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Trading Psychology

What is Forex and How Big It Is?💱 Forex - foreign exchange market, is a location where international currencies are bought and sold by economic participants at various exchange rates. Forex market is the biggest market in the world, reaching on average 6 trillion dollars trading volumes daily. Forex market is a vital element for a global economy because it provides capital exchanges between the countries. The main market participants of forex market are central banks, commercial banks, commercial companies, hedge funds and investors. 🕰In order to grasp how big is that market, take a look what is happening on that just in 60 seconds: 📎Total transactions value reaches 3.52 billion US dollars. 📎 1.15 billion dollars of spot transactions. 📎 1.65 billion dollar of exchange swaps. 📎 Total transactions value involving USD reaches 3 billion US dollars. 📎 Total transactions value involving EURO reaches 1.1 billion US dollars. 📎 Just one single EUR/USD pair accumulates 812 million US dollars transactions value. It is hard to imagine how such big amounts are rolling with such a frequency and how insignificant are the orders of individual traders. ❤️If you have any questions, please, ask me in the comment section. Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
6
Become a better trader by just answering these questions!Hey Traders! Most people think that trading success is found within a system... yet a successful trading system could be something as simple as 2 or 3 basic combinations, knowledge of price action and a sprinkle of instinct. To me successful trading is a completely different path, I believe that real trading success falls into one sentence which is "Constant and never-ending improvement", self-improvement that is, and in today's post, since it is the weekend, I want to go over this core improvement process with you so you too can become a better trader next week! First to make it clear, I believe that out of the 100% required for trading success the system part falls into the low 10%, while the other 90%+ is within you, it is your knowledge, knowhow, instinct, mindset and everything else that makes you... you. The system is something you learn once and all you have to do is follow it forever with consistency and focus, sounds simple right? It kind of is but we humans tend to make it complicated. Anyway, its Saturday the 9th of July and I want to give you 6 questions that if you answer will make you better by at least 1% right away, but if you continue to answer these questions each time you will, guaranteed no matter what (as long as you are honest) get better by 1% each time, how much better you become in entirely up to you, and by that I mean how honest you are and how consistent you are in answering these questions! So, without anymore delays, here are the 6 questions that can make you a better trader: What was my biggest loss and why? What was my biggest profit and how? What was the best thing I did this week? What am I most excited about for the upcoming week? Did I follow my system on every trade? Was I in control of my trading, mentally, every time I traded? BONUS QUESTIONS: What prevented me from doing better? What motivated me most? What will I not repeat next week? What will I repeat next week? What do I want to remember it for? What is the best highlight? What do I regret not doing? Do you have any of your own questions that could help other traders? - Do share in the comments!
BITSTAMP:BTCUSDEducation
by PrimedGroup
SEVEN GUILTS IN TRADING PSYCHOLOGY1. Confirmation Bias: People pay close attention to information that confirms their beliefs and ignores information that contradicts it. How to avoid: While preparing to execute the order, we try to find support reasons for the opposite direction. The second consideration can not be too careful. 2. The illusion of Control: The illusion of control is the tendency for people to overestimate their ability to control events. It occurs when someone uses a lot of market indicators/TA's method and places the truth on as many as possible. How to avoid: Remember that "Simple is the best". The good-enough trading system on a simple level with a good-enough winning probability will help to exist in the full lying market. 3. Mental-Accounting Bias: The investor has 1000 USD initial capital and 200 USD profit. The psychology of investors usually tries to keep the capital of 1000 USD, while 200 USD will take away more risky investments with the thought that if they lose, they will only lose profits. However, in essence, 200 USD or 1000 USD are all our assets. How to avoid: - Convert the profit to hard assets, if the profit is enough big. - Withdraw the profit periodically, only trade with the initial capital. We can review and reinvest into the capital every month/year. 4. Recency Bias: People analyze a stock that has good fundamentals, and now has a low valuation, but the market trend over the last few weeks is down. Most of them will be more inclined to the negative side and think that this is no longer an attractive investment. However, with experienced analysts, they will see the other long-term factors and see the decline as a temporary correction, even an opportunity to buy shares cheaply. How to avoid: Let's see things from a wider perspective. 5. Herd Mentality: - FOMO: Fear of missing out when seeing nearby someone get a lot of money. - Be panicked when the market sharply decreases. How to avoid: - For short-term trading, be patient, do not chase the price. There are a lot of chances for the next trading. - For long-term trading, make out some major support areas, and early enter orders with sufficient volume in order to avoid FOMO. - For the problem of strongly competing for sales in the plunging market, stay away from illiquid assets. 6. Loss Aversion: Loss aversion refers to people’s tendency to prefer suffering huge losses with the expectation that the price will come back. How to avoid: Make a plan for managing the capital. Everything is just probability, don't hesitate to cut your losses when guessing wrong. Leave room for mistakes. 7. Overconfidence: The psychological problem occurs when an investor wins continuously, they will be more subjective and less disciplined. How to avoid: Always keep a balanced mind! For example, a good psychological investor usually set minimum and maximum profit targets by period (week, month, year). If the lowest goal hasn't been reached, confidence is superfluous. If the highest goal has been reached, the rest should be taken into account. Of course, goal setting must be consistent with the strategy and not overwhelming, it is impossible to set a 100% profit in a week.
