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ETH - The Trade of The Year!Hello TradingView Family / Fellow Traders. This is Richard, also known as theSignalyst. 📈 As ETH retests the $2,800 structure zone marked in blue, I will be looking for trend-following longs. 🎯Once the trade is activated, I will be targeting the $3,500 round number, providing us with a good RRR trade. For now, we wait!⏱️ 📚 Always follow your trading plan regarding entry, risk management, and trade management. Good luck! All Strategies Are Good; If Managed Properly! ~Rich
Long
by TheSignalyst
3
Mastering Risk-Reward Ratios in Trading: A Comprehensive GuideIn the world of trading, the risk-reward ratio is a critical tool that helps traders evaluate the potential profit of a trade relative to its potential loss. This ratio, which compares the amount of risk a trader is willing to take on for a potential reward, is fundamental to successful trading strategies. By calculating and applying favorable risk-reward ratios, traders can make more informed decisions, manage risks, and position themselves for long-term profitability. In its simplest form, the risk-reward ratio is calculated by dividing the potential loss (risk) by the potential gain (reward). For example, a risk-reward ratio of 1:3 means that for every unit of risk, the trader anticipates a reward of three units. Understanding and utilizing this ratio is essential for every trader aiming to navigate the complexities of financial markets and maintain a profitable trading strategy. Example Risk Reward 1:3 The Basics of Risk-Reward Ratios Understanding Risk In trading, risk refers to the potential for loss inherent in any trade. This could be a decline in the value of an asset, an adverse market movement, or other unforeseen events. Risk is an unavoidable aspect of trading due to the volatile nature of financial markets. Factors contributing to risk include market sentiment, economic news, and price fluctuations. Understanding Reward Reward represents the potential profit that can be gained from a trade. It is the positive outcome traders aim for when entering a position. Typically, traders set a target price for their reward, where they plan to exit the trade to realize gains. Calculating the Risk-Reward Ratio The risk-reward ratio is calculated using this formula: Risk-Reward Ratio = Potential Loss / Potential Gain For example, consider a scenario where a trader buys a stock at $1000, sets a Stop Loss at $950 (risking $50 per share), and sets a Take Profit at $1150 (aiming for a $150 gain per share). The risk-reward ratio for this trade would be: Risk-Reward Ratio = $50 / $150 = 1:3 This means the trader is risking $1 to potentially gain $3, providing a solid foundation for a trade with favorable profit potential. Why Risk-Reward Ratios Are Crucial -Balancing Risk and Reward The primary purpose of the risk-reward ratio is to balance risk and reward effectively. It ensures that the potential profit justifies the risk taken. This balance helps traders avoid taking on excessive risk for inadequate rewards, reducing the likelihood of substantial losses. -Impact on Trading Strategies Risk-reward ratios play a vital role in shaping different trading strategies. Here's how they apply to various approaches: -Swing Trading: Swing traders aim for larger price movements, often using a risk-reward ratio of 1:2 or higher. This allows traders to profit even if only 50% of their trades are successful. Swing Number Example using Stoch and SMA 200 Period -Day Trading: Day traders may aim for a 1:1.5 or 1:2 ratio, balancing frequent trades with favorable risk-reward setups. Example Double Top with SMA 200 Period and 1:1.5 Risk- Reward -Scalping: Scalpers often use lower risk-reward ratios, such as 1:1, focusing on many small trades with minimal risk. Mixed strategies for Scalping 1:1 Risk Reward Psychological Benefits Using risk-reward ratios provides traders with psychological benefits: -Maintaining Discipline: Predefining risk and reward limits helps traders stick to their strategy, avoiding emotional trading decisions driven by fear or greed. -Managing Emotions: Knowing the potential loss and gain upfront promotes a calm, calculated approach to trading, even in volatile markets. Practical Application of Risk-Reward Ratios: -Setting Up Trades To effectively use risk-reward ratios, traders need to set up trades with clear parameters: -Identify Entry Points: Based on market analysis, identify the price level to enter a trade. -Set a Stop Loss Order: Define the maximum loss acceptable by placing a Stop Loss at a level that invalidates the trade idea if reached. -Set a Take Profit Order: Specify the target price to exit the trade and lock in gains. Using Stop Loss and Take Profit orders in conjunction with risk-reward ratios is essential for effective risk management: -Stop Loss Orders: Limit potential losses by automatically closing a trade when the price hits a predefined level. 