Get started

Trading Psychology

Who makes money playing the markets directionally?> Retail & Day Gamblers: Absolutely no one day gambling profitably has been found to this day, and we keep looking for them. There might be a handful of DAX & Dow Jones traders that make some money, I don't think they outperform the indices. Compare day gambling to regular predation: Ever heard of an apex predator going for tiny prey over and over? Tiger goes for prey at the bare minimum 10% of its size, up to 10 times its size. Also a tiger has a winrate of 5-10%. Same for polar bears. High risk reward is universal. The exception would be grizzlys that found a niche with salmon jumping in their mouths. The hyper massive apex predator going for small prey would be blue whales: They go for lots and lots at once, like a quant fund, not like a day gambler. Traders at banks that have some liberties and hold some positions have an exposure limit at the end of the day. They can't hold Citibank with 10 billion usd just because they want to for example. Intraday they execute orders for clients and you can't stalk them non stop so they have some liberties during the day. So to go around their limits, because they all think they are the wonderboy who will be the next Jesse Livermoore if only the bank would give them their chance, they day gamble. As long as at the end of the day their exposure is below the limit all good. Wonderboys... One of these legends is Jerôme Kerviel. He didn't even day gamble he wanted to make big money so he cheated the system to hide his exposure. And lost 5 billion. Well that's what the bank said, and the government that sent them a big check of taxpayer money never bothered to audit them. Needless to say to this day humanity has not found a single institutional day gambling wonderboy that makes money. It's like looking for life on Mars. In Forex at least 90% of retail "traders" are day gamblers. In stocks a part of retail is made of passive holders, of course hedge fund clients, ETF too, and then there are lots of bagholders chasing the worst possible investment and holding to zero, and lots of day gamblers too. Retail investors in FX have a success rate of close to 0%, and in stocks passive holders underperform the indices at about 99%, retail stock day gamblers either lose money (~95-99%) or underperform the indices. At any given time ~75% of FX retail loses money but this is taking all the ones lucky in the short term plus doesn't account for turnover (winners stay longer). Overall in FX at least 95% of retail will lose, but when you know they almost all day gamble, sometimes with "EA and robots", you are not surprised. The ones that do not day gamble hold losers for ages and get out of winners asap, just check brokers retail positions. At least 80% do this. No day gambling and not holding losers is not even step 1. I would call it step 0. In nature not a single predator holds losers. Videos of predations show almost only the success, but pay attention they'll say "this tiger hasn't made a kill in 4 days" and also sometimes show them "losing", these top predators give up so quickly I am amazed, they ambush, jump, and if the prey starts running away immediatly the hunter just doesn't even try. It's like a law of the universe: losers insist on holding losers. That simple. If speculating had an elo then 95% of retail would have 200 elo, being naturally bad and then add all the bs thrown around the internet and the scams... ==> 200 elo. They're just that bad. Don't even have the nuts and common sense to cut losses which is not even a goal to have it's not even a step. Herbivore prey instinct. Remove all the extremely bad trolls and then it's just a regular business the ropes of which you have to learn. You just can't fix stupid I guess? > Hedge funds: They are (very) public, we hear about them most. Stocks versus Forex: They all go into stocks, in the US there has to be maybe 10 funds dedicated to FX, and their phone never rings. Investors think stocks are magical money machines, they have all sorts of stereotypes about FX the "negative sum game", and also think stocks are better because they can be more diversified with a portfolio of 100 stocks that are all correlated. You can add quants, arbitrage, and all sorts of strategy denominated funds we hear about in here I guess. Most hedge funds mainly hold stocks to make their clients happy, and will do a bit of everything. Even Warren Buffett had a position on USDMXN a few years ago. 1 "different" hedge fund we heard about in 2018 was legend manager James Cordier. He had a good 100 leverage on volatile commodities. You can't say "we never hear of these guys", he had a public fund like all hedge funds, and he even posted ideas on an investing website (I think he did so for 15 years).   1 client with a $1MM account with the guy linked his positions: NatGas, Crude Oil, Gold, Silver, Soybeans, ICE Coffee. JC had positions on dozens of contracts for each of these, on only a 1MM portfolio. > Private equity, family office, venture capital, and individuals you never hear about: Michael Burry started being heard about when 25 or 30 years ago he was posting stock picks on a forum. But he really got famous when he did "the big short". His clients were so mad with him after he made money, I think it is why he decided to leave and start his own thing. I am not sure exactly as I heard his positions were public. There is a private equity guy that posts about economics & geopolitics on a social network, I forgot the name, he manages the money of a single billionaire. Recently we heard about Bill Hwang, another legend. We heard about him because he got liquidated and crashed certain stocks he had massive positions in. Prior to that he started working for an institution, left with a few millions, started his own private business, and turned those millions into billions making 60% a year. Too concentrated and leveraged, he got too big, if he was smaller he would have gotten out without problem. Should have thought about it. You also have some politicians that make record profits... I have an idea on how they make these profits. Clearly they are the ones generating the highest returns. Note that none of these individuals are doing any day gambling. > Pension/mutual funds, sovereign funds, etc: They are running safer, more passive strategies so no one really cares. We care when Norway says they are going to sell 500 million krona, or when China says they're going to dump 1 billion usd on the market. Other Corporate for example. They simply buyback shares with their profits. I think that's it. If you have something to add let me know. We could add funds of funds if we wanted to. What else? That's it pretty much. 60% a year for Bill Hwang is pretty great, too bad he didn't take it easy when he got very big.