HOSE:VNINDEXEducation
by vumaikhanh1991
149
Boredom Trading Could Be a Killer To Your ProfitabilityMost of the retail Traders are mainly day trading. And one of the trickiest part about short-term trading, is the amount of screen time we're putting in VS the amount of action we're taking. On most days, i spend about 12-15 hours everyday sitting infront of the chart. only 15 - 30 mins of them are spent on clicking the buy & sell buttons. So if you do the math 30mins/ 720mins = 4.2% Only 4.2% of my time is spent on taking action, the rest of 95.8% are spent on waiting, planning, testing, reviewing, assessing, studying, etc... So now ask yourself a few questions: 1. How much of a portion of your time is spent on taking action? 2. How often do you over-trade OR revenge-trade? 3. How does impulsive trades affect your consistency? I believe the best Traders have the highest ability to sit with their hands. The ability to look at a high volatility market environment and say "no", and yet only focus on your plan should be the end goal of us as a day trader. There are countless of market opportunities everyday, but how many of them are meant for you?
KRAKEN:BTCUSDEducation
by TraderNeoh
2
How to spot and avoid Stop Loss hunting: a complete guide Stop Loss hunting happens every trading day, and it's not something you would want to let fly under the radar. We have carefully orchestrated some examples on the graph to give a clear picture of what this phenomenon really is, and listed some tips on how to avoid getting into this mouse trap. In basic terms, Stop Loss hunting is the strategy of the price action spiking above/below key levels to enter the pool of Stop Loss orders and take the masses out of their positions before moving the price in the destined direction. Looking at the first example, we can observe that a nice double top pattern has been formed. This is one of the clear indicators that the price might potentially drop after failing to rise above and forming a new top. Thus, a trader would most likely go short and set his Stop Loss a few pips above the freshly formed area of resistance. What happens next is obvious - a trader gets liquidated. Why? because him and tens of thousands of other market participants had set their Stop Losses at a very obvious key level - above the local zone of supply. After successfully spiking up and grabbing some liquidity, the price peacefully continues its bearish movements in the predetermined direction. The second example is a similar one as well. "What a beautiful ranging market. Let's buy at support and sell at resistance." Only if it was that easy... What happens next, the price spikes below the lower boundary of the sideways-moving range and grabs liquidity before moving in the upside direction. Stop Loss hunting scenarios will always happen, and to be honest, we cannot really avoid them all. However, there are some tips that we can follow in order to evade these traps. Firstly, you should never rush into entering positions. Eventually, the price will come to your levels and develop into some patterns (Double Top, Head&Shoulders etc.) before starting its big moves. With that being said, no FOMO either. There will always be fish in the sea, just like there will always be opportunities in the market. Be patient, cold-blooded, and wait for your time. Do not set a tight Stop Loss, because you will most likely get taken out immediately. Either set a wide one so you can escape hunting in case the price starts spiking up and down, or wait for cases of a fake breakout a.k.a liquidation before entering a position. Last tip is a pretty smart one: set your entry orders at levels where masses would put obvious Stop Loss orders. Then, you will notice how many times the price goes in that direction. Hope you enjoyed this Educational Post, dear TradingView community members! If you have any suggestions or recommendations for the next educational idea, feel free to let us know in the comment section below.
BITSTAMP:BTCUSDEducation
by Investroy
50
Are You Ready to Trade Full Time? 4 Essential Signs ⭐ Hey traders, Once you mature in trading and become a consistently profitable trader, the question arises: are you ready to trade full time? Becoming a full time trade is a very significant step and my things must be taken into consideration before you make it. ✨Becoming a full time trader implies that you quit your current job, that you give up a stable income - your salary. In contrast to classic job, trading does not give guarantees. Please, realize that such a thing as stable income does not exist in trading. Trading is a series of winning and losing trades, positive and negative periods. For that reasons, remember that in order to become a full time trader, your average monthly trading income must be at least twice as your monthly expenses. ✨Moreover, even if your trading income is sufficient to cover two months of your life, that is still not enough. You must have savings. Trading for more than 8 years, I faced with quite prolonged negative periods. One time I was below zero for the entire quarter. For that reason, supporting a family and living a decent life will require savings that will help you not to sink during the losing periods. ✨Another very important sign is your correct and objective view on your trading. Please, realize that if you bought Bitcoin one time and made a couple of thousands of dollars, it does not make you a consistently profitable trader. Please, do not confuse luck with the skill. Your trading must be proven by many years of trading. ✨You must be emotionally prepared for the living conditions that full time trading will bring you. Being a full time trader implies that you are constantly at home, you work from home from Monday to Friday. You do not see your colleagues, your social life will change dramatically. I know a lot of people who started to trade full time and then realized that they can not work from home for different reasons. ⭐So what are the necessary conditions for becoming a full time traders: you should have savings that will cover the negative trading periods, your average monthly trading income should be at least twice as your monthly expenses, your trading efficiency must be proven by objective, consistent results, and you must be psychologically prepared for working from home. When these conditions are met, you can make a significant step and become a full-time trader. Are you ready to become a full time trader? ❤️If you have any questions, please, ask me in the comment section. Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
44
Risk Control - Think Beyond The BasicsHi Traders. Let's talk abit about Risk Control/ Risk Management today. I believe most Traders may be thinking that Risk Management/ Risk Control is about - Having a pre-determined risk (% Risk-per-Trade) - Having a Stop Loss Well, that's correct to a certain extent. But if you really think about Risk Control, do you think its really all about that 1 - 2% risk per trade? Look, most of us got the meaning wrong. Let me share some examples: 1. You took 3 losses on GBPJPY, all 3 of them are shorts with the same trade setup. Yes, even if you are only risking 1% per trade, but aren't you now risking 3% on the same setup? 2. You took 3 positions (GBPUSD Long, AUDUSD Long, EURUSD Long). All 3 of them are positive correlated, so if one of it goes wrong, it is likely that all of them will be wrong. 3. You took 5 positions at the same time. Why do you have to expose yourself to that amount of risk? The point I'm trying to tell you is, often we really do not have to put ourselves at that high level of risk to generate a decent return. The way i do it, is i enjoy taking one trade OR maximum two trades at a time. So instead of having the frustration to worry about all those correlation. I make sure the positions I'm involved are almost non-correlated. Then if any of my position goes well, I can always scale into it. In that way, I maximize my winner, minimize my loser. If you enjoy the content, make sure you follow my profile and click the like button. Take care and trade safe. All the content I've posted are for educational purposes, please perform your own research and only take it as a reference.
