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Examining Rejections - Probability of SuccessHi Traders. Today, we are going to discuss about Type 1, Type 2 & Type 3 Rejections that I personally examine prior to taking any Reversal setups. Are you someone who has multiples reversals strategies, but often when the trade lines up, you find it difficult to determine whether you should pull the trigger or not? If that's the case, there are two possible issues you are facing A. You did not back-test the strategy - Backtesting gives you to necessary confidence to take any setup without hesitation B. You do not know exactly what you are looking for - Due to the lack of research, backtesting and experience, you find it confusing to identify whether an entry trigger is valid or not Below, I will be breaking down the logic behind these 3 different types of rejections, and which one had proven to give me a better Probability of Success over the long-term Type 1 : Price just tap a Resistance zone , then begin showing signs of exhaustions • This type of rejection often attracts traders who are FOMO (Fear of Missing Out) or have the sense of urgency to quickly get involved • My data shows that Type 1 rejection gives the least success rate, often price tends to move sideways after the rejection, then slowly grind back up digesting the entire candle • It is the weakest rejection due to the liquidity purposes (not always). It is not easy for a market to completely reverse into the opposite direction without attracting traders onto the wrong side Type 2 : Price pierces through a Resistance zone , then showing strong sign of rejection closing back below • e.g. Pin-bar, Doji , Spinning Top , etc • It usually wick through the previous high, and wipe off traders who place their SL just slightly above the structure • This type of rejections is often what I personally enjoy trading the most too, as it shows extreme price disagreement. • Price attempts to break above the Resistance zone , but faced immediate opposing pressure defending the price zone, showing solid rejection Type 3 : Price closes above the Resistance, then pop back below • Commonly referred as a "Fakeout" • The logic behind this is great as well. Price closes above a Resistance zone attracting more fresh buyers in, Buyers who bought at low would scale-in, Breakout traders would try to chase the aggressive buys • All of a sudden, buying pressure turns off, Big Boys step in immediately reverse the market into the opposite direction • Think about the amount of selling volume requires to shut down that huge amount of Bullish momentum • A very reliable reversal entry trigger too In this example, I am using a Bearish reversal scenario. It works the same way in a Bullish reversal environment too. Comment down below which one is your favourite rejection trigger? Do not forget to like if you enjoy the sharing. Trade safe and take care.
KRAKEN:BTCUSDEducation
by TraderNeoh
11
How to analyze the market from scratch (Impulse & Correction)Hello everyone: Many have asked me about demonstrating how to analyze the chart from complete scratch. When looking at my chart and educational video, it all seems very simple, but many are telling me they are struggling to identify the market. Today I will go over how I analyze the chart, from the Higher time frame down to lower time frame by using multi-time frame analysis, top down approach. Specifically by identifying price action, impulse and correction phases of the market. 1. Start from the Higher Time Frame (HTF): HTF can be any time frame higher than the daily chart, such as monthly, weekly, daily. Personally I like to use daily as a go to time frame as it is widely used by traders. 2. Identify the impulse phase of the market. Understand the impulse phase is a period of fast momentum, price is either pushing up or down very aggressively, and not much consolidation visible on the HTF. 3. Identify a period of consolidations. Using trendlines, connect the swing highs and lows of the price. This is to identify the correction/consolidation phase of the market. Which is the most important aspect in price action analysis. You will need to be very knowledgeable on the type of continuation, reversal correction patterns/structures the market usually will form. (I will share many price action patterns/structures that I identify and use in the market below) 4. Once you identify the HTF phase of the market, you will then go down to the Lower time frames (LTF). LTF can be anything under 2/1 HR, 30/15 Min charts. It's not a specific time frame, rather “Multi time frame analysis”. You will also identify the impulse phases & Correction phases on the LTF and use trendlines to connect the swing highs and lows of the correction/consolidation phase, just like what we did on the HTF. 5. Now that you have both the HTF and LTF charts drawn out, the key here is to have both the HTF and LTF tell you the same direction/bias. They should align up and have the same bullish/bearish bias. This will strengthen your probability of success. I always make sure when I am about to enter any trades, I want the multi-time frames all telling me the same story. Same bias, same direction. 6. Now all that comes down to is forecasting the possible entries, which I have made many videos on this topic and I will share some below. Understand you would always want to make sure you are either entering during the impulse phase on the LTF, or the price is about to start the impulse phase to gain the upper hands in the market. You do not want to enter when the price is in a consolidation which is why many traders end up losing money, stuck in the correction and price isn't moving too much, rather just sideways. 7. Continue to work on analyzing the chart from scratch, get comfortable at identifying the impulse phase in the market, and do backtesting continuously so you identify the corrections in the market. This will make you see the chart and the market completely different than before, and you will have a much better probability of entering trades that work out in your favour. Any questions, comments or feedback welcome to let me know. Jojo Below I will share many educational videos that will help you to understand more on price action analysis, impulse/correction phase, entry, forecasting, backtesting and more. Continuation and Reversal Correction Identify a correction for the next impulse move in price action analysis Multi-time frame analysis Continuation Bull/Bear Flag Parallel Channel (Horizontal, Ascending, Descending) Reversal Ascending/Descending Channel Reversal Rising/Falling Wedge Reversal Double Top/Bottom Reversal Head & Shoulder Pattern Reversal “M” and “W” style pattern Reversal Impulse Price Action Continuation/Reversal Expanding Structure/Pattern Risk Management: 3 different entries on how to enter the impulsive phrase of price action Risk Management: How to Enter and set SL and TP for an impulse move in the market Risk Management: When/How to move SL to BE and to profit in a running trade ? How forecasting can benefit your trading journey Backtesting & Chartwork on Forex Market Backtesting & Chartwork on Indices Market Backtesting & Chartwork on Crypto Market How & Why I backtest:
OANDA:XAUUSDEducation
by jojofang0901
40
Processing Spreads Provide Fundamental CluesSome futures markets offer contracts that are related to others and are processed products of the commodity. Understanding the price relationships, history, and paths of least resistance of the processed product versus the original input can provide valuable insight into supply and demand fundamentals. Moreover, these relationships shed light on other related assets. Market structures are the pieces of a jigsaw puzzle Processing spreads are real-time supply and demand barometers The soybean crush spread Gasoline and distillate crack spreads Monitoring corporate profits There is so much data at our fingertips, but we need to understand how to use and interpret the information. Processing spreads are invaluable tools as they are critical variables for market calculus when forecasting the path of least resistance of prices. The crude oil and soybean futures markets offer liquid futures contracts in products that can reveal significant trends, warning signs, and calls to action. Anyone who undertakes a home improvement project knows that the job will not go well without the correct tools. Trying to hammer in a nail with a screwdriver is far from optimal. Tightening a bolt with an ax is a disaster. The best tool leads to the optimal result. The processing spread is one of the most critical tools in my investment and trading toolbox. Market structure are the pieces of a jigsaw puzzle In the world of commodities, market structure are integral pieces of a puzzle. When put together, they provide clues about the path of least resistance of prices as they reflect and can be real-time indicators of supply and demand fundamentals. A commodity’s market structure includes: Term structure- Price differentials for nearby versus deferred delivery periods. Location differentials- Price differentials for delivery of a raw material in different regions. Quality differentials- Price differentials for differing grades, sizes, or composition of the same commodity. Substitution spreads- The price comparison of one commodity for another that can serve as a substitute. Processing spreads- The margin or differential for refining or transforming one commodity into its products. Together, the various pieces that comprise a market’s structure create a picture that often points to higher or lower price paths. Processing spreads are real-time supply and demand barometers The processing spread is one of the valuable tools in an analysts’ toolbox. It tells us if demand for the products is rising or falling. Consumers often require the processed product instead of the raw commodity. The differential between prices of the input, the commodity, and the output, the product, is a critical fundamental measure. Narrowing processing spreads signal falling demand while widening spreads are a sign that supplies are not keeping pace with requirements. Since futures contracts prices are constantly changing, processing spreads can be volatile. When the commodity and product trade in the futures market, the differentials provide a unique supply and demand perspective for traders and investors. There can be many reasons for price variance in processing spreads. However, comparing them to historical levels can serve as real-time indicators of fundamental forces that determine the underlying commodity’s price direction when exogenous factors are not impacting the overall refining or treatment process. Many commodities do not offer futures contracts in the products. The soybean and crude oil markets are exceptions. The soybean crush spread Soybean futures trade on the CME’s CBOT division. Soybean products, soybean meal, and soybean oil also trade in the futures markets on the CBOT with separate and independent futures contracts. Soybean meal is a critical ingredient in animal feed, while soybean oil is cooking oil. Both have other uses. Processors crush raw soybeans into the two products; the oil is the liquid from the crushing process, while the meal is the solid substance. The soybean crush spread can be highly volatile. The monthly chart shows the soybean crush spread over the past fifteen years. The spread traded to a low of a quarter of one cent to as high as $2.1950. The low was in 2013 when soybean futures were trending lower from the all-time high in 2012 at $17.9475 per bushel. The high was in October 2014 when soybean futures were consolidating at lower levels. The move to the high was because consumers bought soybean products at lower prices around the $10 per bushel level. More recently, the crush spread signaled that soybean futures had run out of downside steam. After trading to a high of $16.7725 per bushel in May 2021, the oilseed futures fell below $12 in October. When soybeans were on the high in May, the crush fell to a low of 52.75 cents. At high soybean prices, consumers backed off buying the oilseed products, leading to a price correction that took the price below the $12 per bushel level in October. Meanwhile, falling prices caused demand for products to return. The crush spreads traded to the most recent high at $1.9050 during the week of October 18. The rising crush spread was a sign of robust demand that lifted the raw soybean futures from the recent low. The November soybean futures chart shows the rise from a low of $11.8450 to the $12.50 level. The price action in the crush spread was a signal that demand for products would lift the soybean futures price. The processing spread action signaled the price bottom over the past weeks. Gasoline and distillate crack spreads Crude oil refiners process the raw energy commodity that powers the world into products, gasoline, and distillates. The NYMEX futures market trades contracts in crude oil, gasoline, and heating oil. Heating oil is a distillate fuel that is a proxy for other distillates, including jet and diesel fuels. Refineries process crude oil into the oil products by heating them to different temperatures in a catalytic cracker. The price differential between the input, crude oil, and the output, the products, are “crack spreads.” Rising crack spreads point to increasing demand for oil products. When they fall, it is a sign of oversupply or weak demand. Crude oil futures reached lows in April 2020 during the height of the global pandemic’s impact on markets across all asset classes. The NYMEX crude oil futures weekly chart highlights the bullish trend since April 2020 as the energy commodity has made higher lows and higher highs. The weekly chart of the gasoline crack spreads highlights the bullish trend since March 2020. Gasoline is a seasonal commodity that tends to reach highs during the spring and summer months and decline during the winter as drivers tend to put more mileage on their cars during the warm months. However, at the $17.63 per barrel level at the end of last week, the gasoline crack spread was appreciable higher than the peak in October 2020, when it reached $11.62 per barrel. The gasoline crack