TVC:DJIEducation
by MrRenev
1
How To Set Up A 2% Trade (Example)You should do this on every trade you make, because right risk management will keep you trading - and not blowing your account. If you remember 4 thing before entering any new trades: 1) Right Pair 2) Right Price 3) Right Session 4) Right Time Yes, 4 out 4 is best above- but I will go with 3 out of 4 of above, if other things are supporting a trade. *Then this will help you int lining up any news trades with high liquidity and volume, especially if you are day trading or scalping. Use Forex Pip Calculator and NO you do not have to use standard size lots when trading (100,000 units)- this example is 70,000 units related to risk management and to adjust to 18 pip loss and target of 52 pips. *You can use standard lots, mini lots or micro lots- trading Forex is long game not short game. Good luck and Good Trading!!!
Education
by Anbat
How Markets Really Work- Supply & Demand!!1) Where do market prices turn? Demand (Not Support): Price turns higher at a price level where willing demand exceeds willing supply. Supply (not Resistance): Price turns lower at a price level where willing supply exceeds willing demand. 2) Who is on the other side of you, a PROFESSIONAL TRADER or a NOVICE? * 2 most important components to consistent profits are: - Supply and Demand & - Human Emotion Human Emotion: The emotions of fear and greed are clearly seen on a price chart, if you know what you are looking for. FYI: The Concept: - The origin of any move in price is where supply and demand are "out of balance". This is where we find low risk, high reward, high probability entry points into markets.
Education
by Anbat
BTC/USD ( THE OVERALL PICTURE ) WHERE DO WE GET INTHE BIGGER PICTURE: 1 DAY/YTD FRESH DOWNTREND ( PLAY IT SHORT WITH CAUTION ) --- BTC/USD HAS BEEN ON AN UPTREND SINCE THE BEGINNING OF THE YEAR. --- BTC/USD HAS RECENTLY BROKEN THEIR TREND, MAJOR SUPPORT AND RESISTANCE LINES ( BITCOIN IS IN SOME DEEP WATER ) AFTER A SLIGHT CONSOLIDATION ( INVESTORS + TRADERS ( BIG AND SMALL ) CAME TO AN AGREEMENT BTC/USD IS NOT WORTH PUSHING PRICE PAST $60K "RIGHT NOW' THEY NEED TO EARN THEIR WORTH. --- "EARN THEIR WORTH --- BTCUSD HAVE TO PROVE THEY'RE WORTH SOMETHING FOR MORE INVESTORS TO BUY AND PUSH PRICE. OTHERWISE BLOOD SUCKING TRADERS WHO ONLY CARE ABOUT PRICE IS GOING TO SELL BTC UNTIL IT HITS ZERO IF I CAN. --- DOES NOT MEAN SKIP THE FUNDAMENTALS. WHAT DO "THE PEOPLE" SAY ABOUT BTC/USD AND THAT WILL ALSO GIVE YOU AN IDEA OF WHERE IT MAY GO.--- TRADING STOCK, COMMODITIES, FUTURS, OPTIONS, WHATEVER. DO NOT FALL IN LOVE WITH THE STOCK. QUICK WHAM, BAM, THANK YOU MAM, I HAVE TO GO. THESE STOCKS WILL SAY THE SAME TO YOU ONCE TAKING YOUR MONEY FROM PIVOTING IN THE OPPOSITE DIRECTION AND RUNNING HOME ( ANOTHER TRADERS POCKET) STOP LOSS + TAKE POFIT + QUICK CAPTURES = HAPPY YOU, HAPPY WIFE, HAPPY LIFE.