KRAKEN:BTCUSDEducation
by TraderNeoh
Improve your trading skills with PTAHey Traders! In this video we talk about Post Trade Analysis which we believe it probably the best way to develop your trading skills, trading system and general instinct of trading. Today we traded the DAX for 2 hours with complete focus, focus is a vital requirement for trading success as it allows you to be present and disciplined to follow your trading rules and system. The video explains some things we did good and some things we did bad, of-course the good should be repeated in the next trading session, the bad either improved or removed! Do you do post trade analysis? - Let us know in the comment section below! Have a fab day!
OANDA:DE30EUREducation
by PrimedGroup
Questions to ask yourself before entering a tradeThere is a set of questions to ask yourself before opening a transaction and we will talk about some of the common ones. 1) Are my entry criteria met? Undoubtedly, everyone has his own style of trading. Entry and exit strategies should be included in each and every trading plan there is. Only if the entry criterium is met, should we enter a position on any security. No FOMO, if our entry criteria have not been met, we sit on our hands and patiently wait. 2) Am I being risk tolerant? Am I risking my usual 1-2% per position or I am too confident in this setup and would rather go all in? If you see yourself risking more than you usually do on a single trade, pause for a minute and thoroughly reflect. Yes, you can have some winners while risking a big portion of your total capital on a position, but does that not make you a gambler? Always remember that it is a marathon and not a sprint. 3) Have I set a Stop Loss? Many people will say that it is not mandatory to set an SL if you are a position trader. Let me tell you this: a trade without a Stop Loss is like jumping off a cliff without a parachute. No matter how confident you are in your analytical skills, you can never be 100% sure that a trade will play out thoroughly according to your technical setup. Use a Stop Loss and carry on! While there are many more questions that you may ask yourself before executing a position, we have addressed some popular ones. Of course, it solely depends on your trading plan, but the aforementioned questions can be implemented in every strategy. Hope you enjoyed the read and thank you!
BITSTAMP:BTCUSDEducation
by Investroy
29
Consistent Profitability, how long does it take?How long does it take to become consistently profitable as a trader? This is one of the most searched questions in the Internet when it comes to trading and the beauty is there's no right answer. When you do receive an answer, it's miss leading to beginners and everyone gets confused. There's a solid chance that you've looked at this before, or perhaps you just seen the title of this post and clicked on it. How long this is going to take you to master the arts of the market. There's a good chance you sat there and questioned, "what am I doing? how long are we going for? What should I be goal setting in terms of time with trading?" if you see yourself in this position or you've seen it previously, I finally have the answer you need to hear. How long does it take you to become consistent and profitable trading? As long as it takes. There's so many different sources which claim so many different time limits that it takes to master Forex trading or crypto trading or industry, trade, whatever it might be your embarking on. All of them say the same around two to three years to become a consistent and experienced professional. Yet, where are they getting this data from? I know traders that master trading within six months. I also know other traders that traded for six years and couldn't get the look of it. There's no time frame to put on trading in terms of success and consistency. It isn't a university course, we don't sit down and do all the course procedures and even if we do, the bare minimum, still graduate in three years. That's not how trading works. The question you should be asking isn't how long is this going to take me to master, but rather how many hours are you going to put into it. Day in, day out, how much work are you going to do? That is what will determine how long it takes you to become successful in this industry. There's so many people that will see 2 and a half years to become successful trader, then they trade half heartedly as if it is a hobby. They don't concentrate too much. They just trade here in there. Two and a half years pass and they'll call themselves seasoned professionals because they have been in the market for 2 1/2 years. Yet they couldn't show a single piece of consistency within their trading. Then there's other traders that put in hard work. I'm talking 8 hours a day of pure grueling backtesting, trade management, risk management, analyzing everything, and they put an exponential amount of work in and in six months they can outperform anyone else who's ever step foot in the market. Time is not an important factor. The amount of work you are putting in is the important factor. Yes, time will tell whether or not you can be successful in this industry, but if you're measuring time based off of when you've been interested or when you've been trading a little bit and rather than the actual hard, grueling hours that you're putting into trading. Then you will never get to that level you want to get too. You have to put in the hard yards. This industry is very advertised as easy, simple and the money making machine. There's a number of different factors in which we can blame for that, but we're not going to dive into that today. What I want to share with you is this is not easy. This is actually one of the hardest professions you could ever do, because work doesn't just stop, we don't just clock off and get paid the same amount every week. It's all dependent on the amount of time and effort you put into the market. Do you want to be profitable and consistent in trading? Then put in the hard work. Stop Googling how long it's going to take. Stop having a look at other people's success stories. Knuckle down and put in the hard work. Then in two years, three years, six years, 10 years, whatever it's going to take. Look back and be proud. When someone asks you how long did it take you? Don't answer about six years or two years, be honest. How many hours did you have to invest? How hard was the work?
