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Why do most traders end up losing moneyThis question is quite scary, but if you are a novice and see this question, congratulations, you are on the right path of trading. The most important lesson to learn before entering the financial markets is risk expectation. You can ask yourself, how much money do you want to make from trading? Is your goal asset appreciation, or a small fortune? If a trade loses money, will it affect your own life? Is your own character able to stop losses in time, or do you have no self-control? After asking these questions, we decide whether to enter the financial market. So why do the vast majority of traders lose money? 1. Because of the particularity of the financial market. I believe that many friends have heard of the 28 rule. For example, in the distribution of wealth in our society, 20% of people control 80% of social wealth; 20% of people will persist in encountering difficulties, and 80% of people will give up when encountering difficulties. The rule of 28 is ubiquitous in life, and it also determines what kind of people will succeed and what kind of people will fail. As for the financial market, it is crueler than real life, because there are no rules in this market, only human nature, so the financial market even surpasses the rule of 28, and less than 10% of people may make profits. In the face of money, most people want to make a big fortune with a small amount, and want to turn around by trading, so those who have stable personalities, strong self-control, low income expectations, and money in their hands are silently harvesting these people who are eager for quick success. Some people may say that the world is inherently unfair, and those who hold funds can only survive because of the capital. Actually no. We Xiaosan hold small funds, and we can achieve low return expectations, or we can do it slowly, but how many people are just anxious to make money? Just want to make a big difference with a small one? Just don’t regard money as money, and think it’s a big deal to take a gamble, and if it’s gone, it’s gone? So it has nothing to do with the amount of capital, but has something to do with people. In financial markets, human nature is the rule. 2. Too many people are dominated by human nature. As I said before, there are no rules in the financial market, and human nature is the rule. Trading is a very anti-human thing. Human nature is greedy for comfort, averse to risk, afraid of losing, feeling that one's level is higher than others, hating giving and learning, impatient, etc., which will be infinitely magnified in trading. There is a saying in the trading industry that trading can be profitable, mentality accounts for 70%, and technology accounts for 30%. In actual combat, it seems that it is not difficult for traders to see the market correctly, but it is very difficult to complete this wave of market and make profits. Why? I give two examples. For example, the problem of stop loss in trading. Seeking advantages and avoiding disadvantages is a characteristic of human nature, unwillingness to lose, unwilling to accept losses, this is human self-protection awareness. Stopping losses in the wrong direction means losing our real money, who can bear it? So in actual combat, many people rationally know that the direction is wrong, but they just don't stop losses, and even increase their positions against the trend, floating orders, allowing the stop loss to become bigger and bigger, and finally lead to serious losses. Another example is the profitable position in the transaction. The market trend always fluctuates upwards, or fluctuates downwards, and profit taking in positions is often encountered. Once profits are withdrawn, we will have a sense of insecurity in our hearts, worrying about the reversal of the market and losing profits. This insecurity is also due to human nature. Even if we rationally know that the profit target has not yet been reached, we should continue to hold positions, but the little emotion of longing for peace of mind has been tormenting us, and in the end we couldn't help but close the position, and made a lot of less money. We comfort ourselves that it is all right, at least there is no loss. But in fact, less earning = loss, because the amount you lose next time will be greater than the money you earn. In the long run, your overall loss will be. There are many such examples, such as betting on the market, heavy trading, unwillingness to admit defeat, stop loss leading to liquidation, etc., are all caused by the aversion to loss in human nature and the fear of failure. In fact, if we look at the trading market 100 years ago, it is basically the same as the current human nature problem. The weakness of human nature is very strong, and it is also the main reason why traders lose money. So at the beginning, I asked everyone to ask themselves those questions, just to let everyone understand their own personality, their current situation, and their human nature, so as to help you win certain opportunities in the trading market. Trading is like a free game. It seems that the threshold is low and no money is required, but in fact some hidden costs are contained in it, and the human nature is clearly played for you. Therefore, before making a transaction, you must have an existing risk expectation, and then think about making money.
FOREXCOM:XAUUSDEducation
by CheetahAttack
Hunting Breakouts with Bollinger Bands and OBVThanks to zAngus for the idea, here is a simple trading strategy that uses two tools: Bollinger Bands and OBV to find moments when an asset's prices can increase or decrease. First and foremost, please note that this explanation is simplified and only covers the basics. Each individual can develop their own settings and adjustments according to their own preferences. Imagine that you are looking at a price chart of an asset. This chart shows how prices have changed over time. Sometimes prices go up and sometimes they go down. The trading strategy we are going to show you can help you find moments when prices are about to change direction. - Bollinger Bands are lines that show a zone where prices of an asset are likely to stay. These lines have two parts: a middle line that shows an average of prices and two other lines that show the zone where prices should be. The lines widen and narrow based on the volatility of prices. - OBV (On-Balance Volume) is another tool that measures whether more people are buying or selling an asset. If more people are buying an asset, OBV increases, and if more people are selling an asset, OBV decreases. Now, here is how we use these two tools to find moments when an asset's prices can increase or decrease: 1. First, we wait for prices to stabilize for a certain amount of time. This means that prices don't go up or down much during a given period. 2. Next, we look at the Bollinger Bands to see if prices have reached the upper or lower limit. If prices exceed the upper limit, it may mean that prices will increase. If prices fall below the lower limit, it may mean that prices will decrease. 3. To confirm what we have seen in the Bollinger Bands, we look at the OBV. If OBV increases or decreases at the same time as prices exceed the upper or lower limit of the Bollinger Bands, it means that more people are buying or selling the asset, and this reinforces our idea that prices will increase or decrease. 4. We enter the market by buying or selling the asset based on whether we think prices will increase or decrease. 5. We exit the market when prices reach the opposite upper or lower limit of the Bollinger Bands or an important resistance zone. This is a simple strategy, but it can help find moments when an asset's prices can increase or decrease. Remember that you must always use good risk management to avoid losing too much money if the market doesn't follow your forecast. Please note that this Bollinger Bands and OBV breakout trading strategy involves risk and is intended for educational purposes only. Any investments made using this strategy are done at your own risk, and you should always do your own research and seek professional advice before making any investment decisions.
