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Riskreward

S&P500 - New high comingAlthough we have the risk of this being a 3 waves rise, by the looks of it I tihnk we'll see a new high as this move has the caracteristics of a corrective wave 4. Looking at the number of stocks that keep on breaking out of corrective bases and making new highs (look at my profile) but also looking at the Advance/Decline Line we can see that we have positive divergence with ADL making new high while the indexes are still below their previous high, this gives me confidence in my outlook that the move higher will continue.
FOREXCOM:SPX500Long
by ElliottWaveBelgium
1
Trade Like a Pirate: Ye needs the aRRR!!!!One of the amazing things about trading the financial markets is that it is the only industry where we “common folk” have the potential to EXPONENTIALLY grow our income day after day, week after week, year after year. All our lives, from opening up our first lemonade stand to landing our first job, we are taught to make LINEAR income: to exchange TIME for MONEY. We are told that we must work “X” amount of hours per day, and you can earn “Y” amount of money. If you want more money, you simply have to work longer and harder: work overtime, work a second job, or start a "side hustle", and though it is true you can increase your earning power through multiple income streams or by climbing the corporate ladder, you are always going to be limited to the amount of money you can make because there are only so many hours in a day that you can work. As Al Pacino said in Scarface, "Say hello to my little friend…” May I introduce to you, “R”, which stands for “Return”. There are two powerful paradigms that you, Dear Trader, have access to in our glorious financial markets, and our primary goal needs to be that we MAXIMIZE all we can from them. Paradigm Number One is a popular reason that we enter the fray: Instead of "working for our money” we trade so that we can "make our money work for us." Instead of clocking into a job where are are assigned duties where we will earn our daily bread, we take our “bread" and we assign it to a company, a commodity, or a currency in the stock, options, futures, and forex markets. We aim to hit “X” dollars per day or “Y” PIPs per day and call ourselves successful traders. Paradigm Number Two is where the magic is, and is the topic of this article: let's “kick it up a notch” as Emeril likes to say. Instead of trying to earn "so many dollars per day," let us instead set our sights on achieving a certain “R” per day. “R" is a measure of *return* based upon the amount of ‘risk’ we are willing to take on any trade. A good rule of thumb is that with any trade, you should never risk more than 1% of your account equity and you should never get into a trade without at *least* a 3-to-1 expectation of Reward if you are correct. This is known as the "reward-to-risk ratio”, or “R”. The working principle behind this is that we want to keep our risk *small* (i.e. you won’t blow up your account with a bad trade) and our reward *large*, where your winning trades will give you a minimum of three times what you are risking. In this scenario of 3:1 you don’t have to be the best of traders to be a profitable trader. Say you do 3 trades per day and you were a mediocre trader, where you are only batting one out of three. You can only have a 33% hit rate, only winning one of every 3 trades, and if that were the case you would win 3%, lose 1%, and lose 1%, netting 1 “R" for the day. (3-1-1 = 1) "1R? What good is that?" you might ask? Well here’s where we start talking about the *miracle* of compounding. On Day 1 with a $10,000 account you would look at risking $100 per trade to win $300. If you lost 2 and won 1, your account now has a value of $10,100. So on day 2 you aren’t risking $100, but $101. Every day you place 3 trades and win at least 1, your account grows not linearly, but *exponentially*. Each week you are making more and more money EVEN THOUGH YOU ARE DOING THE SAME AMOUNT OF WORK. By week 34 you are risking $500 to make $1,500. At the end of the year, (theoretically of course) that $10,000 could be worth over $120,000 - Your account has now grown in an order of *magnitude* from where you started. And all you are doing is placing 3 trades per day. Day in. Day out. Do it again for year 2 and see what you come up with! Every day you are doing the same amount of work, but every day you are generating an increasing amount of cashflow as the 1% you are risking grows each and every day. What does it take to get these kind of results? First, it takes a system of trading that you can follow that can give you at least a 1-in-3 success rate. Second, (and this is the hard part...) it’s all about YOU. Every day you don’t trade is anther day your net worth doesn’t grow… another day you will have to WAIT to achieve your dreams, whatever reason it was that you decided to become a trader. But once you start realizing the power of R you will NEVER want to trade time for money again: you will want to increase your net worth by 1R, 2R, 5R per day until you reach that Magic Number you need to say “I’m done… I’ve got all the money I need to live as long as I need to enjoy the lifestyle I