spread has provided bullish validation for the path of least resistance of crude oil’s price. The weekly heating oil or distillate crack spread chart also displays a bullish trend. Distillates tend to be less seasonal than gasoline as jet and diesel requirements are year-round. At the $22.53 per barrel level at the end of last week, the heating oil crack was far higher than its October 2020 peak at $9.96 per barrel. The crack spreads have supported the rising crude oil price as they point to robust product demand. Monitoring corporate profits While processing spreads can provide insight into the path of least resistance of prices for commodities that are inputs, they are also real-time earnings indicators for companies that refine or process the raw commodities into the products. Refiners or processors tend to buy the input at market prices and sell products at market prices. The refiners and processors make significant capital investments in refineries or other processing equipment. They make or lose money on the processing spread. When they widen, they experience a profit bonanza; when they fall, times can get rough. When the spreads rise above the cost of the process, profits rise. Low processing spread levels can lead to losses. Valero (VLO) is a company that refines crude oil into oil products. The chart shows that the high in October 2020 was at $44.88 per share. In October 2021, VLO was over the $80 level at the end of last week. Rising crack spreads have lifted profits for the oil refiner. Archer Daniel Midland (ADM) and Bunge Ltd. (BG) are leading agricultural processors. Soybean processing is one of the many business lines for the two companies. The rising soybean crush spreads have lifted profits for the companies. In October 2020, ADM shares reached a high of $52.05 per share. At the end of last week, the stock was at the $66.22 level. BG shares reached a high of $60.50 in October 2020 and were trading at the $88.33 level at the end of last week. The rise soybean crush spreads at least partially supported rising profits and higher share prices for ADM and BG. Processing spreads are real-time indicators for the demand of the commodities that are the inputs. They are also real-time earnings barometers for companies that process commodities into products. Any tool that improves your ability to analyze markets is worth keeping in that toolbelt. --- The full article and spread charts are available using the link below. You can also sign up for the Monday Night Strategy Call below. Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
NYSE:VLOEducation
by Andy_Hecht
3
PRICE ACTION TRADING | RISING WEDGE PATTERN 🔰 Hey traders, Rising wedge pattern is one of the most accurate price action patterns. Being relatively simple to recognize, it is applied in various trading strategies. ⭐️The pattern itself signifies the exhaustion of bulls. Even though the asset keeps growing in value, the price action legs contract forming a narrowing channel. Being stuck between two contracting trend lines, one serving as support and one serving as resistance, the price forms a wedge pattern. 🔔The trigger that we are looking for to sell the market is a bearish breakout of the support of the wedge (candle close below). To not be caught by a false breakout, it is highly recommendable to wait for a bearish violation of the last higher low level as well. Only then the wedge breakout is confirmed. ⚡️Trading the market aggressively, one opens a short position on spot just after the candle closes. ⚡️The conservative trader will wait for a retest of the broken support of the wedge though for a safer entry. ✔️Safest stop will lie strictly above the highest wick within the wedge. ✔️Initial target will be based on the closest key structure support. Learn to recognize this pattern and be disciplined to wait for its confirmed breakout. Only then a high trading performance will be achieved. What price action pattern do you want to learn in the next post? ❤️Please, support this idea with like and comment!❤️
Editors' picks
COINBASE:BTCUSDEducation
by VasilyTrader
122
What are candlesticks in trading and how to use them?🕯 ✅The price dynamics of an asset are displayed on the chart in different formats, including bars, lines, or candles. The latter format is most popular among traders and is often used in technical market analysis. What are candles and how to work with them? 🟢Candlesticks (Japanese candlesticks) are a graphical way of displaying price dynamics, in which vertical rectangles and lines are used. This method was invented on the rice exchanges of Japan in the 17th century, from where it got its name. A price candle consists of two main elements: 1️⃣the body is a vertical rectangle that shows the opening and closing levels of trades; 2️⃣wicks (shadows, tails) - vertical lines from above and below the body of the candle, reflecting fluctuations in value in the interval between opening and closing. ❗️The main advantage of a candle over bars and a linear chart is that it allows you to get 4 important indicators for technical analysis at once: High - the highest price for the period; Low - the lowest price for the period; Open - the opening price of the period; Close - the closing price of the period. 🔴When using a linear graph to get the same information, 4 indicators would have to be displayed on the screen at once, which is inconvenient and complicates the perception of information. At the same time, candles display the process of cost formation in a specific time interval, so the position and appearance of candles on the hourly and daily periods will differ significantly Types of candles ⚠️Two main types of candlesticks correspond to market trends: Bullish candle - formed when the closing price of the period was higher than the opening price. On the chart, such a candle is displayed in green (on b / w - white) and indicates the victory of buyers in this time. A bearish candle - is formed if the period is closed at a price lower than it was opened. On the chart, bearish candlesticks have a red color (on b / w - black) and they show that sellers are dominating at the moment. ❤️ Please, support our work with like & comment! ❤️
Education
by UnitedSignals
15
Can You Profit Day Trading? YesKeep Trading Simple!!! Volume is the heart of trading Forex. This tells us how much interest is in a candle or at a price level zone- where big money and hedge firms are trading. On chart example: London and NY session overlap is a very high liquidity and volume time every day to trade. Only 4 hour period. Use only: 1) Simple Volume indicator 2) Session indicator 3) Bolliger Bands indicator Rules are: 1) Is price action over a critical price action level? yes- 1.55000 2) Is price action over 20 ema of Bolliger Bands? yes- over yellow line 3) Use ATR for stop loss, entry and targets- this is something that all Forex traders should know on pair that is being trader. 4) On chart is 25 pip stop vs 62.5 pip is risk reward 1:2.5 setup 5) Only find setup at around start of London/NY overlap and trade during this 4 hour time period. Close all trades at end on London session.