Education
by Julien_Eche
What can financial ratios tell us?In the previous post we learned what financial ratios are. These are ratios of various indicators from financial statements that help us draw conclusions about the fundamental strength of a company and its investment attractiveness. In the same post, I listed the financial ratios that I use in my strategy, with formulas for their calculations. Now let's take apart each of them and try to understand what they can tell us. - Diluted EPS . Some time ago I have already told about the essence of this indicator. I would like to add that this is the most influential indicator on the stock market. Financial analysts of investment companies literally compete in forecasts, what will be EPS in forthcoming reports of the company. If they agree that EPS will be positive, but what actually happens is that it is negative, the stock price may fall quite dramatically. Conversely, if EPS comes out above expectations - the stock is likely to rise strongly during the coverage period. - Price to Diluted EPS ratio . This is perhaps the best-known financial ratio for evaluating a company's investment appeal. It gives you an idea of how many years your investment in a stock will pay off if the current EPS is maintained. I have a particular take on this ratio, so I plan to devote a separate publication to it. - Gross margin, % . This is the size of the markup to the cost of the company's product (service) or, in other words, margin . It is impossible to say that small margin is bad, and large - good. Different companies may have different margins. Some sell millions of products by small margins and some sell thousands by large margins. And both of those companies may have the same gross margins. However, my preference is for those companies whose margins grow over time. This means that either the prices of the company's products (services) are going up, or the company is cutting production costs. - Operating expense ratio . This ratio is a great indicator of management's ability to manage a company's expenses. If the revenue increases and this ratio decreases, it means that the management is skillfully optimizing the operating expenses. If it is the other way around, shareholders should wonder how well management is handling current affairs. - ROE, % is a ratio reflecting the efficiency of a company's equity performance. If a company earned 5% of its equity, i.e. ROE = 5%, and the bank deposit rate = 7%, then shareholders have a reasonable question: why invest equity in business development, if it can be placed in a bank deposit and get more, without expending extra effort? In other words, ROE, % reflects the return on invested equity. If it is growing, it is definitely a positive factor for the company and the shareholders. - Days payable . This financial ratio is an excellent indicator of the solvency of the company. We can say that it is the number of days it will take the company to pay all debts to suppliers from its revenue. If the number of days is relatively small, it means that the company has no delays in paying for supplies and therefore no money problems. I consider less than 30 days to be acceptable, but over 90 days is critical. - Days sales outstanding . I already mentioned in my previous posts that when a company is having a bad sales situation, it may even sell its products on credit. Such debts accumulate in accounts receivable. Obviously, large accounts receivable are a risk for the company, because the debts may simply not be paid back. For ease of control over this indicator, they invented such a financial ratio as "Days sales outstanding". We can say that this is the number of days it will take the company to earn revenue equivalent to the accounts receivable. It's one thing if the receivables are 365 daily revenue and another if it's only 10 daily revenue. Like the previous ratio: less than 30 days is acceptable to me, but over 90 days is critical. - Inventory to revenue ratio . This is the amount of inventory in relation to revenue. Since inventory includes not only raw materials but also unsold products, this ratio can indicate sales problems. The more inventory a company has in relation to revenue, the worse it is. A ratio below 0.25 is acceptable to me; a ratio above 0.5 indicates that there are problems with sales. - Current ratio . This is the ratio of current assets to current liabilities. Remember, we said that current assets are easier and faster to sell than non-current, so they are also called quick assets. In the event of a crisis and lack of profit in the company, quick assets can be an excellent help to make payments on debts and settlements with suppliers. After all, they can be sold quickly enough to pay off these liabilities. To understand the size of this "safety cushion", the current ratio is calculated. The larger it is, the better. For me, a suitable current ratio is 2 or higher. But below 1 it does not suit me. - Interest coverage . We already know that loans play an important role in a company's operations. However, I am convinced that this role should not be the main one. If a company spends all of its profits to pay interest on loans, it is working for the bank, not for the shareholders. To find out how tangible interest on loans is for the company, the "Interest coverage" ratio was invented. According to the income statement, interest on loans is paid out of operating income. So if we divide the operating income by this interest, we get this ratio. It shows us how many times more the company earns than it spends on debt service. To me, the acceptable coverage ratio should be above 6, and below 3 is weak. - Debt to revenue ratio . This is a useful ratio that shows the overall picture of the company's debt situation. It can be interpreted the following way: it shows how much revenue should be earned in order to close all the debts. A debt to revenue ratio of less than 0.5 is positive. It means that half (or even less) of the annual revenue will be enough to close the debt. A debt to revenue ratio higher than 1 is considered a serious problem since the company does not even have enough annual revenue to pay off all of its debts. So, the financial ratios greatly simplify the process of fundamental analysis, because they allow you to quickly draw conclusions about the financial condition of the company, without looking up and down at its statements. You just look at ratios of key indicators and draw conclusions. In the next post, I will tell you about the king of all financial ratios - the Price to Diluted EPS ratio, or simply P/E. See you soon!