COINBASE:BTCUSDEducation
by CHarrison2021
BENEFITS OF SCALE TO THE LEFTAs a trader we perform a technical analysis based off "historical data" where was the money, how did the money progress to where it is TODAY". Our job as traders is to what? PREDICT FUTURE price action. If my job is to see where price is going (the profits are unlimited) so, the only thing we need to know is where to stop the money and your stop loss is not only based off of your personal financial criteria but also where price dropped LAST ( PAST ) IN BACK OF US. MAKE the future based off of historical facts.
COINBASE:ETHUSDEducation
by CHarrison2021
Significance of Meditation💯Do you face at least some of these problems in trading? Intervene in trading by constantly re-evaluating the market. You have discipline problems. Fear of opening the next trade after one or more losses. Greed as a result of several trades with large profits. Opening positions that are more risky than allowed by the Money Management rules. Increasing risks. Do not consider each trade as an independent situation, unreasonably believing that they represent a sequence, where each unprofitable automatically increases the chances of profitability in the next. It is a fairly common belief that about 70% or more of your trading success is the result of the right mindset, and it is not charts and trading skills that determine success. Meditation gives you a holistically realistic view of life. It creates a state of purity and peace of the inner world so much that profitable and unprofitable trades are perceived the same . They become simply events that do not have an emotional component and do not disturb your peace of mind. The Buddha said that you should practice joyfully participating in the suffering of the world. This does not mean that you should strive for losses! This means that when you receive them (and you will certainly be like any other trader), you will see them as a lesson taught to you by the market, and learn to accept it with gratitude, and not as a personal tragedy that destroys your a life. Basic Trader Meditation Technique If you just want to start somewhere, there is a very simple form of meditation that anyone can easily master. Just repeat this every day for five days in a row, and then analyze the result. Find a comfortable place to sit with your back straight. You can sit against a wall, on the floor, or in a chair. Choose what is most convenient for you. Close your eyes and then inhale and exhale deeply and evenly. You only need to breathe through your nose. When breathing through the mouth, an internal state of fear can be activated and a fight-or-flight response can occur, similar to trying to escape from an attacking animal. Concentrate on your breathing and try not to think about anything else. To do this, slowly count to five during inhalation and exhalation. Your breathing will gradually become even. If that helps, you can imagine a blank white movie screen in front of you. It can help you clear your mind of automatic thoughts and just relax. Continue doing this for five minutes. If you need to accurately time the time, set a timer with a soft and soft sound signal. Before you open your eyes, take one last deep breath and imagine yourself calm and collected. Then exhale, get up slowly and continue your day. Have good trades, my dear friends. Hope you enjoyed🔥 P.S. Leave your meditation techniques below in the comments📭
Education
by Berzerk_invest
4
Top 3 Trading Psychology Lessons (no emotions=no mistakes)Top 3 Trading Psychology Lessons (no emotions=no mistakes) 1) Have A Trading Plan! * Rules you follow every time you place a trade. A trading plan consists of a strategy that has proven to make money over time, that you follow every time you place a trade. This strategy should be based on a set of rules to make it easy to follow. 2) Back test Your Strategy! *How else do you know if it makes money? Now, take your rules based strategy (trading plan) and test it through historical charts in the market. Find 100 examples of when your exact rules were met. Did your strategy make money? Yes? Then you have a winning strategy! 3) Have Solid Risk Management *Risk less to stay emotionally stable Ask yourself, "what am I comfortable losing on this trade?". no one likes to lose trades, but it will definitely happen from time to time. So approach each trade as if you were going to lose it and set up your risk accordingly.