👇Check this Article for Deep details About Stop-Loss -Take Profit Orders: Secure gains by automatically closing a trade when the price reaches the target level. These orders provide traders with control over their trades, ensuring that risks are managed while profits are locked in. Diversification Diversification is another essential component of risk management. By spreading investments across various assets, traders can reduce the risk of major losses from a single trade. Diversification ensures that different trades with varying risk-reward ratios work together to stabilize the portfolio's overall performance. Common Pitfalls and How to Avoid Them Ignoring Risk-Reward Ratios: Failing to calculate and apply risk-reward ratios can lead to poor decision-making and financial losses. Always assess the potential risk and reward before entering a trade. Overestimating Rewards: Avoid setting unrealistic expectations for profits. Overconfidence can lead to taking on unnecessary risks that outweigh the potential gains. Underestimating Risks: Failing to account for potential losses can expose traders to excessive risk. Always factor in possible losses and use Stop Loss orders to mitigate them. Conclusion: Mastering the Risk-Reward Ratio for Long-Term Success 👇Check this Article for Deep details about Risk Management The risk-reward ratio is a powerful tool that helps traders make informed decisions, manage risk, and optimize profitability. By systematically evaluating potential trades based on this ratio, traders can maintain a disciplined approach, reduce emotional trading, and align their strategies with long-term financial goals. Incorporating risk-reward ratios into a broader risk management plan, using Stop Loss and Take Profit orders, and diversifying across various assets are key practices for achieving consistent trading success. By mastering these principles, traders can navigate the complexities of financial markets with confidence, minimizing losses while maximizing gains. ✅ Please share your thoughts about this article in the comments section below and HIT LIKE if you appreciate my post. Don't forget to FOLLOW ME; you will help us a lot with this small contribution.
Education
by FOREXN1
1
First ATH BREAKOUT Before Halving ?? Bitcoin Halving: What It Is and Why It Matters Bitcoin halving is an event that occurs every 210,000 blocks (approximately every 4 years) where the block reward for mining Bitcoin is cut in half. This is programmed into the Bitcoin protocol and has a significant impact on the BTC price. Why Halving Leads to Growth Reduced Supply: Halving cuts the number of new Bitcoins created each day in half. This can lead to scarcity, as demand for BTC remains constant or increases. Increased Value: The decrease in supply can lead to an increase in the value of Bitcoin, as it becomes more difficult to mine. Psychological Factor: Halving is an anticipated event that can generate excitement about Bitcoin and lead to increased investment. History of Bitcoin Halvings: 2012: The first Bitcoin halving occurred on November 28, 2012. At that time, the block reward was 50 BTC, and after the halving, it decreased to 25 BTC. 2016: The second Bitcoin halving occurred on July 9, 2016. The block reward decreased from 25 BTC to 12.5 BTC. 2020: The third Bitcoin halving occurred on May 11, 2020. The block reward decreased from 12.5 BTC to 6.25 BTC. Impact of Halvings on Bitcoin Price: After each Bitcoin halving, the BTC price has experienced significant growth. 2012: After the 2012 halving, the BTC price grew from $12 to $1150 over 18 months. 2016: After the 2016 halving, the BTC price grew from $650 to $20,000 over 18 months. 2020: After the 2020 halving, the BTC price grew from $9,000 to $64,000 over 12 months. Expectations for the 2024 Halving: The next Bitcoin halving is expected to occur in April 2024. This time around, expectations are somewhat different, as: Bull Market: Unlike previous halvings, the BTC price is already in a bull market. Institutional Interest: There is significant institutional interest in Bitcoin now, which could lead to even greater growth after the halving. Will ATH Be Breached Before the Halving? While halving has historically always led to new ATHs, this time the probability is somewhat higher. Bullish Trend: The market is already in a bull trend, which is favorable for further growth. Institutional Interest: Growing institutional interest could stimulate demand for BTC. However, it is important to remember that the cryptocurrency market is volatile and unpredictable. It is impossible to predict with 100% certainty that the BTC price will break ATH before the halving. It is important to conduct your own research and only invest what you can afford to lose.