AMEX:SPYEducation
by Be_Capy
Top Pullback Trading StrategiesTop Pullback Trading Strategies In this article, we will be discussing some of the most effective pullback trading strategies that can assist forex traders in identifying ideal entry points that align with the current trend. These strategies enable traders to take advantage of short-term price retracements, allowing them to navigate the volatile currency market with greater ease and profitability. What is pullback trading? Pullback trading refers to the practice of capitalizing on temporary price retracements or surges within an existing uptrend or downtrend in the forex market. These fluctuations in price typically occur over a brief period and do not interrupt the prevailing trend. Traders can leverage pullbacks by entering positions when the currency pair's price approaches its support or resistance level, enabling them to profit from upward or downward market movements. Discover the Top Pullback Trading Strategies for Forex Traders Moving Average Strategy The Moving Average (MA) strategy is among the most widely used techniques for identifying pullbacks in an ongoing uptrend. This technical indicator calculates the average price of a currency pair over a specified timeframe and compares it with the present price to ascertain market behaviour. In an uptrend, when the current price of the currency pair is significantly below its average price, it suggests that a short-term dip is likely to occur and provides a signal to enter long positions. Conversely, in a downtrend, if the current price of the currency pair is significantly above its average price, it implies that a short-term hike is probable, indicating the need to enter short positions to profit from a subsequent market downturn. Trendline Strategy Trendlines play a crucial role in identifying the direction of a trend in forex. Connecting three or more high or low price levels creates an uptrend or downtrend trendline, respectively. When trading pullbacks with trendlines, traders look for higher high price levels followed by higher low price levels, indicating a temporary dip in an ongoing uptrend. Alternatively, traders can enter short positions with trendlines showing lower low price levels followed by higher low price levels, signaling a temporary hike in an ongoing downtrend. Traders can enter long or short positions with trendlines at the third, fourth, or fifth high or low price level, as these levels confirm the prevailing trend and signal the optimal entry point in the forex market. Breakout Strategy The Breakout strategy enables traders to enter the market immediately after currency pair prices reach their support or resistance level and subsequently move above or below it, respectively. Breakouts represent opposing movements to the prevailing trend, providing opportunities to enter the market during temporary reversals. In an uptrend, when the currency pair price briefly touches its support level and contracts, a breakout signals a pullback in the trend, providing a signal to enter long positions and benefit from rising prices. Conversely, in a downtrend, when the currency pair price briefly touches its resistance level and expands, a breakout signals a pullback in the trend, providing a signal to enter short positions and benefit from falling prices. Fibonacci Retracement Strategy The Fibonacci Retracement strategy determines the optimal levels for entering the market during an uptrend or downtrend. Using Fibonacci levels, traders can identify the ideal support and resistance levels, based on which they can decide to long or short the market. This strategy utilizes Fibonacci retracement levels, which indicate how much currency pair prices are retracing before continuing in the prevailing trend direction. During a downtrend, lower Fibonacci levels, such as 23.6% and 38.2%, suggest that the markets have not retraced significantly, enabling traders to identify the ideal resistance level (representing a temporary pullback hike) and signal short trades due to the expected continuation of the downtrend. Conversely, during an uptrend, higher Fibonacci levels, such as 61.8% or 78.6%, indicate that the markets have retraced extensively, helping to identify the ideal support level (representing a temporary pullback dip) and signal short trades due to the anticipated continuation of the uptrend. Additionally, during an uptrend, lower Fibonacci levels like 23.6% and 38.2% suggest that prices are approaching the resistance level, which may break above this level, signaling traders to place long orders and benefit from the ongoing rising markets. On the other hand, during a downtrend, higher Fibonacci levels like 61.8% or 78.6% indicate that prices are approaching the support level, which may fall below the support level, signaling traders to place short orders and benefit from the ongoing falling markets. Trade forex pullbacks and identify ideal entry prices In forex trading, pullbacks can help traders pinpoint the optimal entry points for both long and short trades. By identifying temporary dips or hikes in currency pair prices during an existing uptrend or downtrend, traders can take advantage of short-term trading opportunities without missing out on potential profits.
PEPPERSTONE:XAUUSDEducation
by FOREXN1
13
Financial ratios: digesting them togetherI hope that after studying the series of posts about company financial statements, you stopped being afraid of them. I suggest we build on that success and dive into the fascinating world of financial ratios. What is it? Let's look at the following example. Let's say you open up a company's balance sheet and see that the amount of debt is $100 million. Do you think this is a lot or a little? To me, it's definitely a big deal. But can we say the company has a huge debt based only on how we feel about it? I don't think so. However, if you find that a company that generates $10 billion in annual revenue has $100 million in debt (i.e. only 1% of revenue), what would you say then? That's objectively small, isn't it? It turns out that without correlating one indicator with another, we cannot draw any objective conclusion. This correlation is called the Financial Ratio . The recipe for a normal financial ratio is simple: we take one or two indicators from the financial statements, add some market data, put it all into a formula that includes a division operation - we obtain the financial ratio. In TradingView you can find a lot of financial ratios in the section Financials -> Statistics . However, I only use a few financial ratios which give me an idea about the financial situation of the company and its value: What can you notice when looking at this table? - Profit and revenue are frequent components of financial ratios because they are universal units of measurement for other reporting components. Just as length can be measured in feet and weight in pounds, a company's debts can be measured in revenues. - Some financial ratios are ratios, some are percentages, and some are days. - There are no financial ratios in the table whose data source is the Cash Flow Statement. The fact is that cash flows are rarely used in financial ratios because they can change drastically from quarter to quarter. This is especially true for financial and investment cash flow. That's why I recommend analyzing cash flows separately. In my next post, I'll break down each financial ratio from this table in detail and explain why I use them specifically. See you soon!