Education
by Anbat
Trading Conviction: Missing Ingredient“How did you hold that winner for so long?” “How did you hold through that big move against your position?” “Why did you take so much size?” Conviction is what allows you to have big, home-run trades that make your whole trading year. It keeps in winning trades even when things look uncertain. This is what separates amateur traders from pro traders. Learn how to build this in your trading: What is Trading Conviction? Conviction is defined as “a firmly held belief or opinion”. In the trading world, you will often hear traders say “that was a conviction trade”. Conviction trades are ones taken with large size, and are often responsible for the bulk of your PNL at the end of the year. One of the most important characteristics of great traders is sizing big when the odds are in their favor. Not sizing big on your high probability setups is like betting small when you have pocket Aces in Texas Hold’em. You won’t be able to win in the long run if you don’t maximize profits on your high-probability setups. Capitalizing on winning trades is just as important as keeping losing trades small. Knowing the Probabilities To have a conviction on a trade, you need to have an accurate estimate of the probability of the trade becoming a winner. So where does conviction come from? Having a defined trading strategy. This means you have defined what type of Forex you trade, when you trade them, what constitutes buy and sell signals, and you have rules to protect yourself from your weaknesses. You cannot have conviction if you don’t have a proven system you know has an edge. A lot of traders assume the effectiveness of a strategy by just what happened on the last few trades. You need to have a large sample of trades to determine a system’s effectiveness. If you don’t know how the trade SHOULD pan out, you won’t be able to ride the bumps on the road to your target (s) with big size. “Competence breeds confidence”. Conviction is derived from confidence, and confidence comes from having a DEFINED strategy with an edge. Psychology does play a role as well of course, but the base of all successful trading comes from knowing what you should be doing during the trading day, and more importantly, what you shouldn’t be doing. And the only way to know this is to have a system and rules. Differentiating Between Conviction and Stubbornness This is where many traders go astray. They let their convictions prevent them from cutting a losing trade before it gets out of hand. Even on high probability trades, there is always a chance of them turning into a loser. “A conviction trade” results from trader completely accepting possibility trade could be a loser, thus eliminating fear. Trading losses are just business expenses: Change the perspective of your trading." Trading is a business. Just like any business owner or entrepreneur, traders have expenses, frequently these expenses come in the form of losses." View losing trades as price you pay to find out if trade would be a winner. Study Your Best Trades EVERY Day Your brain needs to see the same setup play out over and over again to build conviction. Just like an athlete trains every day, you as a trader need to train your brain every day. Study best trades over and over again, and remind yourself how they usually play out so you can take big size on them. What you can do is after you run morning scans and build watch list, go back and study past names with similar setups, and remind yourself how they typically play out. Summary There are many factors that cause a trader to have or not have a conviction. Experience is a big one that I didn’t mention. But I think it all comes back to having a system with an edge, and taking the time to study past charts and scenarios on a daily basis. Starting sound like a broken record: Study 1000 charts a day. Seeing the same patterns play out over and over again is how you build conviction in your trades. Can you hold Forex trades for several months for your profit pip reward, like example weekly chart of USDCAD from 1.30000 to 1.20000 (1000 pips)? Still going lower at this time... maybe for rest of the month of May? With right risk management and plan you can- and increase lot size as trade profits.
Education
by Anbat
2
An oppertunistic shake-outSince I've posted the previous chart (on 1th of may) we can see the TTM squeeze hasn't completed yet (marked in upper chart with yellow circles). But in my previous post, I've also explained how I use this DMI indicator to signal the start of a new trend. measure the fading trendline untill its end. track the intermediate bearish pushes up till strength 40 The focus on strength 40 wasn't the right way to look at it. All the pumping happening at the time got to me, making me grow impatience. Because since I've posted that chart, these pushes became more dominant. And now we have had two consecutive bearish pushes. This can be described in two ways. The first explanation (oppertunistic shakeout, my prospect. Previous analysis still applies): When the trend is stale in both directions, it doesn't take a lot of force to move the price significantly. What this means is (I try to explain in layman's terms) less bears are necessary when the bulls are absent and vice-versa. The price shift is caused by opportunistic trades and do not have a fundamental catalyst. This does not cause a change in prospects but is psychologically torturing traders with long positions. The second explanation, the reversal engages and a trend down is set. This is a premature conclusion and the chart is misinterpreted. I like to point out, misinterpreted. Not a false signal . It is extremely hard to predict a reversal (means charting before a reliable confirmation signal has happened). The DMI can be used for these things if used accordingly. We have 3 points in our chart that tell us we can't predict a reversal 'reliable'. 1. If we were to chart a new trend, this can only happen after the current trend halts. - An example of a flaky trend stop signal would be on 23rd-24th april. - An example of a clear trend stop signal would be on the 20th of march No trend halts abrupt, nor is the halt always very clear. But we can see pretty obvious that the combined trend hasn't dropped below 20 since the 1th of may. It has come close to 20, but didn't drop below it. And even if it did, it would take an additional bar (longer silence = more reliable) for an acceptable trend stop according to my own methods. 2. Both bearish pushes had less strength than past bullish push 3. The second bearish push was weaker than the first one, while the last bullish push was stronger than the bullish push before that. If you enjoyed reading this please leave a comment. If you have any questions, please DM me. I can imagine you have questions, i am happy to answer them personally. As I am a small analyst with few followers, comments actually give me huge dopamine rushes.