Long
by Yaroslav_Krasko
2
LTC - The #Halving is Around The Corner ⏱Hello TradingView Family / Fellow Traders. This is Richard, also known as theSignalyst. LTC has been trading within a significant range between 85 and 100. Currently, from a short-term perspective, LTC is showing a bearish trend as it is trading inside a descending red channel. The upcoming LTC halving is worth considering (in 24 hours), and two potential scenarios can be anticipated: 📈 Scenario 1: Bullish Takeover - Medium-term perspective For the bulls to gain control in the medium-term, we need to observe a daily momentum candle closing above the key round number of 100.0. 📉 Scenario 2: Short-term Buying Opportunity In parallel, if LTC's price approaches the demand zone near 83.0, we may look for short-term buy setups on lower timeframes. This could present an opportunity for traders to capitalize on potential price rebounds from the support level. Which scenario do you think is more likely to happen first? and why? 📚 Always follow your trading plan regarding entry, risk management, and trade management. Good luck! All Strategies Are Good; If Managed Properly! ~Rich
COINBASE:LTCUSD
by TheSignalyst
19
🔥 UMA Bullish Channel: Highest Risk Reward Trade Of The DayUMA has been trading inside this bullish channel for over 6 months now. This trade is based on the idea that UMA will continue to trade within the channel. Keep in mind that BTC is currently in a short-term bearish trend, so a long-entry carries more risk from the start. To counter this, this particular trade has a very high risk reward ratio of 15.5 More defensive traders could take the safer trade with a lower SL and a slightly lower entry. Still, a risk-reward ratio of 10.53 is very good.
Long
by FieryTrading
5
⚠️ Risk:Reward & Win-Rate CheatsheetThe reward to risk ratio (RRR, or reward risk ratio) is maybe the most important metric in trading and a trader who understands the RRR can improve his chances of becoming profitable. Basically, the reward risk ratio measures the distance from your entry to your stop loss and your take profit order and then compares the two distances. Traders who understand this connection can quickly see that you neither need an extremely high winrate nor a large reward:risk ratio to make money as a trader. As long as your reward:risk ratio and your historical winrate match, your trading will provide a positive expectancy. 🔷 Calculating the RRR Let’s say the distance between your entry and stop loss is 50 points and the distance between the entry and your take profit is 100 points . Then the reward risk ratio is 2:1 because 100/50 = 2. Reward Risk Ratio Formula RRR = (Take Profit – Entry ) / (Entry – Stop loss) 🔷 Minimum Winrate When you know the reward:risk ratio for your trade, you can easily calculate the minimum required winrate (see formula below). Why is this important? Because if you take trades that have a small RRR you will lose money over the long term, even if you think you find good trades. Minimum Winrate Formula Minimum Winrate = 1 / (1 + Reward:Risk) 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Editors' picks
Education
by QuantVue
8
What is really up with the Funded Programs?Before we go any further, I want to state that 1) This post is NOT PROMOTING ANY prop firms/funded trader programs, 2) I do not hate or have anything against any prop firms/funded trader programs, I am just sharing my understanding from what I have read and experienced, and 3) Info here is not complete. If you choose to embark on any programs, please make sure you do your own due diligence. Traditional Prop Firm Typically refers to a group of traders that focus on buying and selling financial assets with the firm’s capital. The trader uses that firm's money to trade and in exchange receives a small wage and a large percentage of the profits. In practice, proprietary trading firms provide the capital, proprietary technology, training, coaching, and mentoring for you to become an elite trader. Funded Programs There has been an ever-increasing number of funded trader programs, marketing to retail traders about the huge profit-sharing potential (75-90%) when they become "a funded trader." And all that is required is paying for and passing an evaluation/testing period. You would pay anywhere from $84 to $184 for a $10,000 account and it could go as high as you want (almost) A trader in the evaluation/testing period would have - Profit target of 8-10% in phase 1 (typically 30 days) - Profit target of 5% in phase 2 (typically 60 days) - Daily drawdown of no more than 5% - Overall drawdown of no more than 10-12% From my experience coaching retail traders, newbie or average trader has an account size of no more than $10,000. This makes the idea of being funded to trade become really attractive, limiting the downside while almost maximizing the potential. However, there has also been a lot of negativity about these funded programs; - the evaluation and actual trading accounts are demo accounts - the company makes more money from traders failing than from profitable traders - some traders claim to have never received their payouts Are funded programs scams? Again, I have not evaluated ALL funded programs to say this, but probably not. (Do your own due diligence!) Companies running funded programs are likely just deploying a good business model, addressing a pain that most retail traders have (funding their account) and filling that gap. Should you jump into a funded program? There is a lot more information (more than discussed above) that needs to be considered before you jump in. A brief checklist: 1) Do you have a profitable trading strategy to deploy? ( if you don't have a profitable strategy, keep reading, learning & testing ) 2) Have you used it for at least a year? ( avoid using funded programs as a testing ground, it can get costly! do it on a demo or even a $1,000 account first ) 3) Does the strategy meet the max drawdown conditions? ( 5% a day, 10% total? For example, a martingale strategy is not likely to work ) 4) How likely are you to bend your trading rules? ( rules set by the programs are set in stone, a breach even by the slightest and you would have failed ) 5) Is it the right time to start? ( are markets in consolidation, on a holiday period, or super volatile with no clear trend ) Remember that the average annualized return of the S&P500 is 11.88% (1957 to 2021). Trying to make 8-10% in 30 days and then 5% in 60 days just to pass, tends to put the trader under a lot of stress. How do you perform under significant pressure? What are your views of the funded programs? Share it with me in the comments I have never thought much about the funded programs. But recently have been considering giving it a shot and live-streaming the trading process daily. Would you join me on the stream? Stay tuned, it might just happen.