Education
by the5erstrading
74
Shocking Truths about Trading no one talks about EP1.After 5 years of self-educating myself in the art of trading while undergoing brutal consistent losses, these are the truths that set me on the path of surprising consistency after internalizing them.....I hope it will for you guys and give more inspiration to the already consistent ones. Shocking Truths no one talks about in trading: 1. You may have the best strategy, signal provider or learned everything about trading, but what counts is what happens to that knowledge 5 seconds before pressing the buy/sell button. 2. What is Mathematically optimal is Psychologically impossible. If you have a strategy that gets wins of 25R but has like 12 losses in a row, DUMP IT. Mathematically, you will make money at the end, Psychologically you will quit before you take trade 13. 3. You start winning in trading when you believe you can lose (Trading Paradox). Consistently profitable traders have one thing in common: they place their next trade like it was already a loser. 4. Extremely good analysts are most often bad traders....you can be right about the direction but fail in the critically important aspect of Entry timing and still lose the trade. 5. IT IS THE SIMPLE THINGS THAT WORK!. Most people will tell you to look for complex strategies that look for "Random walk algorithmic discrepancies that rhyme with Chaos theories....and all that blah..." But I have been on that path and I hate to break it to you that a guy/girl using only support and resistance and simple moving average crossovers with a verified and bactested edge and discipline will most likely be more profitable. 5. THE MORE OBVIOUS A TRADE IS THE GREATER THE CHANCES YOU LOSE IT. Most people think that if a trade has soooo many confluences it is more likely to work....well that might be true to an extent after which it is a blatant fallacy. From historical data and my own personal LIVE trading results, the probability of a trade working out reduces DRASTICALLY when the number of confluences crosses 5. I theorize that this happens because market makers will see all the orders placed at that point is soo much(cause everyone will see the opportunity with their different approaches) and take them all out. 6. No one can sell a money printer, cause it has no price. If someone offers to sell you a robot or STRATEGY that triples your money every month, laugh and pass, if you don't and end up buying that....you deserved to be scammed. Think about it the person can just take $100 and apply his/her magic to it and print out Elon Musk's networth in lower than 3 years using compounding......and he/she will sell you that for $2000?, you must be kidding me!. 7. Your consistency has nothing to do with your strategy but your mind. I can bet you my life's earnings, that there is someone out there, using your exact entry and exit rules but is profitable and you are not. A better strategy brings in more profit, but any random edge with the right mindset and risk management MUST be profitable. 8. Almost everything in life is a pyramid-scheme, & survival of the fittest and trading is not left out. No matter how much we desire to the contrary, it is IMPERATIVE THAT TRADING HAS MORE LOSERS THAN WINNERS. The winners in trading have to be relatively fewer cause they win a lot and hence they need soo many losers to give them that money. There is no bank that hands at money to you when you win, your job as a trader is to outsmart some other fellow and TAKE his/her money and once you come to terms that every dollar lost by you trading, is a dollar gained by someone else in this zero-sum game, you will realize only YOU has got your own back. 9. You can NEVER completely eliminate emotions in trading but you can set rules that allow you trade only when you are at your optimal state, and gives you a day or two vacation when you are down. 10. Reading this article will definitely NOT HELP YOU, it is remembering it the moment before you place your next trade that will. Pls LIKE and Subscribe, I want to know what you think about this article and which point you agree with the most or disagree with. Tell me whether it helped you in any way and if we get 50 likes and 20 comments I will consider making the next episode.
BITSTAMP:ETHUSDEducation
by LexyenHille
3
Don't let the dopamine get you 🥴Do you feel excited? 😅 This is why. It's all down to the chemical reaction in your brain. Dopamine. Dopamine is a chemical in the brain that makes us feel good. Should you be feeling excited when trading?🤔 No.🙈 As this isn't gambling and shouldn't give you the same dopamine rushes like a gambling win does. What's starts as initial excitement will move to fear, anxiety, stress and excitement again. 🤷🏻‍♂️ You become irrational and unable to stick to your plan.🤯 Entering trades through boredom for the 'rush' and closing profitable trades too early because of fear of the profit disappearing - all because you risked too much for that 'buzz'. 'So what can I do about it?' I hear you shout loudly....📢 Well this depends on if you really want to change or not, the downside is you'll think you will make less money .... Think about it - you have a £5000 account right? Option 1 - you trade 15 pairs at 0.5 lot size and your account is up and down like a yo yo - but it's exciting right? Option 2 - you trade 3 pairs at 0.01 - your account movement is marginal. Option 2 is less exciting for sure, but if you want excitement go and jump out of plane. Option 1 will eventually lead to a blown account. Option 2 will give you sustainable consistent trading - you'll let your winners run and you'll lose less on the losing trades. A win win. Only when you get this bit right will you start to see positive change. Emotional control is key Be present doing other things without checking your phone to see how trades are going. Exercise patience by sticking to your plan and letting your trades run instead of closing them early. The only thing you can control in trading is YOU Just don't end up letting the dopamine take control! Have a good weekend everyone and thanks for looking Darren👍
Education
by pow_removetheguesswork
5