SP:SPXEducation
by Be_Capy
Backtesting Tip- What You May Be Doing WrongThis part of trading is very unattractive to most people or simply performed incorrectly. There is nothing flashy about back-testing and it requires time, work and patience. Most individuals interested in trading will avoid this part of the job all together at first or use an automated approach to testing, leading them to failure after failure without ever acknowledging the issue! I know the idea of so much work consisting of this much time is daunting but you will learn to appreciate the process. Even if you never like testing a strategy, you don't really have much of a choice. You will eventually develop some way of testing/monitoring your trading strategy & performance because without this, I can almost guarantee you will not succeed. I have touched on many of the back testing mistakes in the past and will discuss more in the future I am sure- but today I am going to answer a crucial question that has been asked to me several times. When Back testing a strategy, do I need to test the strategy for each individual market (ticker) I am trading? The answer to this question is YES! Let me clarify exactly what I mean so there is no confusion- As an example, lets say you have created a strategy and tested it correctly on GOLD (XAUUSD). Your test results show that this strategy DOES work when trading gold and maybe you have successfully used it in your live account as well. This DOES NOT mean that this strategy is going to work when trading Silver or EURUSD or TSLA. You must test each market (ticker symbol) separately, as results will vary wildly. A strategy that is profitable while trading one market may not be profitable in another! It is important that you gather proper data points in regards to this strategies performance as well, in order to identify any changes in results over time. It is not uncommon to have to make adjustments to a strategy over time as market conditions and behavior change- to ensure you remain profitable. In summary- each market (or ticker symbol) must be treated as its own entity, therefore your strategy needs to be tested for each individual market you plan to trade it in. After you have tested a strategy and it is producing profits, you will want to monitor this strategy, in order to determine if you are making trading mistakes or simply need to make new adjustments to accommodate recent changes in market conditions, or behavior. I know this was a short one but very important! I hope this was helpful and if you have any questions or would like to use the backtesting tool that I use- please leave a comment and I will follow up asap!
Education
by Alec40
2
📈HOW TO RECOVER FROM A TRADING LOSS📉 🔰Analyze the reasons behind the trading loss: Understanding what caused the loss is essential to avoid repeating the same mistake. Analyze the market conditions, trading strategy, and emotions behind the loss. 🔰Stick to a trading plan: A trading plan acts as a blueprint for a successful trading journey. Follow your trading plan and avoid any impulsive decisions. 🔰Cut losses short: Don't hold onto losing trades in the hope of recouping your losses. Cut the losses immediately and move on to the next opportunity. 🔰Diversify: Diversification can reduce your overall risk. Spread your investments across multiple channels and avoid investing all your money in a single asset. 🔰Learn from successful traders: Successful traders can provide valuable advice and insights into trading. Follow their strategies and learn from their experiences. 🔰Reduce the trading size: To avoid significant losses, reduce your trading size. Start with small trades and gradually increase the position size. 🔰Control emotions: Emotions play a significant role in trading. Avoid trading based on emotions and stick to the trading plan. 🔰Stay informed: Keep abreast of the latest market news and events. Follow economic indicators, news releases, and expert opinions. 🔰Take a break: Taking a break after a trading loss can help you clear your mind and recharge. Take time to assess your trading journey, re-evaluate your strategy and come back refreshed. ❗️Remember that trading losses are part of the journey, and everyone experiences them. Recovering from a loss requires discipline, patience, and a willingness to learn from mistakes. Stick to your plan, manage risk, control emotions and with time, recover from the loss. I Hope you guys learned something new today✅ Wish you all Best Of Luck👍 😇And may the odds be always in your favor😇 Do you like this post? Do you want more articles like that
Education
by ProSignalsFx
12
Perfect BBands Strateg. w/ Indic. SetupThis one is for anybody looking to try a new consistently solid strategy with multiple intuitive indicators setup that is not automated - yet. But, since the strategy part of this setup relies mostly on a simple but effective BBands strategy (I've found best results with 15m), it shouldn't be that hard to get automation setup. As it is now, the indicators included in this setup work perfectly together to give even beginner traders a rather good idea of where the trend is going and when to enter/exit their trades. This is a great setup for those using a free TV account since it combines certain indicators together by making use of the Pine Editor. So technically, only 3 indicators/strategies are used. In this case, 2 indicators and 1 strategy. All features of the indicators combined in terms of being able to adjust settings for each can still be fine tuned and have not been negatively impacted by the merging of multiple indicators. If you like this setup or have any suggestions to improve it, please let me know and if you consider testing this out with automation - send me a private message and let's discuss it.
EEducation
by Y2K_B
Thoughts About Selling Courses and Strategies Regarding the idea of selling courses and strategies online, I would like to share my thoughts with everyone for reference. (1) Successful traders usually don't lack money, and they are often unwilling to share the money-making tools they have developed through hard work and research. A few ambitious traders are willing to share their experience, knowledge, and even occasionally reveal their trading cards. Facebook provides many free high-quality resources. In addition, there are very few traders who are just starting out and hope to earn some extra income, but they do not treat trading as their main business. (2) If you find that a trader has been selling courses for more than five or ten years, you need to carefully evaluate whether they have really made money from the market. The power of compounding is frightening, and if they are capable, they should have made a fortune a long time ago. (3) In fact, trading is not just about having a profitable strategy. Taking futures as an example, most traders end up losing money, even though their strategies may not be the problem. Therefore, selling a fishing rod (strategy) without teaching how to use it is not enough to make you successful in trading. (4) I believe that trading, like any competitive sport, should have coaches. However, this culture seems to be lacking in the domestic market. Just like when I learned how to play Texas Hold'em, I sought out a coach to establish the correct concept. Otherwise, even if you succeed, it will only be a fluke, and if you fail, it will be common. Proper money management and psychological adjustment are more important than technical skills. I suggest that everyone can buy books on the market to learn on their own. If you can't even find a book to read, you may not be suitable for trading at all. If you encounter difficulties during the process of practicing what you have learned from the book, you can come to me for help as a coach. I am willing to help, but I also hope that you can donate the money you make in the future to those in need.