Education
by Anbat
Simple Forex (Support & Resistance) #1Support and Resistance Support occurs when falling prices stop, change direction, and begin to rise. Support is often viewed as a “floor” which is supporting, or holding up, prices. Resistance is a price level where rising prices stop, change direction, and begin to fall. Resistance is often viewed as a “ceiling” keeping prices from rising higher. If price breaks support or resistance, the price often continues to the next level of support or resistance. Support and resistance levels are not always exact; they are usually a zone covering a small range of prices so levels can be breached, or pierced, without necessarily being broken. As a result, support/resistance levels help identify possible points where price may change directions. Major vs. Minor Resistance/Support Minor resistance or support temporarily delays rising or falling prices within a larger market trend while major resistance or support altogether stops either rising or falling prices and larger market trend changes direction. Minor price resistance/support is an artificial horizontal line representing an area, which previously served as price support or resistance, and has now transformed to the other. If price was previously a support level, it is now a resistance level. Trade the “Bounce” Buy when the price falls towards support. Sell when the price rises towards resistance. Trade the “Break” Buy when the price breaks up through resistance. Sell when the price breaks down through support.
Education
by Anbat
Trade everything that moves. The mechanics of the position set💡 Trading on the market can be regarded as a full-fledged struggle for the right to survival, where the main enemies are two factors, infinite randomness and time. By adapting your positions to what is happening, you risk becoming that very accident and you can only fight with time. The mechanics of the position set includes a theory about the direction of the price. Directivity theory The essence lies in the continuous direction of the price when the distance from the selected zone is inevitable. It is important to highlight the level and work as soon as the price reaches these values. How is the usual set of positions made Opening a position in a certain direction, as soon as the price goes against the desired forecast, closing with a stop loss, abandoning the transaction, searching for a new entry point, and trying to predict the direction, is an extremely difficult task. An example of a set of positions taking into account the theory of price orientation and risk control R The mechanics of position recruitment are based on clear and simple principles of operation, flexible thinking, quick adaptation to market sentiment. If you start to apply these mechanics in practice, you will notice how at first glance simple things are difficult to do the practice. There will be a feeling that nothing will work, there is no logical explanation for this, eventually, everything will be lost and a big chaotic high-speed car will crush you. This is the basic principle, as long as the market is such, you have very little chance of the death of capital. While large funds, investors, and someone else is fighting among themselves for huge movements, we do not necessarily have to accept their rules of the game and play on their territory in predicting the general and long-term direction of the market. You should think with your head and look for benefits primarily for yourself, taking into account all the nuances of what is happening. But how to be flexible? Constantly turning over a position is completely unprofitable, in the final execution, losses exceed the target profit. It is not at all clear where and when to put stops, overturns, and takeaways. This is where the risk control system R will help us She kicks down the door, breaks into our strategy, and, as the most important puzzle, falls into its rightful place! From my experience, the optimal risk per trade for a beginner is $10 With a smaller volume, there will simply be no motivation to work. But it is worth remembering that the deposit should not be extremely small, as it will not withstand a series of unsuccessful transactions For example, if the deposit is $100, 1R= $10, the power reserve is 10 stops, this is extremely small But with $ 400, you can already try, since the probability of getting 40 stops in a row is extremely small Example of risk calculation for a $1000 deposit The risk is reasonably low R=$10 Power reserve 1000/10=100 100 stops I recommend having a power reserve for the 200R series, from practice I can say that for training and the first results will be enough. All calculations are carried out without taking into account the commission A few tips for improving efficiency: - Do not risk your funds in vain, TradingView provides an excellent opportunity for paper trading (demo) completely free of charge, where you can try out any of your ideas and strategies. - Search for highly volatile tools and work with them. - Analyze the broker (exchange) for conditions, commissions play a particularly important role, pay attention and look for more favorable conditions. - Before you start trading, you should have a clear action plan, the most important component of which should be a risk control system. - Your stop should be tied only to the mathematical component of the transaction. ❤️ Please, support our work with like & comment! ❤️
OANDA:XAUUSDEducation
by UnitedSignals
15
Managing Negative Emotions - Psychology of Winning TradersHi Traders. When it comes to trading, psychology is often the biggest pieces among strategy and risk management. In this workshop, I will be breaking down 3 of the most common emotional issues happening on most retail traders. To becoming a consistently profitable trader, it's never about eliminating emotions. Emotions are biological not psychological, it exists within our body system, which cannot be removed completely. But what you can do is to condition your mind to organize its performance, and reduce emotions to the least possible. If you enjoy the content, make sure you follow my profile and give me a thumbs up for daily fx forecast & educational content. Trade safe and take care.