The 5 Crashes That Shook The Markets.A very brief look at 5 of the most significant market crashes to date, using the Dow Jones Index. Content taken from various online sources. Great Crash 1929 Many factors likely contributed to the collapse of the stock market. Among the more prominent causes were the period of rampant speculation (those who had bought stocks on margin not only lost the value of their investment, they also owed money to the entities that had granted the loans for the stock purchases), tightening of credit by the Federal Reserve, the proliferation of holding companies and investment trusts (which tended to create debt), a multitude of large bank loans that could not be liquidated, and an economic recession that had begun earlier in the summer. During the mid- to late 1920s, the stock market in the United States underwent rapid expansion. It continued for the first six months following President Herbert Hoover’s inauguration in January 1929. The prices of stocks soared to fantastic heights in the great “Hoover bull market,” and the public, from banking and industrial magnates to chauffeurs and cooks, rushed to brokers to invest their liquid assets or their savings in securities, which they could sell at a profit. Billions of dollars were drawn from the banks into Wall Street for brokers’ loans to carry margin accounts. The stock market stubbornly kept on climbing. That is, until October 1929, when it all came tumbling down. Catching on to the market's overheated situation, seasoned investors began "taking profits" in the autumn of 1929. Share prices started to stutter. They first crash on Oct. 24, 1929, markets opened 11% lower than the previous day. After this "Black Thursday," they rallied briefly. But prices fell again the following Monday. Many investors couldn't make their margin calls. Wholesale panic set in, leading to more selling. On "Black Tuesday," Oct. 29, investors unloaded millions of shares — and kept on unloading. There were literally no buyers. The rapid decline in U.S. stocks contributed to the Great Depression of the 1930s. The Great Depression lasted approximately 10 years and affected both industrialized and non industrialized countries in many parts of the world. When Franklin D. Roosevelt became President in 1933, he almost immediately started pushing through Congress a series of programs and projects called the New Deal. How much the New Deal actually alleviated the depression is a matter of some debate — throughout the decade, production remained low and unemployment high. But the New Deal did more than attempt to stabilize the economy, provide relief to jobless Americans and create previously unheard of safety net programs, as well as regulate the private sector. It also reshaped the role of government, with programs that are now part of the fabric of American society. Black Monday 1987 Many market analysts theorize that the Black Monday crash of 1987 was largely driven simply by a strong bull market that was overdue for a major correction. 1987 marked the fifth year of a major bull market that had not experienced a single major corrective retracement of prices since its inception in 1982. Stock prices had more than tripled in value in the previous four and a half years, rising by 44% in 1987 alone, prior to the Black Monday crash. The other culprit pinpointed as contributing to the severe crash was computerized trading. Computer, or “program trading,” was still relatively new to the markets in the mid-1980s. The use of computers enabled brokers to place larger orders and implement trades more quickly. In addition, the software programs developed by banks, brokerages, and other firms were set to automatically execute stop-loss orders, selling out positions, if stocks dropped by a certain percentage. On Black Monday, the computerized trading systems created a domino effect, continually accelerating the pace of selling as the market dropped, thus causing it to drop even further. The avalanche of selling that was triggered by the initial losses resulted in stock prices dropping even further, which in turn triggered more rounds of computer-driven selling. A third factor in the crash was “portfolio insurance,” which, like computerized trading, was a relatively new phenomenon at the time. Portfolio insurance involved large institutional investors partially hedging their stock portfolios by taking short positions in S&P 500 futures. The portfolio insurance strategies were designed to automatically increase their short futures positions if there was a significant decline in stock prices. On Black Monday, the practice triggered the same domino effect as the computerized trading programs. As stock prices declined, large investors sold short more S&P 500 futures contracts. The downward pressure in the futures market put additional selling pressure on the stock market. In short, the stock market dropped, which caused increased short selling in the futures market, which caused more investors to sell stocks, which caused more investors to short sell stock futures. A key consequence of the Black Monday crash was the development and implementation of “circuit breakers.” In the aftermath of the 1987 crash, stock exchanges worldwide implemented “circuit breakers” that temporarily halt trading when major stock indices decline by a specified percentage. For example, as of 2019, if the S&P 500 Index falls by more than 7% from the previous day’s closing price, it trips the first circuit breaker, which halts all stock trading for 15 minutes. The second circuit breaker is triggered if there is a 13% drop in the index from the previous close, and if the third circuit breaker level is triggered – by a 20% decline – then trading is halted for the remainder of the day. The purpose of the circuit breaker system is to try to avoid a market panic where investors just start recklessly selling out all their holdings. It’s widely believed that such a general panic is to blame for much of the severity of the Black Monday crash. The temporary halts in trading that occur under the circuit breaker system are designed to give investors a space to catch their breath and, hopefully, take the time to make rational trading decisions, thereby avoiding a blind panic of stock selling. The Federal Reserve responded to the crash in four distinct ways: (1) issuing a public statement promising to provide liquidity, as needed, “to support the economic and financial system”; (2) providing support to the Treasury securities market by injecting in-high-demand maturities into the market via reverse repurchase agreements; (3) allowing the federal funds rate to fall from 7.5% to 7.0% and below; and (4) intervening directly to allow the rescue of the largest options clearing firm in Chicago. Dotcom Bubble 2000 The dotcom crash was triggered by the rise and fall of technology stocks. The growth of