CME_MINI:NQ1!Education
by Eleta1228
1
Cash flow vibrationsIn the previous post we started to analyze the Cash flow statement. From it, we learned about the existence of three cash flows - operating cash flow, financial cash flow, and investment cash flow. Like three rivers, they fill the company's "lake of cash" (that is, they go with a "+" sign). However, there are three other rivers that flow out of our lake, preventing it from expanding indefinitely. What are their names? They have absolutely identical names: operating cash flow, financial cash flow, and investment cash flow (and they go with a "-" sign). Why so? Because all of the company's outgoing payments can also be divided into these three rivers: Operating payments include the purchase of raw materials, the payment of wages - everything related to the production and support of the product. Financial payments include repayment of debt and interest on it, payment of dividends, or buyback of shares from shareholders. Investment payments include the purchase of non-current assets (say, the purchase of additional buildings or shares in another company). If the inflows from the three rivers on the left are greater than the outflows into the rivers on the right, then our lake will increase in volume, meaning that the company's cash balances will grow. If the outflows into the three rivers on the right are greater than the inflows from the rivers on the left, the lake will become shallow and eventually dry up. So, the cash flow statement shows how much our lake has increased or decreased over the period (quarter or year). This report can be presented as four entries: Each value of A, B, and C is the difference between what came into our lake from the river and what flowed out of the lake by the river of the same name. That is, the value can be either positive or negative. How can we interpret the meanings of the different flows? Let's break down each of them. Operating cash flow . In a fundamentally strong company, it is the most stable and powerful river. The implication is that it should be the main source of "water" for our lake. Negative operating cash flow is an indicator of serious problems with the business because it means it is not generating money. Investment cash flow . This is the most unpredictable river, as sometimes it can be very powerful and sometimes it can flow like a thin trickle. This is due to the fact that the purchase or sale of non-current assets (recall that these may be buildings, equipment, shares in other companies) does not occur as regularly as operational activities. A sudden negative investment flow tells us about some big purchase. Shareholders do not always view such events positively, as they may consider it an unwise expenditure or a threat to dividend payments. Therefore, they may start to sell their shares, which causes their price to drop. If a big purchase is perceived as an opportunity to reach the next level and capture more market share, then we may see exactly the opposite effect - an increase in share price. Financial cash flow . A negative value of this cash flow can be seen as a very positive signal because it means that the company is either actively reducing its debt to creditors, or using the money to pay dividends, or spending the money to buy its own stock (*), or maybe all of these together. (*) Here you may ask, why would a company buy its own stock? Management sometimes does this when they are confident in the success of their business and want to support the growth of their stock. The company becomes a major buyer of its own stock for some time so that it begins to grow. The process itself is called share buyback . Positive financial cash flow, on the other hand, signals either an increase in debt or the sale of its own stock. As far as debt is concerned, you can't say that loans are bad for business. But there has to be a measure. But the sale by a company of its own shares is already an alarming signal to the current shareholders. It means that the company doesn't have enough money coming out of operating cash flow. There is another type of cash flow that is not a separate "river," but is used as information about how much cash the company has left to meet its obligations to creditors and shareholders. This is Free cash flow . It is simple to calculate: just subtract one of the components of the investment cash flow from the operating cash flow. This component is called Capital expenditures (often abbreviated as CAPEX). Capital expenditures include outgoing payments that go toward the purchase of non-current assets , such as land, buildings, equipment, etc. (Free cash flow = Operating cash flow - Capital expenditures) Free cash flow can be characterized as the "living" money that a company has created over a period, which can be used to repay loans, pay dividends, and buyback stocks from shareholders. If free cash flow is very weak or even negative, it is a reason for creditors, shareholders and investors to think about how the company is doing business. This concludes my discussion of the cash flow statement topic. Next time, let's talk about the magic ratios that you can get from a company's financial statements. They greatly facilitate the process of fundamental analysis and are widely used by investors around the world. We will talk about the so-called Financial Ratios . See you soon!
NASDAQ:AAPLEducation
by Be_Capy
❌NO RISK OF LOSS=NO CHANCE OF GAIN✅ *️⃣There are several reasons why losses are part of the game: 1️⃣Emotion: Traders, just like all human being, are prone to emotional bias, which can lead to impulsive decision making and ultimately to losses. 2️⃣Probability: Even with the best trading strategy, there will be losing trades. It's important to remember that not all trades will be successful, and losses are a normal part of the process. A successful trader should aim to have more winning trades than losing ones. 3️⃣Markets are unpredictable: Even the most experienced traders can't predict market movements with 100% accuracy. Unforeseen events, such as natural disasters or major political announcements can cause sudden changes in market conditions, leading to losses. 4️⃣Risk is inherent in trading: All forms of investing involve some level of risk. In trading, the risk is even greater due to the fast-paced nature of the markets and the fact that positions are often held for shorter periods of time. 5️⃣There is no Holy grail strategy: There is no one strategy that will work in every market condition and for every trader. Different strategies work better in different market conditions, and a trader should be flexible and adaptable to changing market conditions. ▶️It's important to remember that losses are a normal part of trading, and traders should not be discouraged by them. Instead, traders should focus on managing risk, learning from losses, and continuing to develop and refine their trading strategies over time. I Hope you guys learned something new today✅ Wish you all Best Of Luck👍 😇And may the odds be always in your favor😇 Do you like this post? Do you want more articles like that
Education
by ProSignalsFx
10
Cash flow statement or Three great riversToday we're going to start taking apart the third and final report that the company publishes each quarter and year - it's Cash flow statement. Remember, when we studied the balance sheet , we learned that one of the company's assets is cash in accounts. This is a very important asset because if the company doesn't have money in the account, it can't buy raw materials, pay employees' salaries, etc. What, in general, is a "company" in the eyes of an accountant? These are assets that have been purchased on credit or with equity, for the purpose of earning a net income for its shareholders or investing that income in further growth. That is, the source of cash in a company's account may be profits . But why do I say "may be"? The point is that it's possible to have a situation where profits are positive on the income statement, but there is no money physically in the account. To make sense of this, let's remember the workshop I use in all the examples. Suppose our master sold all of his boots on credit. That is, he was promised payment, but later. He ended up with a receivable in assets and, most interestingly, generated revenue. The accountant will calculate the revenue for these sales, despite the fact that the shop hasn't actually received the money yet. Then the accountant will deduct the expenses from the revenue, and the result will be a profit. But there is zero money in the account. So what should our master do? The orders are coming in, but there is nothing to pay for the raw materials. In such circumstances, while the master is waiting for the repayment of debts from customers, he himself borrows from the bank to top up his current account with money. Now let us make his situation more complicated. Let us