desire.” TradingView makes it super-simple to put this philosophy into practice. Using the Long & Short Position tool, you can map out your trade, right-click the tool, select “Create Limit Order” and then change the “% Risk” field to 1%, 0.25%, or whatever your trading plan requires. (My personal “R” is one quarter of one percent, .025). For stock trading, the tool then automatically fills in the number of shares that will satisfy your risk percentage. For futures, it automatically calculates the number of contracts, and for Forex (most brilliantly!) it will automagically perform the necessary currency conversion and calculate the number of Units you can trade. THIS FEATURE ALONE is why I became a Premium subscriber to TradingView to trade through my Forex and Futures brokers - no more position sizer spreadsheets! If you are not using the Long and Short position tool to place your orders you are missing out on a great resource. I will leave a link to a TradingView blog post on how to use it below. A great exercise to get you excited about trading like a pirate is to create your own trading spreadsheet and calculate like a Pirate: Calculate your “aRRRRRRR” in multiple scenarios. There are 250 trading days per year give or take. What if you grew by 1R per day and you traded every day? What if you grew by 3R per day but you only traded 2 days per week? What if you were an options trader and you only traded on Mondays but you gained 7R per week? What if you threw in a home-run 20R trade every 3 weeks? (Yes, they do happen!) What’s your end retirement goal? $2 million? $7 million? When can you calculate that you will get there? By estimating your exponential growth you will be able to estimate the you will reach your life target. Although these scenarios are idealized (we’re not *always* going to have a “Green Candle Day”) we need to have a PLAN for our trading activity. Having a *plan* and matching that with a *vision* will give you a *passion* to DO what you need to do so you will GET what you want to get. As Louis Carrol said, “If you don’t know where you are going, any road will get you there.” And as Norman Vincent Peale said, "Shoot for the moon. Even if you miss, you'll land among the stars.” Make you plan, and work your plan. And having an exciting Vision will help you wake up early, stay up late, and stay on track. I hope this lesson helps you bring out your inner pirate… I’ll see you on the high seas of the financial markets! Trade Hard, and trade well… Till next time… -Anthony www.tradingview.com
Editors' picks
Education
by ocaptain
54
AMB/USD SpeculationThe AMB/USD chart cancels out a lot of noise from the AMB/BTC chart. Downtrend broken and turned into an uptrend that needs to hold these next couple of weeks to stay valid. An inverse head and shoulders looks as though it is forming: It has a clear neckline (blue horizontal) and assuming the uptrend/diagonal support holds here that would be the first target. The second target is calculated by the price disparity between the low of the head (in this case the lowest point priced in on the chart) and the neckline, then adding that difference to the neckline. The Kumo cloud has been green these last couple months which is the first time in AMB's 1W history. The Tenkan and Kijun have crossed bullish, however they are still not above the Kumo cloud so they aren't as strongly bullish as they can be just yet. The Lagging Span is still below the Kumo Cloud which is bearish. The massive volume is notable. By the looks of things, the chart may contain just enough bullish biases for the swing trader to have suitable conviction to make a play here depending on risk tolerance. For the long term hodler, entry point as an investment could play out quite profitably for one who is looking to take a risky bet on one of the lowest Market Cap coins on Binance. This assumes that the product proves legitimate, the negotiations with IBM/Maersk and others stay true and the team keeps working hard.
ALong
by Hrempe
DAX - One more small push lower before rallying ? Excellent R/R!DAX - Turned into a Triangle here it seems. I'm expecting price to go down to ~12645 or even a bit lower towards the 61.% retracement level and hte 161.8% projection level, respectively at 12566 and 12515. (It should ideally remain above 12463 since a close below that would significantly increase for bears to take over). Alternatively, if price remains above 12682 and rallies above 12858, it would have important implications since that would make this correction a wave B Triangle and therefore we can expect one more wave C up before going to lower lows, below 12333 !!
OANDA:DE30EURLong
by ElliottWaveBelgium
TSLA - One more push lower before rallying way above 500 ?We're in a wave 4 that seems to be taking the form of a Triangle. Measures have been respected for now, each leg being 61.8% to 78.6% of the prior move. This makes us believe that wave D and E of the Triangle can be of the same proportions. But if price keeps on going higher now, we could then be in Flat correction , which could take wave B up to the noted 1.272 - 1.382 zone before going back down to 350-ish (needs to be recalculated depending on B of course). Bigger picture
NASDAQ:TSLALong
by ElliottWaveBelgium
4