Education
by UnknownUnicorn12005085
1
The Quarter's Theory (Is Price Action Random & Chaotic?)IS PRICE MOVEMENT RANDOM? No There is a notion that price movement in financial markets is random and chaotic. Quarter theory suggest a clear pattern in price movement, challenging the notion that price movement is random. Quarter theory organizes the daily fluctuations of currency exchange in a systematic orderly manner. Quarters Theory focuses on the 1000 PIP Ranges between the Major Whole Numbers in currency exchange rates and divides these ranges into four equal parts, called Large Quarters. Each 1000 PIP Range contains four Large Quarters and each Large Quarter has exactly 250 PIPs (1000 PIP Range/4 = 250 PIPs). Can you day trade The Quarter Theory? Yes (Look at attached price action on GpbNzd 1 hour chart, between Tokyo end and London end. The 100 PIP Ranges between two whole numbers in currency exchange rates are also divided by The Quarters Theory into four equal parts called Small Quarters. Each 100 PIP Range contains four Small Quarters and each Small Quarter has exactly 25 PIPs (100 PIP Range/4 = 25 PIPs). The numbers that mark the beginning and the end of each Small Quarter are given the name Small Quarter Points. Currency exchange rates fluctuate in orderly series of price moves from one Small Quarter Point to the next, measured in increments of 25 PIPs, in a systematic effort to complete an entire Large Quarter of 250 PIPs. In order to monitor the price behavior of currency exchange rates within the range of each Large Quarter, The Quarters Theory establishes three important price levels within each Large Quarter:– The End of the Hesitation Zone,The Half Point, and The Whole Number preceding a Large Quarter Point (25 PIPs). HESITATION ZONE: The Hesitation Zone is the range of 75 PIPs above or below a Large Quarter Point. The Hesitation Zone is formed by the first three Small Quarters of 25 PIPs of each Large Quarter. The Quarters Theory uses the Hesitation Zone to identify successful or failed Large Quarter Transitions by distinguishing between decisive and indecisive entrance of prices into a new Large Quarter. If prices stay confined within the Hesitation Zone, the End of the Hesitation Zone can prove to be a difficult support or resistance level to overcome and may prevent further progression of prices beyond the range of the Hesitation Zone, leading to price exhaustion and unsuccessful completion of a Large Quarter. Only decisive price moves that target the end of the Hesitation Zone and do not break above (or below) the preceding Large Quarter Point on pullbacks are considered to be an indication of a successful Large Quarter Transition.
Education
by Anbat
Trading Mindset Quotes (6/6)Trading Mindset Quotes Need help with some trading psychology quotes? Here a few of the best. Learn to take losses. The most important thing in making money is not letting your losses get out of hand. Marty Schwartz If you cannot control your emotions, you can’t control your money. Warren Buffet Do more of what works and less of what doesn’t. Steve Clark Risk comes from not knowing what you are doing. Warren Buffet FIVE Anonymous quotes for you to get inspired by: 1) Some people say Forex trading is dangerous, I say investing in anything with a lack of knowledge is dangerous. 2) There is no room for laziness or complacency in the world of a professional Forex trader. A professional trader is always improving. 3) Trading is like any skill. Mastery requires knowledge and practice. 4) First they mock you then they ask you advice. 5) A great trader is like a great athlete. You have to have natural skills, but you have to train yourself how to use them.
Education
by Anbat
Trading Psychology Books (5/6)Trading Psychology Books There are many trading psychology books you can read to improve your trading. Whilst a lot of them are good reads, a lot of them are also incredibly boring. The following three books are not boring and they will help you in your trading immensely. Trading In The Zone by Mark Douglas This is one of the most famous and popular trading books by the late Mark Douglas. The great thing about this book is that it breaks down what can be an incredibly complicated subject and makes it easy to understand. Douglas goes through all the mental habits and mistakes that are constantly costing you money in your trading. The Disciplined Trader by Mark Douglas This is another book by Mark Douglas and is now also known as another one of his classics. This book looks closely at why traders tend to make the same mistakes over and over again. You get taken through a step-by-step walk-through and will begin to understand why it is you have been making the mistakes you have been. Trading Psychology 2.0 : Brett N. Steenbarger This is an extremely comprehensive trading psychology book by Brett Steenbarger. This is not a book you are going to finish in one sitting and it can often take some time to go over things a few times to fully understand there meaning. This book includes full academic research and you will come away after having read it with a lot of practical tips you can start using in your own trading. FYI: you might be able to google name of above books with PDF on end.... get them for free off web... good luck!!!