assume that the money borrowed he still does not have enough, and the bank does not give more. The only thing left is to sell some of his property, that is, some of his assets. Remember, when we took apart the assets of the workshop , the master had shares in an oil company. This is something he could sell without hurting the production process. Then there is enough money in the checking account to produce boots uninterrupted. Of course, this is a wildly exaggerated example, since more often than not, profits are money, after all, and not the virtual records of an accountant. Nevertheless, I gave this example to make it clear that cash in the account and profit are related, but still different concepts. So what does the cash flow statement show? Let's engage our imagination again. Imagine a lake with three rivers flowing into it on the left and three rivers flowing out on the right. That is, on one side the lake feeds on water, and on the other side it gives it away. So the asset called "cash" on the balance sheet is the lake. And the amount of cash is the amount of water in that lake. Let's now name the three rivers that feed our lake. Let's call the first river the operating cash flow . When we receive the money from product sales, the lake is filled with water from the first river. The second river on the left is called the financial cash flow . This is when we receive financing from outside, or, to put it simply, we borrow. Since this is money received into the company's account, it also fills our lake. The third river let's call investment cash flow . This is the flow of money we get from the sale of the company's non-current assets. In the example with the master, these were assets in the form of oil company stock. Their sale led to the replenishment of our notional money lake. So we have a lake of money, which is filled thanks to three flows: operational, financial, and investment. That sounds great, but our lake is not only getting bigger, but it's also getting smaller through the three outgoing flows. I'll tell you about that in my next post. See you soon!
NASDAQ:AMZNEducation
by Be_Capy
Trading EUR/USD with Moving Averages and Price ActionA simple way to trade EUR/USD is by taking advantage of its tendency to retest the 200-period moving average on the hourly chart. To do this, wait for the currency pair to move away significantly from the 200-period moving average and show signs of overbought or oversold conditions with two peaks or troughs, along with divergence. This presents an opportunity to enter a trade in the direction of the moving average. To execute this strategy, first, identify the 200-period moving average on the hourly chart of the EUR/USD pair. Next, monitor the price action to look for significant deviations from the moving average with clear signs of overbought or oversold conditions. This may include the formation of two peaks or troughs with divergence in the price action. Once you have identified these conditions, consider entering a trade in the direction of the moving average. For instance, if the price is significantly above the moving average and shows signs of overbought conditions, consider entering a short trade. On the other hand, if the price is significantly below the moving average and shows signs of oversold conditions, consider entering a long trade. In summary, this strategy involves identifying overbought or oversold conditions in the EUR/USD pair, along with divergence and two peaks or troughs, as it moves away from the 200-period moving average. This can help you identify trading opportunities in the direction of the moving average. ----------------------------------------------- Share your feedback in the comments and demonstrate your support by liking the tutorial. Please follow if you're interested in more tutorials like this. Your support is highly valued!
Education
by Candlestick_OB
2
My precious-s-s-s EPSIn the previous post , we began looking at the Income statement that the company publishes for each quarter and year. The report contains important information about different types of profits : gross profit, operating income, pretax income, and net income. Net income can serve both as a source of further investment in the business and as a source of dividend payments to shareholders (of course, if a majority of shareholders vote to pay dividends). Now let's break down the types of stock on which dividends can be paid. There are only two: preferred stock and common stock . We know from my earlier post that a stock gives you the right to vote at a general meeting of shareholders, the right to receive dividends if the majority voted for them, and the right to part of the bankrupt company's assets if something is left after paying all debts to creditors. So, this is all about common stock. But sometimes a company, along with its common stock, also issues so-called preferred stock. What advantages do they have over common stock? - They give priority rights to receive dividends. That is, if shareholders have decided to pay dividends, the owners of preferred shares must receive dividends, but the owners of common shares may be deprived because of the same decision of the shareholders. - The company may provide for a fixed amount of dividend on preferred shares. That is, if the decision was made to pay a dividend, preferred stockholders will receive the fixed dividend that the company established when it issued the shares. - If the company goes bankrupt, the assets that remain after the debts are paid are distributed to the preferred shareholders first, and then to the common shareholders. In exchange for these privileges, the owners of such shares do not have the right to vote at the general meeting of shareholders. It should be said that preferred shares are not often issued, but they do exist in some companies. The specific rights of shareholders of preferred shares are prescribed in the founding documents of the company. Now back to the income statement. Earlier we looked at the concept of net income. Since most investments are made in common stock, it would be useful to know what net income would remain if dividends were paid on preferred stock (I remind you: this depends on the decision of the majority of common stockholders). To do this, the income statement has the following line item: - Net income available to common stockholders (Net income available to common stockholders = Net income - Dividends on preferred stock) When it is calculated, the amount of dividends on preferred stock is subtracted from net income. This is the profit that can be used to pay dividends on common stock. However, shareholders may decide not to pay dividends and use the profits to further develop and grow the company. If they do so, they are acting as true investors. I recall the investing formula from my earlier post : give something now to get more in the future . And so it is here. Instead of deciding to spend profits on dividends now, shareholders may decide to invest profits in the business and get more dividends in the future. Earnings per share or EPS is used to understand how much net income there is per share. EPS is calculated very simply. As you can guess, all you have to do is divide the net income for the common stock by its number: - EPS ( Earnings per share = Net income for common stock / Number of common shares issued). There is an even more accurate measure that I use in my analysis, which is EPS Diluted or Diluted earnings per share : - EPS Diluted ( Diluted earnings per share = Net income for common stock / (Number of common shares issued + Issuer stock options, etc.)). What does "diluted" earnings mean, and when does it occur? For example, to incentivize management to work efficiently, company executives may be offered bonuses not in monetary terms, but in shares that the company will issue in the future. In such a case, the staff would be interested in the stock price increase and would put more effort into achieving profit growth. These additional issues are called Employee stock options (or ESO ). Because the amount of these stock bonuses is known in advance, we can calculate diluted earnings per share. To do so, we divide the profit not by the current number of common shares already issued, but by the current number plus possible additional issues. Thus, this indicator shows a more accurate earnings-per-share figure, taking into account all dilutive factors. The value of EPS or EPS Diluted is so significant for investors that if it does not meet their expectations or, on the contrary, exceeds them, the market may experience significant fluctuations in the share price. Therefore, it is always important to keep an eye on the EPS value. In TradingView the EPS indicator as well as its forecasted value can be seen by clicking on the E button next to the timeline. We will continue to discuss this topic in the next publication. See you soon!