the Internet created a buzz among investors, who were quick to pour money into start-up companies. These companies were able to raise enough money to go public without a business plan, product, or track record of profits. These companies quickly ran through their cash, which caused them to go under. The Internet bubble, grew out of a combination of the presence of speculative or fad-based investing, the abundance of venture capital funding for start-ups, and the failure of dotcoms to turn a profit. Investors poured money into Internet start-ups during the 1990s hoping they would one day become profitable. Many investors and venture capitalists abandoned a cautious approach for fear of not being able to cash in on the growing use of the Internet. With capital markets throwing money at the sector, start-ups were in a race to quickly get big. Companies without any proprietary technology abandoned fiscal responsibility. They spent a fortune on marketing to establish brands that would set them apart from the competition. Some start-ups spent as much as 90% of their budget on advertising. Record amounts of capital started flowing into the Nasdaq in 1997. By 1999, 39% of all venture capital investments were going to Internet companies. That year, most of the 457 initial public offerings (IPOs) were related to Internet companies, followed by 91 in the first quarter of 2000 alone. The high-water mark was the AOL Time Warner megamerger in January 2000, which became the biggest merger failure in history. As investment capital began to dry up, so did the lifeblood of cash-strapped dotcom companies. Dotcom companies that reached market capitalizations in the hundreds of millions of dollars became worthless within a matter of months. By the end of 2001, a majority of publicly-traded dotcom companies folded, and trillions of dollars of investment capital evaporated. The bubble ultimately burst, leaving many investors facing steep losses and several Internet companies going bust. Companies that famously survived the bubble include Amazon, eBay, and Priceline. The US government would date the start of the dot-com recession as beginning in March 2001. And by the time of the economic shock from the terrorist attacks of September 11, 2001, there was no longer any doubt. In that tragic month of September, for the first time in 26 years, not a single IPO came to market. The dot-com era was over. Global Financial Crisis 2008-2009 The crisis, often referred to as “The Great Recession,” didn’t happen overnight. There were many factors present leading up to the crisis, and their effects linger to this day. The foundation of the global financial crisis was built on the back of the housing market bubble that began to form in 2007. Banks and lending institutions offered low interest rates on mortgages and encouraged many homeowners to take out loans that they couldn’t afford. With all the mortgages flooding in, lenders created new financial instruments called mortgage-backed securities (MBS), which were essentially mortgages bundled together that could then be sold as securities with minimal risk load due to the fact that they were backed by credit default swaps (CDS). Lenders could then easily pass along the mortgages – and all the risk. Outdated regulations that weren’t rigorously enforced allowed lenders to get sloppy with underwriting, meaning the actual value of the securities couldn’t be established or guaranteed. Banks began to lend recklessly to families and individuals without true means to follow through on the mortgages they’d been granted. Such high-risk (subprime) loans were then inevitably bundled together and passed down the line. As the subprime mortgage bundles grew in number to an overwhelming degree, with a large percentage moving into default, lending institutions began to face financial difficulties. It led to the dismal financial conditions around the world during the 2008-2009 period and continued for years to come. Financial stresses peaked following the failure of the US financial firm Lehman Brothers in September 2008. Together with the failure or near failure of a range of other financial firms around that time, this triggered a panic in financial markets globally. Many who took out subprime mortgages eventually defaulted. When they could not pay, financial institutions took major hits. The government, however, stepped in to bail out banks. The housing market was deeply impacted by the crisis. Evictions and foreclosures began within months. The stock market, in response, began to plummet and major businesses worldwide began to fail, losing millions. This, of course, resulted in widespread layoffs and extended periods of unemployment worldwide. Declining credit availability and failing confidence in financial stability led to fewer and more cautious investments, and international trade slowed to a crawl. Eventually, the United States responded to the crisis by passing the American Recovery and Reinvestment Act of 2009, which used an expansionary monetary policy, facilitated bank bailouts and mergers, and worked towards stimulating economic growth. Covid Crash 2020 The 2020 crash occurred because investors were worried about the impact of the COVID-19 coronavirus pandemic. The uncertainty over the danger of the virus, plus the shuttering of many businesses and industries as states implemented shutdown orders, damaged many sectors of the economy. Investors predicted that workers would be laid off, resulting in high unemployment and decreased purchasing power. On March 11, the World Health Organization (WHO) declared the disease a pandemic. The organization was concerned that government leaders weren't doing enough to stop the rapidly spreading virus. Investors had also been jittery ever since President Donald Trump launched trade wars with China and other countries. Under both the Trump and Biden administrations, the federal government passed multiple bills to stimulate the economy. These included help directed at specific sectors, cash payments to taxpayers, increases in unemployment insurance, and rental assistance. These measures further soothed investors, leading to additional gains in the stock market. Investors were also encouraged by the development and distribution of multiple COVID-19 vaccines, which began under the Trump administration. The driving forces behind the stock market crash of 2020 were unprecedented. However, investor confidence remained high, propelled by a combination of federal stimulus and vaccine development.