KRAKEN:BTCUSDEducation
by TraderNeoh
2
Leave Your Ego At The DoorAl Pacino played John Milton in the 1997 film the Devil’s Advocate. Milton ran a hugely successful law firm as a front. The fictional character was really the devil. The final line of the movie is, “Vanity is definitely my favorite sin.” Vanity is excessive pride in or admiration of one’s own abilities, appearance, or achievements. There is a fine line between vanity and ego. Ego is a person’s sense of self-esteem or self-importance. Vanity may be the devil’s favorite sin, but ego can be a trader or investor’s worst nightmare. Ego gets in the way of rational, logical, and reasonable conclusions because fear and greed can tug on our egos and cause us to make mistakes that are sins when growing our nest eggs. The quest to buy at the low- Ego leads us to state the market is wrong Looking to sell at the “high”- A recipe for disaster Following trends requires no ego at all Suppressing emotions is harder than you think Never listen to that voice on your shoulder- It leads you to make mistakes The quest to buy at the low- Ego leads us to state the market is wrong Human nature is a powerful force, but it deludes us to believe our gut instincts. When the price of an asset falls to a level where an investor or trader believes is a logical, reasonable, and rational low, they perceive the price as a bargain. After an initial purchase, if the price continues to fall, our emotions cause a dangerous impulse. The little voice in our heads declares that the market is wrong. The market price is never the wrong price. It is the level where buyers and sellers meet in a transparent environment, the marketplace. All of the fundamental analysis in the world can go out of the window when sellers overwhelm buyers. A perfect example occurred on April 20, 2020, in the crude oil futures arena. Who wouldn’t want to buy crude oil at zero? After all, what is the risk? Well, there turned out to be plenty of risk for those who purchased the nearby NYMEX crude oil futures on April 20, 2020, at zero, negative $10, negative $20, and even negative $30. Those with long positions on the expiring contract who could not store the energy commodity learned an expensive lesson. As the chart shows, a purchase of the expiring futures contract at zero looked more than ugly at negative $40.32 per barrel, the April 20, 2020 low. The oil example is dramatic. However, it is a reminder that the quest to buy the low in any market has everything to do with ego and little to do with making a profit. Looking to sell at the “high”- A recipe for disaster It is easier for most investors and traders to rationalize a long position as they assess the total risk from the current price level to zero. Oil was an exception to that assumption. Meanwhile, shorting an asset has the same ego dynamics. Bull and bear markets can take prices to levels on the up and downside that defy logic, reason, and rational analysis. There are many instances where prices rise to levels that make no sense. The lumber market in May 2021 is the perfect example. The annual chart of the illiquid lumber futures market shows the wood price never traded over the 1993 $493.50 per 1,000 board feet level before 2017. After falling to a low of $251.50 in early 2020 as the global pandemic gripped markets across all asset classes, the price took off on the upside. At $660 in August 2020, it reached a new record high. At $1,000 in September 2020, the price was irrational, and it more than halved in value, reaching a low of just over $490 in October 2020. In May 2021, the price exploded to $1711.20 per 1,000 board feet before collapsing. Lumber is a dramatic example, but it reflects the potential for the ego to trigger impulses that lead traders and investors to financial ruin. Selling short at $1000 the second time up and ignoring the power of the trend was disastrous. Just because a market price rises to a high, does not mean it cannot go higher a lot higher. Following trends requires no ego at all Following trends requires a special skill, which is no skill at all. Following trends allows us to go with the flow, ignore expert advice, the news, and any other exogenous forces. The only tool necessary is a simple chart that displays the path of least resistance of the price. And, it does not matter what the asset is; it can be a stock, a commodity, a currency, a bond, or any other product with liquidity that allows for effective execution of buy and sell orders. Following trends allow the markets to work for us instead of us slaving for the market. The process is entirely objective, while fundamental analysis is completely subjective. So many variables determine the path of least resistance of market prices, making it impossible to legislate for all potential outcomes. Experts may make a compelling case for buying or selling an asset, but they do not have a monopoly on the truth or offer any guaranty. James Surowiecki wrote The Wisdom of Crowds in 2004, arguing that the many are smarter than the few and how collective wisdom shapes business, economies, societies, and nations. A price chart is the roadmap of the crowd’s wisdom. Suppressing emotions is harder than you think Tucking away your ego takes practice. Understanding that ego triggers the emotions that lead to pushing the buy or sell button is the first step. Many investors wind up selling the lows and buying the highs in wild markets because they allow fear and greed to guide their behavior. Wild markets are the exception, not the norm. Training yourself to manage your ego objectively will reduce the odds of allowing it to destroy you when the you know what hits the fan in markets. Eliminating ego from all investment and trading decisions starts with ignoring the news, experts, and any inputs other than the herd behavior in markets. Since prices rise or fall to levels that many believe are not sustainable, following trends allows you to take advantage of their mistakes. Make a conscious decision that you will end the quest to pick a high or low in any market is a great place to start. Successful trend following will cause you to be long at the high and short at the low, but that is OK. It will also allow you to take the most significant percentage from a market move when trends emerge. Moreover, following trends is an automatic exercise that reduces stress. Never listen to that voice on your shoulder- It leads you to make mistakes Eliminate any thoughts about picking lows or highs. When I first began trading in the early 1980s, a colleague in London offered sage advice, saying, “Andy, when you look to pick a bottom, all you will wind up with is a dirty finger.” Ignore those voices in your head that appeal to your ego, trigger fear and greed, and lead you down a losing path. Never forget that your view has no relevance whatsoever. Vanity is definitely the devil’s favorite sin. Ego and vanity are dangerous. Follow those trends. Approach markets with a clear risk-reward plan where the rewards are equal to or greater than the capital at risk. Understand that you will be wrong all the time, but the market will never be wrong. The most successful traders do not make money on all of their trades or investment positions. Many will tell you that losers far outnumber winners. However, success depends on catching that wave or substantial trend that yields the most significant profits. Leave your ego at the door; it is your worst enemy, while the trend or the market’s wisdom is your only friend in the pursuit of profits. Use the link below to register for the Monday Night Strategy Call. You can also sign up for free using the other link to gain access to full articles. Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
Editors' picks
LEducation
by Andy_Hecht
31