SP:SPXEducation
by JinDao_Tai
2
Catching a Falling Knife with AMD on the 30 minute chartBetting on a price increase after a sharp price decrease is called "catching a falling knife". In fact, you may have heard someone say, "don't try to catch a falling knife." The analogy is meant to sound dangerous because it is very risky to buy a stock that is dropping rapidly. The hope is that if you time it right, you will get in at the bottom and make big profits. The opposite is true as well, but catching a knife thrown upward sounds like an even worse idea. I would like to suggest that it's possible to profit from a knife-catching strategy if you manage your risk and timing properly. In the chart for AMD, I've marked the opportunities to catch a falling (or rising) knife, which have been occurring on a daily basis for the past week. For AMD, a price bottom has typically been forming after the price has dropped significantly over the previous day. And a top has formed after the price has risen significantly over the previous day. Sometimes it's not clear if a bottom or top has formed such as on October 25. In that case, it's a coin flip (50% chance of being right). The key to success in this strategy is to set a tight stop loss and to buy or sell short during the pre-market (yellow-shaded area). There were at least 6 excellent opportunities last week to do this. Unfortunately, I wasn't paying attention to AMD until the morning of Friday, October 28. I saw the opportunity and realized that there was no way my order would have a chance to go through when the market opened if the price was making a dramatic move. I bought a half hour before the market opened (9:00 AM Eastern) and set my stop loss below the low reached post-market the previous day. Once the market opened, the price was already climbing and I got out before 10:00 AM Eastern. My risk-reward ratio was 1:5. That is, I risked 1 dollar for every 5 dollars I profited. Not too shabby. It appears that Monday is going to be another great opportunity, and I will be watching the pre-market closely. I will be setting a stop loss at 62.30 and a take profit of around 59.50. Although I will be watching for the right time to get out, which is usually when the price reverses, and I chicken out as I did on the 28th. Monday's trade will be going against the larger trend which I believe is heading to 73 by the end of November. See the link to my longer-term analysis of AMD. This is not a 100% fool-proof strategy, and the conditions that make this look easy can change completely and without notice. Also, the volatility can stop you out too soon. Take a look at October 22 for an example of where I would have been stopped out and lost out on the subsequent big move. Disclaimer: I am not a financial advisor, and the above statements are not investment advice. My comments are only intended for educational purposes. You are solely responsible for your own trading decisions. I'd like to add that developing these analyses is a powerful educational tool for the one doing the analysis (namely me). It helps me formulate my thoughts and plan my trades so that I can make the best decisions possible. I'm training my brain to eventually do this automatically when I glance at a chart. It's a skill that I hope will benefit me for the rest of my life. I hope you enjoyed reading as much as I did writing. Give some thought to publishing your own ideas. I highly recommend it. Have a profitable week!
NASDAQ:AMD
by cdnbuzzard
High Risk & High Reward - LUNA CLASSICHello Team, As we can see LUNC is forming a massive falling wedge after a huge run up (Bullish Formation : *Upon Breakout). A strong volume resistance break to the upside from this falling wedge can have massive upside potential. We are looking to start adding small positions as we continue lower. Key Notes: This is a very high risk play due to being a highly skeptical trading pair; only for small position sizing. Fundamentals to follow: Bitcoin Strength/Weakness USD/Stock Market Strength/Weakness : Strong Correlation Previous Posted LUNA/C Trade: 1000%+ Run to the upside
Long
by GenesisGo
1