TVC:DJIEducation
by bL1TZZ
9
4 Rules every successful trader should follow📈😎1. Trade according to the system. 2. Keep statistics. 3. Have strict risk management. 4. Adapt to the market. Trade according to the system When you trade without a system, it's gambling. Usually, when you ask a beginner why he has opened a position, he uncertainly begins to refer to the fact that someone gave him a signal, or that he thinks it's time for the coin to go in his direction. Trading is a job in which discipline is rewarded. That is why every trader has his own trading system, which he follows in every trade. It's like with the road rules, you can drive car without knowing them, but then you are almost guaranteed to get into an accident. Keep statistics Professional athletes constantly watch recordings of their performances and practice all the movements in front of a mirror, paying attention to every detail. It is vital to get better. For a trader, statistics is a riddle that helps him learn from his mistakes. You should write comments on each trade, filter them by reason of entry or closure, track the average risk, average profit, percentage of successful trades and analyze each trade in detail on a tradingview chart. Have strict risk management Sometimes the market goes against you and you feel the full range of emotions – hope, anger, disappointment, despair. On such days, you will lose all your money if you do not have clear rules. Set yourself a clear limit – no more than 3% of the deposit lost per day. For example, you have a deposit of $1000. You can't lose more than $30 a day. In this way, you no longer risk falling victim to a spiral of negative emotions, you will begin to be more responsible in the trades you open, and you will be able to create financial stability. Adapt to the market Institutional players are always coming up with new ways to entice young players to invest in their coins, and technicians are developing increasingly sophisticated robots. That is why our responsibility as traders is to develop faster than them and to not stand still. To do this, you need to monitor the market and watch which setups work best and which end up as traps. An obvious example: during a bull market, breakouts work upwards, and downward breakouts are usually false. The same is true for the bear market – downward breakouts are cool, upward breakouts are deception. In addition, you need to experiment with your trading algorithm and identify its weaknesses. Add new rules, test them, evaluate the difference. Follow these rules and I guarantee that you will earn much more from trading, and the process itself will give you more pleasure than ever. Good luck with your trades and see you in the DOM ✌️
Education
by Artem_Dishel
1
5 MUST READ TRADING BOOKS 📚 Hey traders, You frequently ask me to share a list of trading books that I personally recommend. In this post, I gathered 5 books every trader must-read. Please, note that in that list I included the books that changed my perception of trading. Most of them focus on the psychological aspects of trading and do not teach any particular trading strategy. 📕Trading in The Zone by Mark Douglas. Douglas uncovers the main fallacies of newbie traders. He focuses on the psychological aspect of trading and its tremendous role in this game. Relying on studies of the human psyche the author teaches readers to beat the ingrained mental habits. 📔The Black Swan by Nassim N. Taleb. Even though that book is not about trading, it uncovers the aspect of probabilities in life and our perception of them. Especially, Taleb focuses on very rare and extremely low probability events that humans frequently neglect in their predictions and the impact of their occurrence in our lives. 📘The Disciplined Trader by Mark Douglas. One more book from Douglas. This paper describes the mindset of a successful trader, useful habits and traits. It is looking for reasons why most of the traders fail. The author teaches how to properly react to losing and winning trades and changing market conditions. 📙Market Wizards: Interviews with Top Traders by Jack D. Schwager. Best traders of the entire world share useful insights of trading. Top experts in the industry talk about their journey, about their path to success and share their valuable experience. 📗Trend Following by Michael W. Covel Trend is our friend. That is the axiom no one doubts. The only problem is that it is not that simple to follow the trend. In this book, Covel describes a profitable and efficient trend-following trading strategy adopt. Of course, reading these 5 books does not guarantee that you will become a consistently profitable trader but I consider them to be very impactful. I always said that a proper mindset is one of the most important things in trading and these books will help you to build it. Did you read these books? ❤️If you have any questions, please, ask me in the comment section. Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
6
Why doesn't technical analysis "always" work?A technical indicator could give a buy signal for a security with one set of values, and at the same time, could give a sell signal for the same security with a different set of values! How do you trust the indicators then?! Moreover, if a set of values works this time, the same set of values may not work the next time! Technical analysis uses historical movements of a security to predict a probabilistic future direction or price of the security. By definition, technical analysis is probabilistic and thus its predictions are correct sometimes and go wrong other times. And we are aware of this uncertainty and are perfectly fine with it!. However, it is not possible for an indicator to describe the accuracy of its prediction. In the absence of that, basing our trade calls blindly on such predictions is as good as basing them on coin toss results. This article examines ways to assign an accuracy number to the predictions made. Given this problem statement, the first thing that comes to our mind is backtesting. The results of backtesting give an indication of how an indicator has fared in the past. It is important to note that backtesting shows different results if applied to different timeframes (between two dates) or with different sets of values based on market behavior of that period. Our goal then is to know which set of values of all possibilities best suits a technical indicator for a given security for the current market conditions. We all know that the price of a security doesn't move in a straight line! It keeps moving in a wavy pattern making highs (crests) and lows (troughs), both of short and long forms. Not only does the price change, but also the frequency and period (distance between crests and troughs, or swing highs and lows) of the security change on a day to day basis! This dynamic period plays a crucial role in selecting values for indicator parameters. For, e.g., it would be inappropriate to choose a longer length moving average when the security is volatile and making shorter swings. Also, the right set of parameters keep changing for an indicator with ever changing period of the security. Without going into the complexities of establishing relationships between period and indicator parameters, we could backtest indicators for all possible values to arrive at the best set to use. For simplicity, let us consider a strategy that gives a buy signal if slope of the simple moving average is positive and sell signal if the slope turns negative. All that this takes is a single parameter - length of bars to the past (moving average length). Let us backtest with different lengths of and plot P&L for each with probabilities based on the number of trades won. The length with the best P&L could be considered as the ideal parameter. Note from the chart how this changes over time. Note also that this changes based on backtesting lengths, the chart uses 3-Jan-22 as the start date. (Another Note! Approximate P&L calculations with both long and short, for demonstration purposes only) In summary, technical analysis methods work well with the right set of parameter values. And choosing the right set still has a lot of uncertainties to it, though the uncertainty could be reduced by backtesting and choosing a better set from time to time.