CANDLESTICK PATTERNS BASICS | Engulfing Candle 📚 Hey traders, In this educational post, I want to discuss with you one of the most accurate REVERSAL candlestick patterns - the engulfing candle. On EURUSD chart, I spotted for you bullish & bearish examples of this pattern. The logic behind this pattern is quite simple: ⭐️In a bullish trend, after a strong directional movement, the price reaches some important structure level. Growing steadily and forming a sequence of green bullish candles the price suddenly forms a strong bearish candle. What is particular about that candle is the fact that its total range (distance from the wick high to wick low) & body range (distance from body open to body close) exceed the ranges of a previous bullish candle. 🔻Such a candle we will call a bearish engulfing candle. Most of the time it signifies a strong spike in selling volumes and willingness of sellers to push. With a high probability, such a formation leads to a pullback or even a trend reversal. ⭐️In a bearish trend, after a strong short rally, the price reaches some demand cluster. Instead of breaking that and going lower, the price forms a strong bullish candle. That candle engulfs the range of the previous bearish candle & its body size exceeds the size of the previous candle. 🟢Such a candle we will call a bullish engulfing candle. Quite often such a formation leads to a pullback or even a trend reversal. 🔔And there is just one single tip that will dramatically increase your performance trading the engulfing candle: It is recommended to rely on this pattern ONLY IF it is formed on a key level: ❗️Bullish engulfing candle must strictly form on a strong support. ❗️Bearish engulfing candle must strictly form on a strong resistance. Forming beyond key levels, the pattern occasionally will give false signals. ⏳Preferable time frames to trade engulfing candles are daily/4h. Learn to spot this pattern & you will see how efficient it is. What candlestick patterns do you want to learn in the next posts? ❤️Please, support this post with like and comment!❤️
Education
by VasilyTrader
28
Mastering One Strategy Dear traders, My name is KeySlot and I have been trading in the forex markets for over five years now and have gone threw a lot to get to the point I am at now. I have gone threw pretty much all of the common beginner mistakes from risking too much on a single trade, wanting to become a millionaire in one trade, or becoming too cocky and thinking that I am unstoppable have all been some of my downfalls in my journey and probably something that many of you are way too familiar with. Today I am going to be going over one of these major problems and will be going over more in the near future. I hope you get something out of me sharing my experience and problems I have gone through. Jumping from strategy to strategy: When starting off in the trading game everyone will go to Youtube and look up "best forex strategy" click on that video and try to copy their strategy. While sometimes you might get lucky and find a really good system there are a lot of systems that will work for one person but may not work for another. This does not mean that it is a bad strategy but it just might not be your style of trading, this is why I say everyone is different. Some people will be willing to risk a lot more money than some other people will want to do, some people will want to spend more time in a trade than others, and some people will want to trade other pairs than one another. This is why I fell in love with trading, every single person can see a pair a different way and approach that market a certain way, every one can be different for once. When I first started trading I also did the same thing, I went to Youtube and searched for a strategy and probably went through two or three different ways of approaching the market a week. After a few weeks of switching back and forth between strategies I realized that all of these indicators are not really doing anything for me, I thought that when they told me to buy price HAD to go up no matter what. But I quickly realized that this is not the case, indicators are lagging and cannot tell the price of the future or we would all be filthy rich. When I understood this concept that indicators could be actually hurting me more than helping me I ditched them completely, this is when I started to study the concept of Price Action. When I switched to price action the market just seemed so much clearer to me and a light bulb seemed to click suddenly in my head. But then I doubted my self again, I took a few trades using solely price action and they were all losing trades, guess what I did? I went right back to using the indicators that eventually lead to another losing streak. No matter what I had done I was always taking losing trades, it seemed like the market was out to get me and only me. After around a year and a half of trading I had finally gone back to price action and told myself this is something that I need to master. I wanted to learn how to read the market like a book and was ready to do anything to do so. It was only until I devoted all my time into learning this one continuation strategy using price action where I started to become a break even and eventually a profitable trader. I started to see the same setup over and over again but I learned what made my setup one I would take versus one I would not. This is where it became very useful taking a deep dive into one singular strategy, overtime I saw my setup time and time again but I began to notice that sometimes when my setup had formed there would be small details that would stick out to me after seeing it so many times. After doing a good amount of trades I was really able to pick out the really big winners and started to cut out the losers. I noticed that some pair just seemed to not work on certain pairs and this is when I started to narrow down my list. Becoming an expert in one list of pairs and one strategy allowed for me to become a more profitable trader by mastering a single strategy and being able to pick out a good trade with a higher probability and allowed for me to avoid getting into any losing trades as well. While it might sound stupid or too good to be true, focus on one strategy and a set list of pairs and only those things for one month and tell me if your results have improved. Another very important thing when starting out is keeping a trade journal, I will go more in detail on a journal in the upcoming week. I hope all of you have an amazing trading week. Thanks again, Keyslot
Education
by KeySlot
What Is A Buy & Sell Stop Order?Both Buy and Sell Stop Orders are trade order set before current price hits those orders and gets you into a new trade. Buy Stop Order: An order that is executed at a specific predetermined price that is above the current price. Sell Stop Order: An order that is executed at a specific predetermined price that is below the current price. NEVER chases price when making a Forex trade, let price action come to your entry by setting either a Buy or Sell stop order. Then make sure you set your stop loss and targets at that time too. A.C.E. Strategy is: 1) Alert candle 2) Confirm candle 3) Enter candle
Education
by Anbat
What Are 10 Things You See On Daily September Chart? Add YoursExamples: Do this on daily charts- understanding candlestick language will assist you in trading and risk management. 1) Supply Zone/Resistance area 2) Demand Zone/Support area 3) Trends- bearish or bullish 4) Price Action? Top to bottom how many pips? 5) Any Engulfing Candlestick patterns? 6) Any Harami Candlestick patterns? 7) Any Pinbar Candlestick patterns? 8) And Doji's (undecided) candlesticks? 9) From 1st day to last day of September- was it bearish? was it bullish? or doji (monthly candlestick?) 10) Where are critical price line levels (round numbers or psychological numbers) 11) ADD YOURS... PLEASE ADD IN COMMENTS: What do you see on attached naked or price action only chart of AUDJPY- thanks!!! Where and How could you have entered into a trade on this chart, with enter, stops and targets set up and make a profit?
Education
by Anbat
1
Break & Retest Strategy (Should Be A Favorite)Break and Retest Strategy: Bullish example on chart: 1) Quick price action move or continuation phase on chart 2) Price action protected the critical line, structure and future stop loss of 119.000, during exhaustion phase. Could use a fib ret 50%-61.8% for entry. 3) Showed a great two day Engulfing pattern on chart for entry for buy market trade at close of that candlestick. (I use harmi, engulfing and pin bar candle stick patterns to entry all trades, especially on this break and retest strategy) 4) Stop loss would have been at 119.00 (yes, that is 88 pips from entry) 5) Targets 1st target 88 pips from entry, 2nd target 176, 3rd target 264 and 4th target is 352. Related to daily chart, adjust your risk management appropriately just like all trades you do- is at beginning of trade set stops, entry, targets.