AMEX:SPYEducation
by Be_Capy
How to run your Strategy for automated cryptocurrency tradingTo run TradingView Strategy for real automatic trading at any Cryptocurrency you need: 1. Account at TradingView. (Tradingview.com) And it can’t be a free “Basic” plan. You must have any of available Paid packages (Pro, Pro+ or Premium). Because for automatic trading you need the “Webhook notifications” feature, which is not available in the “Basic” plan. 2. Account at your favorite big Crypto Exchange. You have to sign up with crypto exchange, and usually pass their verification ("KYC"). Not all exchanges are supported. But you can use most big "CEX" on the market. I recommend Binance (with lowest fees), Bybit, OKX, Gate.io, Bitget and some others. 3. Account at special “crypto-trading bot platforms”. Unfortunately you can’t directly send trade orders from TradingView to Crypto Exchange. You need an online platform which accepts Alert Notifications from TradingView and then – this platform will generate pre-programmed trade orders and will send them to a supported Crypto Exchange via API. There are few such crypto bot platforms which we can use. I personally have tested 3 of them. It’s "3commas", "Veles" and "RevenueBot". All of them have almost the same main function – they allow you to make and run automated DCA crypto bots. They have little different lists of supported Exchanges, different lists of additional options and features. But all of them have main feature – they can accept Alert Notifications from TradingView! 3commas is more expensive. RevenueBot and Veles – have the same low price – they take 20% from your trade Profit, but no more than $50 per month! So you can easily test them without big expenses. 4. Combine everything into One Automatic System! Once you have all accounts registered and ready – you can set up all into one system. You have to: 1. Create on your Crypto Exchange – "API" key which will allow auto trading. 2. Create on the bot platform (3commas, RevenueBot, Veles) – new bot, with pre-programmed trading parameters. (token name, sum, long/short, stop-loss, take-profit, amount of orders etc) 3. On TradingView configure (optimise) parameters of the strategy you want to use for trading. 4. Once it’s done and backtests show good results – you should create “Alert” on the strategy page. You have to point this alert to “webhook url” provided to you by the crypto-bot platform (and also enter the needed “message” of the alert). For each of the bot platforms, you can find the details on how to set them up on their official sites. If you do not understand it and need help, please contact me.
Education
by dimkud
7
The income statement: the place where profit livesToday we are going to look at the second of the three main reports that a company publishes during the earnings season, the income statement. Just like the balance sheet, it is published every quarter and year. This is how we can find out how much a company earns and how much it spends. The difference between revenues and expenses is called profit . I would like to highlight this term "profit" again, because there is a very strong correlation between the dynamics of the stock price and the profitability of the company. Let's take a look at the stock price charts of companies that are profitable and those that are unprofitable. 3 charts of unprofitable companies : 3 charts of profitable companies : As we can see, stocks of unprofitable companies have a hard enough time growing, while profitable companies, on the contrary, are getting fundamental support to grow their stocks. We know from the previous post that a company's Equity grows due to Retained Earnings. And if Equity grows, so do Assets. Recall: Assets are equal to the sum of a company's Equity and Liabilities. Thus, growing Assets, like a winch attached to a strong tree, pull our machine (= stock price) higher and higher. This is, of course, a simplified example, but it still helps to realize that a company's financial performance directly affects its value. Now let's look at how earnings are calculated in the income statement. The general principle is this: if we subtract all expenses from revenue, we get profit . Revenue is calculated quite simply - it is the sum of all goods and services sold over a period (a quarter or a year). But expenses are different, so in the income statement we will see one item called "Total revenue" and many items of expenses. These expenses are deducted from revenue gradually (top-down). That is, we don't add up all the expenses and then subtract the total expenses from the revenue - no. We deduct each expense item individually. So at each step of this subtraction, we get different kinds of profit : gross profit, operating income, pretax income, net income. So let's look at the report itself. - Total revenue This is, as we've already determined, the sum of all goods and services sold for the period. Or you could put it another way: this is all the money the company received from sales over a period of time. Let me say right off the bat that all of the numbers in this report are counted for a specific period. In the quarterly report, the period, respectively, is 1 quarter, and in the annual report, it is 1 year. Remember my comparison of the balance sheet with the photo ? When we analyze the balance sheet, we see a photo (data snapshot) on the last day of the reporting period, but not so in the income statement. There we see the accumulated amounts for a specific period (i.e. from the beginning of the reporting quarter to the end of that quarter or from the beginning of the reporting year to the end of that year). - Cost of goods sold Since materials and other components are used to make products, accountants calculate the amount of costs directly related to the production of products and place them in this item. For example, the cost of raw materials for making shoes would fall into this item, but the cost of salaries for the accountant who works for that company would not. You could say that these costs are costs that are directly related to the quantity of goods produced. - Gross profit (Gross profit = Total revenue - Cost of goods sold) If we subtract the cost of goods sold from the total revenue, we get gross profit. - Operating expenses (Operating expenses are costs that are not part of the cost of production) Operating expenses include fixed costs that have little or no relation to the amount of output. These may include rental payments, staff