NSE:NIFTYEducation
by iravan
5 Reasons for and against trading forex 🤷‍♂️They make it look easy, posting lifestyle posts all over your Instagram feed.⠀ ⠀ Truth is, that's not real. 😒 Sorry.⠀ With that being said lets break this down into reason you should and shouldn't trade forex. The reason I'm covering this as a forex idea is I am predominantly a forex trader and made my way to where I am trading forex. This however does apply to any trading you might be thinking of getting involved with. So lets get into it👍⁠⠀ FIVE REASONS NOT TO TRADE FOREX 1. Can you afford to lose money? If you cannot afford to lose money or you are desperate to make money then this really isn't for you. Only trade with money you can afford to lose. If you are trading with money you really need to survive then your problems are about to get a whole lot bigger! 2. You don't know what you're doing! We have all been there at some point of not knowing what we are doing. But before even considering placing a life trade focus on learning and developing strategies. Focus in on the process and the desired outcome will naturally happen. We live in a world with so much resource and information at our finger tips. Go do the research before getting in to deep to quickly. 3. You can't handle it when you're wrong or you're losing. You will be wrong at times and that's okay. So long as your winners cover the losses. You also have to handle and learn that no matter how good of a strategy loser runs and periods of draw down happen to every trader. No one can be 100% right all the time. 4. You are risk averse. In any form of trading you are taking a risk. If you are to risk averse then it's really not for you. Risk management is key but if you are to averse trading wont fit your personality. 5. You don't have time. A lot of people say they want this and then say time is a factor stopping them. That's fine if you either make time and sacrifice or simply forget about trading. If time is precious and you really don't have time due to important life commitments then focus in on them. If you spend all your time on PlayStation and Netflix and say you haven't got time. Well then it comes down to lifestyle choice. We all want trading success few realise how time consuming especially at the start when learning it can be. There are also 5 good reasons why you should take up trading so lets cover them now. FIVE REASON TO TRADE FOREX 1. You want freedom Bored of working 50 hour weeks? Be your own boss take control of your own destiny. It's hard work but when achieved you'll wonder why you didn't do it sooner. Very fulfilling seeing your kids grow up instead of getting in at 7pm as they are tucked up ready for bed. ⠀ No more missing school sports days or the certificates in assembly.⠀ Time for more golf maybe? ⠀ Remember to do it for these reasons and not a big shiny Lambo. 2. You have learned the basics and understand the upsides and downsides. It's crucial to get educated and then still understand you will have up days and down days in trading. Don't even trade until you are emotionally sound with all possible outcomes when placing trades. You understand what is required along with being aware of the positives and the dangers. 3. You can deal with a high risk environment. You understand the risk at stake but above all else you understand and practise good risk management. Anxiety, worry, stress, not sleeping, losing money - I could go on.🤦‍♂️⁠⠀ If you're feeling any of the above you haven't ticked the box on this one. If you don't feel any of these you on the right path. 4. You are patient and will persevere. We all want that quick money. Social media makes us think it's easy Fast money fast cars, trips to Dubai. Commitment patience and dedication are the most important traits in trading. This is not an overnight success game it takes time and will to learn the skills needed. If you haven't got patience or commitment don't even bother. So much more to this than just placing a few trades on your tea break. 5. You can stick to a plan and understand probabilities. Once you have a plan that you have tested and take confidence in, understand probabilities and stick to it. If you're hoping from one thing to the next with no real time spent on one plan you not got the traits needed. If you understand probabilities and can let a proven plan with a known edge play out then your on the right track already. FINAL THOUGHTS Most fail - the common denominator in the ones that make it work are they don't quit.👍 Simple as that.😎⠀ Trading isn't for everyone. 🤯⁠⠀ ⁠⠀ Yes, there are upsides for sure - I touched on them. ⁠⠀ But it can be f**king horrible. 😢⁠⠀ The negative emotions when trading can hit hard. ⁠⠀⁠⠀ That's not how trading 'should' be or feel, but its still a reality for a lot of traders.⁠⠀ ⁠⠀ If you're chasing money, if you're desperate to make a quid or three - don't do it.👌⁠⠀ ⁠⠀ This isn't the game for you.⁠⠀ ⁠⠀ There is simply no room for desperation - it will quickly find you out.⁠⠀ If you can get emotions on point and a proven plan however the upsides are massive. The key here is knowing to grow and get to where you want to be will take time. ⠀ If you had more time doing whatever you wanted each day, that's pretty cool right?🙌⠀ ⠀ Going on holiday whenever you want - like tomorrow? Just because you can.⠀ ⠀ Or just chilling in your garden on a nice day ☀️⠀ ⠀ Whatever floats your ⛵.⠀ ⠀ Time for you? Prioritising your health and fitness because you have never had time before?⠀ ⠀ Exactly - the benefits are endless. But be ready to put the long hard miles in to get there and make sure you're doing it for the right reasons. ⠀ ⠀ Also, the cost to start this is like no other 'business' you could go and start.⠀ ⠀ No stock, no big start up costs - just you and your initial deposit. ⠀ ⠀ However big or small that may be it doesn't matter.⠀ ⠀ Learn to trade properly and there are now a wealth of funded trader programmes that can give you the freedom you crave without you having to save up for a lifetime. Focus on getting your process right and then enjoy the inevitable outcomes. Thanks for looking and enjoy your weekend. Darren 🙌
Education
by pow_removetheguesswork
1
7 HABITS OF A SUCCESSFUL TRADERLet us all have a healthy habit as a trader. This is very crucial esp. when controlling our emotions in the markets. We need to develop habits to have a good trading mindset and practice what professional traders do. We need to examine ourseleves first, apart from any TEACHNICAL ANALYSIS. Emotions are involved and really hard to battle especially when our money is on the line. But we got this.. Just create a habit!!! HERE ARE THE 7 HABITS OF A SUCCESSFUL TRADER.
COINBASE:BTCUSDEducation
by traderdynati
1
3 PSYCHOLOGICAL TRADING MISTAKETrading is indeed difficult especially when battling emotions apart from discipline and risk management. Every trader, most commonly for the noobs has difficulty developing and mastering one and that their mindset is set only to GAINS. That's why, we have this qoute "MILLIONAIRE TODAY, AND YOU CAN BE BROKE TOMORROW", because majority treats trading like get-rich-quick scheme/gambling. So here's the 3 common mistake of a trader. It starts with FOMO TRADING. Fear of Missing Out!
COINBASE:BTCUSDEducation
by traderdynati
1