Education
by Anbat
6
Picking Out The Strongest 123 Forex SetupsHow To Pick Out The Strongest 123 Forex Setup: The Most Powerful Trading Setup In Forex!!! 1) The 1 needs to be at the extreme high or low of chart (on chart example a bearish 123 setup). 2) The 2 needs to be lower then 1 on chart and turn around to the 3 3) The 3, but 3 can not be higher then 1 on chart 4) From 3 to 4, you can (if aggressive entry) enter bearish trade at 50% to 61.8% area (see chart) or conservative entry at horizontal break of 2 on chart. Then enter the trade. This trade depending on your entry to trade would have been 1:1 to 1:2 risk reward setup. 5) This happened in between the high liquidity and volume areas between Tokyo end to London end, which is where most scalping or day trading should happen, when big banks and hedges are trading most of the Forex daily rollover of $6 trillion dollars. Just get a piece of pip pie, do not be greedy.
Education
by Anbat
3 Bar Reversal Pattern A.C.E. StrategyChart is example of a 3 bar reversal pattern A.C.E. Strategy. 1) Alert Candle - Large red candle ( wick to wick or bottom to top of candle) 2) Confirm Candle- Smaller red candle ( doji is a very good sign and candlestick) 3) Enter Candle- Larger blue (green usual) that is larger then Alert candle When 3rd candle of this three bar reversal pattern hits the open of 1st candle of this pattern- ENTER buy signal for bullish trade. Place stop loss below this 3 bar reversal pattern, I place them at quarter levels: example (.xx000, xx125, xx250, xx375, xx500, xx625, xx750 & xx877), on Eur pairs and or chart example of EurCad (see chart). The setup would be 1:2 or 18 pip stop vs 39 target. Noted chart stop loss is 1.43125. Use always right risk management and lot sizes etc... for time frame of chart used and ATR for setting stop losses and targets too.
Education
by Anbat
1
Why Do Traders Fail?Most of the novice traders believe that trading FOREX is a gamble! Why do traders fail? 1) They trade with the aim of getting luck to make money. 2) Their greed exceeds their need. 3) They think trading is a game of chance and luck and do not get the proper education to succeed. 4) They do not favor to invest enough time and amount for education and mentor-ship to get basic knowledge. 5) They have poor focus. 6) They are more emotional than intellectual. 7) After failing, they want to make up their loss; therefore they may further incur loss.
Education
by Anbat
2
The biggest “MYTH vs REALITY” in tradingDear traders, happy Friday and welcome on our Educational Post for this week. Today we will be talking about the most popular myths in the trading world and compare it to the reality. “99.99% win rate”, “50 trades winning streak”, “100% monthly return”. Do these phrases sound familiar? All of us have come across people and companies promising that they accomplish the above stated proclamations GUARANTEED. These individuals tend to deceive the beginners and sell them a fake dream. However, trading does not work like that. If we take a look at the chart, we can see the 4H timeframe graphic of GOLD. We decided to use this graph to illustrate the idea. On the left hand side of the chart, we can see an example of the strategy that the above stated type of individuals use to deceive a huge mass of people. Fake and unrealistic risk-to-reward ratios, impractical percentage returns and other tricks appeal the newcomers and lead them to the mousetrap set by the so-called “gurus”. On the other hand, on the right side of the screen, we can see the reality of trading. Not every trade will be a winning one. The most important thing is to follow the principles of risk management, have patience and discipline! We hope you enjoyed this educational post! If you have any proposals on what should our next educational post be about, please feel free to write down the topics of your interest in the comment section below. Investroy team is wishing you all a great upcoming weekend!
OANDA:XAUUSDEducation
by Investroy
6
What Is Capital Partitioning ? How will it help you as a trader?Hi everyone: Let's talk about capital partitioning, which is a risk management approach for consistent traders to utilize to allow them to leverage their capital. You may ask what exactly is capital partitioning ? well to simply put it in words, it is basically divide up your trading $ in the current trading account into 2 or more sub accounts. So what's the point of doing that you may ask ? Well, with leverage, a consistent trader does not require to have their entire money deposit into one trading account. They can allocate the asset into different trading accounts to reduce risk as well as trading different markets available Let's take a look here: Say I have a $100,000 trading capital. I understand risk management, trading psychology, and will not over trade, over risk and revenge trade. Hence, it's in my best interest to divide the $ in this account into a different accounts, or simply in a liquid-able account such as a savings account, stocks, bond..etc Here are a few scenarios that you can implement into your trading accounts. Understand that the % to allocate, what other trading accounts to deposit $ into, and how to move around the $ is totally up to you as a trader. The most important is to make sure you are a consistent trader before you approach this type of method. As more accounts you divide your capital into, the more % you will need to risk per account as you need to open bigger position sizes now. Any questions, comments, or feedback welcome to let me know. Thank you I will share other risk management educational videos that can be helpful for you. Risk Management: When/How to move SL to BE and to profit in a running trade ? Risk Management: How to filter trading opportunities if multiple setups are presenting entries: Risk Management: 3 different entries on how to enter the impulsive phrase of price action Risk Management 101 Risk Management: How to set a Take Profit (TP) for your trades Risk Management: How to Enter and set SL and TP for an impulse move in the market Risk Management: How to scale in the impulsive phrase of the market condition? Risk Management: Combine everything you learn to prevent blowing a trading account
BITSTAMP:BTCUSDEducation
by jojofang0901
27
Bearish Evening Three Candle (Reversal Pattern)Evening Three Candle (pattern) How To Trade: Evening Star- is a three candle pattern with the highest middle candlestick, but also the smallest body and slight shadows/wicks. The third candle goes below the bottom half (1/2) of the body of the first candle and its opening FALLS below the opening price of the middle candle. The evening star is a reflection of the morning star formation. How To Trade: 1) On 4th candle open,use a sell market order to get into trade 2) Set stop loss higher then sell market order, give around top of 3rd candle (could be large, so adjust stop loss and risk management appropriately). You can find these bearish evening candles on lower time frames, but hourly, 4 hour and daily are better and more reliable, then lower time frames. 3) Set targets at least 1:1 to 1:3, stop loss and use ATR to get daily volatility range too.