salaries, office support costs, advertising costs, and so on. - Operating income (Operating income = Gross profit - Operating expenses) If we subtract operating expenses from gross profit, we get operating income. Or you can calculate it this way: Operating income = Total revenue - Cost of goods sold - Operating expenses. - Non-operating income (this item includes all income and expenses that are not related to regular business operations) It is interesting, that despite its name, non-operating income and operating income can have negative values. For this to happen, it is sufficient that the corresponding expenses exceed the income. This is a clear demonstration of how businessmen revere profit and income, but avoid the word "loss" in every possible way. Apparently, a negative operating income sounds better. Below is a look at two popular components of non-operating income. - Interest expense This is the interest the company pays on loans. - Unusual income/expense This item includes unusual income minus unusual expenses. "Unusual" means not repeated in the course of regular activities. Let's say you put up a statue of the company's founder - that's an unusual expense. And if it was already there, and it was sold, that's unusual income. - Pretax income (Pretax income = Operating income + Non-operating income) If we add or subtract (depending on whether it is negative or positive) non-operating income to operating income, we get pretax income. - Income tax Income tax reduces our profit by the tax rate. - Net income (Net income = Pretax income - Income tax) Here we get to the income from which expenses are no longer deducted. That is why it is called "net". It is the bottom line of any company's performance over a period. Net income can be positive or negative. If it's positive, it's good news for investors, because it can go either to pay dividends or to further develop the company and increase profits. This concludes part one of my series of posts on the Income statement. In the next parts, we'll break down how net income is distributed to holders of different types of stock: preferred and common. See you soon!
SP:SPXEducation
by Be_Capy
At the beginning was the EquityWith this post, I am concluding the analysis of the company's balance sheet. You can read the previous parts here: Part 1 - Balance sheet: taking the first steps Part 2 - Assets I prioritize Part 3 - A sense of debt Now we know that every company has assets on one side of the balance sheet and liabilities and equity on the other side. If you add liabilities and equity together you get the sum of assets. And vice versa, if you subtract all of the company's liabilities from the assets, you get what? That's right, you get Equity . Let's discuss this important component of the balance sheet. When a company is first established, it must have initial equity. This is the money with which any business starts. It is used for the first expenses of the new company. In the case of our workshop , the equity was the master's savings, with which he bought the garage, equipment, raw materials and other assets to start his business. As sales progressed, the workshop received the revenue and reimbursed expenses. Whatever was left over was used to boost the company's profit. So, our master invested his capital in the business to increase it through profits. Making a profit is the main purpose for which the company's assets work, loans are raised, and equity is invested. Let's see which balance sheet items are in the Equity group: - Common stock (The sum of nominal values of common stock issued). Remember, when our master decided to turn his company into a stock company , he issued 1 million shares at a price of $1,000 per share. So $1,000 per share is the par value of the stock. And the sum of the nominal values of the stocks issued would be $1 billion. - Retained earnings . It is clear from the name of this item that it contains profits that have not been distributed. We will find out where it can be allocated in the next post, when we start analyzing the income statement. - Accumulated other comprehensive income (Profit or loss on open investments). The profit or loss of a company can be not only from its core business, but also, for example, from the rise or fall in the value of other companies' shares that it bought. In our example, the workshop has oil company shares. The financial result from the revaluation of these shares is recorded in this item. So, the equity is necessary for the company to invest it in the business and make a profit. Then the retained earnings themselves become equity, which is reinvested to make even more profits. It's a continuous cycle of the company's life that bets on equity growth. Which balance sheet items are of interest to me in the Equity group? Of course, I am interested in the profit-related items: retained earnings and profit or loss on open investments. The sum of nominal share values is a static indicator, so it can hardly tell us anything. However, it is better to use information from the income statement rather than the balance sheet to analyze earnings, because only this report allows us to see the entire structure of a company's income and expenses. So we conclude the general analysis of a company's balance sheet. To fully understand why it is needed, let's engage our imagination once again. Do you remember the example with the hotel ? We imagined that a joint stock company is a hotel with identical rooms, where you, as an investor, can buy a certain number of rooms (one room = one share). Think about what you would want to look at first before buying? Personally, I'd rather see photos of the rooms. So, the balance sheet can be compared to such photos that we get from the hotel at quarterly and annual intervals. Of course, in such a case, the hotel will try to use special effects as much as possible in order to improve investors' impression of the photos released. However, if we track and compare photos over multiple periods, we can still understand: is our hotel evolving, or have we been watching the same couch in a standard room for 10 years in a row. We can say that the balance sheet is a "photo" of the company's assets, debts and equity at the balance sheet date. And the balance sheet items I've chosen are what I look at first in this photo. In the next series of posts, we will break down an equally important report, the income statement, and explore the essence of earnings. See you soon!
NASDAQ:AAPLEducation
by Be_Capy