t think that an influencer posts great PNL and great earnings numbers, he trades better than you, or know something better than you 100%. You can simply buy a token at an early stage and earn your first capital. Main thing is not the size of the deposit, but discipline and trading at a distance. There is a lot of stories when people bought for example by luck or randomly Shiba Inu or Pepe, took away hundreds of thousands of dollars in profits, and then the traders lost the entire deposit. If you have a deposit of 1000 dollars and in whom there is absolutely no difference between you and 100 thousand, there is no need to be jealous of yourself and think that you are not successful. As soon as you earn your % from 1000 dollars and work systematically following your strategy, you doing everything correctly. Then you can simply scale your income and improve your skills and strategy. What is important at a distance is the percentage of winning trades and not the one time income. A person with a 100 thousand deposit can spend all the money if the risk management and self-esteem are not protected. Moreover, when the numbers are higher, your emotional and psychological state does not suffer. You are doing everything right. Don’t let social media and “luxury” lifestyle spill into your path as a trader. Filter your news feed and maintain hygiene on social media. Continue to practice and improve your knowledge, skills and trading strategy. If you like the thoughts, ideas, and market dynamics of any influencer, you can follow him, looking for new ideas and a different look at the market that can give you new information for your analysis. But always DYOR and take 100% responsibility for your actions Hope you enjoyed the content I created, You can support with your likes and comments this idea so more people can watch! ✅Disclaimer: Please be aware of the risks involved in trading. This idea was made for educational purposes only not for financial Investment Purposes. --- • Look at my ideas about interesting altcoins in the related section down below ↓ • For more ideas please hit "Like" and "Follow"!
BITSTAMP:BTCUSDEducation
by Crypto4light
1
The Timeless Abyss of Trading: The Greatest Trap Of All-timeI am here with a unique topic. It is about a psychological trading trap called the cycle of doom. What got me interested in this psychological topic? Well, there are very few articles about it. You can count them on one hand, and more than 90% of traders are losing money. Most traders find their method of trading. What stops them from becoming profitable traders? Tradingview platform is one of the biggest charting platforms that provide an educational section and editorial peak for traders to sharpen their knowledge related to technical analysis, trading methodology, trading psychology, etc. As a trader, we are making market memories by improving screen time, practicing technical analysis, analyzing option data(if applicable), and a lot more. Why do we still fall short in applying in real time? What stops us from becoming a profitable trader? Something looks missing out! I would like to draw your attention to the psychological trap cycle of doom, a topic discussed by only a few traders. Let me be clear, I do believe that this topic is universally applicable! The cycle of doom is made up of three phases: The search The Action The Blame "Sun Tzu said Know the enemy and know yourself in a hundred battles you will never be in peril." In order to exit from the loop of the cycle, we have to understand the parts of the cycle. 1) The Search: Probably, it's the first phase of the cycle. Just recall your initial stages of trading. You were finding a trading strategy to make money out of the money. You may have asked to friend, watched a YouTube video, read an article on Tradingview, bought a book or course or indicators, or purchased the strategy. At that time, you were entered into the cycle. Additionally, we should never trade for enjoyment but treat it as a business. The statement does not apply to the initial stages. Trader explores new methods, theories, and systems. Postulate, Trader A uses X theory to do their day trading for a living, and you were impressed and took it to put your money on it, or you found the method by yourself. The trader will switch his next position after finding a system that is convenient for his trading and trusts that he can take minimal risks to achieve expected returns. 2) The Action: The Action phase is the second phase of the cycle. Now, you have a trading system that will make your money grow to expected returns. This phase can be super exciting for traders as they believe he has an edge and is most likely a key to opening a present of unrealistic returns. Issues arise when a trader employs their strategy without supporting evidence, like backtesting results. Your heart may be pounding, and your fingers may be trembling like a child, but it doesn't mean you should directly trade the strategy without checking the results, failure, and performance of the system. Just five percent of traders actually test a trading system before putting it into action. You might discover that the trading system performs well for a prolonged period. Suddenly, a drawdown appeared! At a certain point, everything may seem bleak. While profits might flow in initially, eventually, the losing trades start to accumulate. It's a red signal for traders that their trading system is now on oxygen. I don't think traders can trust the system after a big streak of losing traders. You have entered into the blame phase. 3) The Blame: The Blame is the final stage of the cycle. As we discussed, the trader has lost their trust in his trading system, which was a holy grail for him at the initial stage. The Red portfolio hurts more than a break-up. The trader is not happy with the system as it has wiped out the gain + trading capital, and the trading system is the only cause that affected the profit and wants to remove the system and search for a new strategy. 4) Loop of the cycle: As can be seen, the trader again finds a new strategy and makes an effort and action on it, then blames the system. The cycle repeats and traps the trader in this way. How to get out of the cycle? 1. Modification is the only way to survival & Trust the system: Traders should modify their strategy according to market conditions, instruments, and trading style. Maybe not everything works for everyone. Therefore, traders should do this according to him. For example, I use Elliott wave theory as the first base and price action as a confirmation tool along with different indicators according to the situation. I do modify Elliott and price action as per my observation of price moves and wavelength. 2. Backtesting is the holy grail: Choosing trading theory also depends on traders' mindset, risk-aptitude, and expected return. Scalpers will never check the PE, P/S, or EV/EBITDA ratio of the firm just because of their duration and risk-reward calculation. After choosing an appropriate trading strategy, traders should backtest their trading strategy before doing real-market transaction. We have the advantage of backtesting tools, algo, and virtual account, which was not available for pit traders. 3. Risk management: Already many ideas are available on this topic. The trading system should be giving proper returns as per the taken risk unless it is nothing more than Drilling a well in the desert. I need more time to write a full idea on the escape of the cycle of doom. Thank you! @Money_Dictators
BITSTAMP:BTCUSDEducation
by Money_Dictators
14