Education
by Anbat
How Do You Build A Position With Pyramiding?As a trader, it’s a general rule of thumb that we should always be looking to maximise potential returns (per unit of risk) with each transaction. We should always be looking to squeeze as much out of the market as we can. There are times when this can occur by simply letting the trade run its course. However, sometimes market conditions align perfectly for savvy traders to “press the trade” or Pyramiding into the trade. Don’t press your luck; press the trade instead! Attempting multiple entries in the direction of a trend is one strategy savvy traders use in an attempt to maximise return (otherwise known as Pyramiding). The problem with this tactic is that while it may increase the potential reward, having a larger position in the market also opens you up to more risk. As a trader, you need to find the perfect balance of pressing the trade while not pressing your luck. There are a few ways to achieve this: If the market is moving at a snail’s pace, and not much movement has been made from the initial entry, any additional entry should be minor. If, however, a decent distance has been travelled, a trailing stop will secure more profit, and any additional entry can be larger. In essence, any additional position sizes are partly dependent on the distance between the initial entry position to stop loss. Ensure you have a strong driver that pushes prices along. Simply pressing trades at random is not good risk management. Reduce risk on entry by only adding additional positions when the stop loss on the first position can be trailed. Pick your battles carefully when Pyramiding You may find that as time wears on, you’re left with a large portion (>2% of total equity) in a single trade. The tactic of adding exposure will generally make for a “short” pyramid, which typically won’t grow over 2.5% of overall equity. This Pyramiding tactic ensures you’re exposed to additional upside while minimising downside to a level with which you’re comfortable. Here are a few things to be wary of: Keep an eye out for drivers that influence market psychology: This is when momentum and volatility will be high, allowing you to pyramid into a move more easily. For the technical traders, you may prefer to avoid day-to-day shifts by taking in a broader market view. Diversify: as with any investment, don’t place all your eggs in one basket. Diversification is key to keeping overall risk low. Have strict risk limits in place: With 2.5% in one pyramid, another 2.5% in another – next thing you know, your overall portfolio heat is close to 10%. That’s a high amount of risk to carry around with you. Consider minimising position sizes of certain trades to reduce overall risk. Consistency is key with position sizes: If your initial entry is $100k and your second is $300k, you’re off to a lousy start in building your pyramid. Final Thoughts on Pyramiding Remember always to start small and slowly. There’s no need to rush in. Experiment with pyramiding until you’re comfortable with your approach. Always remember the two key elements to consider: Resist the temptation to take profit early when the opportunity arises. Sometimes it’s best to sit on an existing trade. Be wary of adding to your trade at “worse” levels. Trends will always end at a certain point, so you don’t want to be pyramiding into an extended, ongoing trend. Look for new trends to pyramid in, which will reduce your overall risk.
TVC:GOLDEducation
by BlackBull_Markets
2
BTC.D : A quick note on bitcoin dominance and altsCRYPTOCAP:BTC.D Hello everyone 😃 Before we start to discuss, I would be glad if your share your opinion on this post and hit the like button if you enjoyed it ! It is inevitable that at some points in the cycle, Bitcoin will outperform almost everything. With a few outliers of course. However, it's important that this doesn't change your game plan. Your game plan should already be set in motion. If you track your portfolio daily, both in USD and BTC, there are always fluctuations if you are holding a mixture of BTC, Alts and USD. It would be near impossible to maintain your portfolio's equivalent BTC value round the clock, unless of course you were all in BTC. I personally hold BTC as my base asset during bull runs (switching to USD at local tops or as near as I can) as well as moving to ETH as my base asset when ETHBTC looks set to out perform. However, it is inevitable that my alt coin holdings (spot) that I have accumulated will take a hit during a strong BTC run - so you may see your 'BTC worth' drop at times; However, I think of alt holdings like a coiled spring. When under pressure BTC, they bleed - and are suppressed. If you've accumulated at support, you need not to worry about the temporary drawdown in BTC, because in general alt coins out perform BTC in the right conditions, and so when bitcoin puts in a local top, altcoins regain their dominance and begin out performing. HOWEVER It is important not to be 'alt heavy' at times when the BTC dominance is at support. It is important to rotate the ratio of BTC:ALT:USD holdings to lessen the impact of alts bleeding at certain times in the market. For example, in January of this year, it was an amazing time to load up on altcoins given that BTC dominance was at resistance. We then saw astronomical gains in alts across Feb/March when BTC.D dropped like a rock. Then, in May when BTC.D hit support, the whole market tanked but alt coins got hit the hardest. Alts will lose value when BTC is volatile, in either direction. So it's important to balance the ratio of your holdings across BTC, alts and stables at certain times in the market. I pay attention to Bitcoin dominance more so for my spot holdings. For my trading account, every asset is simply a method of making a profit on percentage gains. So whether I'm trading BTC, ETH or alts - it doesn't matter as much. But for spot holdings, I generally want to cycle my ALT:BTC or ALT:USD holdings. When BTC.D is at support, I want to hold less alts. When BTC.D is at resistance, I want to load up on alts.
CRYPTOCAP:BTC.DEducation
by Helical_Trades
17