Education
by Anbat
1
Day Trading Psychology Tips (4/6)Day Trading Psychology Tips There are many, many different psychology tips that you could use in your trading, but I have turned the list below into a short set of dot points that you can remember and that will help you the most. Don’t risk too much on any one trade. Don’t chase your losses with revenge trades. Don’t over-trade and make too many trades. Don’t let the last trade stop you making your next trade. Always cut your losses short at your stop loss point. Always take profit at your designated profit target level. Don’t get greedy and hold for more.
Education
by Anbat
How To Get The Best Trading Mindset (3/6)How to Get the Best Trading Mindset Whilst many traders will try to pretend that they don’t have any trading emotions, this is actually the wrong way to get the optimum trading mindset. All traders deal with emotions that making and losing money throw up. If you don’t have any emotion around making and losing money whilst you are trading, then you simply are not yet risking enough money. To get the best trading mindset you need to first acknowledge all of the feelings that come with both winning and losing. Once you begin to understand these feelings and the full range of emotions you experience when you are trading you can begin to deal with them. When you start to understand how you feel when you lose you can deal with it. Instead of pretending you feel nothing, you can actually work on it and learn to overcome it to become a much better trader.
Education
by Anbat
Does Trading Psychology Matter? (2/6)Why Does Forex Trading Psychology Matter? The psychological mistakes that traders make are common among almost all traders and they can hold you back from being successful. Reason these errors are so common is because when trading we are all dealing with either making or losing money. This brings on feelings of greed and fear. When we are being greedy we can have a tendency to make the same mistakes over and over again that will hurt our results. These mistakes are not taking profit when we should, making far too many trades than we should or risking a lot more than we should. We do these things because we kick into greed mode thinking we are going to make a lot of money. When we move into fear mode another set of mistakes creep in. These errors are normally holding onto losses for far too long instead of quickly cutting them short or not entering the next good trade we have found because the last trade just lost. We start doing these things because we are fearful of losing money. These psychological errors will continue to hold you back and stop you making money no matter how great your trading strategy is.
Education
by Anbat
What Is Trading Psychology? (1/6)Trading psychology is one of the most commonly overlooked and underrated aspects of successful trading. Whilst every trader needs a great trading strategy that will make them winning trades, if you are making the same mistakes over and over again, then you will continue to lose money. If you risk too much, over-trade, revenge trade to get back your losses or make other psychological mistakes like not cutting your losses small when you should, then it does not matter how good your strategy is, you will lose money. In this six part post we go through exactly why trading psychology is so important and how you can start using the best trading mindset. What Is Trading Psychology? Trading psychology is a broad term that takes into account everything that involves your emotions when trading. When traders refer to trading psychology they are normally referring to the mistakes and mental errors that they continually repeat that cost them money. These errors normally fall into two categories; errors from being greedy and errors from being fearful. As we will discuss in future articles: if you don’t understand and work on these errors, then you will find it extremely hard to be a successful trader.
Education
by Anbat
Don't fight the WORM, Ride ITWe act upon the stories we tell ourselves in our heads. Make sure the stories you have are aligned with the market reality. So here is another story, the market trend is like the WORM from the movie DUNE, when it comes, you don't stand in its way, you let it pass you and then you jump on its back, holding on with your hooks. LETTING IT take you to your destination. ------------ We SEE the worm We UNDERSTAND the worm We TOUCH the worm We ARE the WORM ------------
NYSE:SQEducation
by ZoharCho
5
Direction Easy✔️ Timing Hard ❌Hi Traders, I think the analysis part of trading is the easy bit. By that I mean most traders usually have the correct direction in mind but timing is difficult. AUDJPY is a classic example. The analysis was simple. Price broke about daily resistance, retested it and I was looking for continuation. I entered the trade but price came back and took me out for a breakeven. Then, it continued it same direction I expected it to. Personally, I prefer to preserve my capital by going breakeven once in good profit and I do not even confident re-entering a trade if price retraces so sharp and took me out the trade. 1. How soon do you place your trade at breakeven once it is in profit? 2. Do you re-enter a trade is it took you out at breakeven and show signs of following your original trade idea? Comment below.
Education
by UnknownUnicorn8360477
2% Max LossMoney Man has not seen the need to adjust his levels as he still stands with his original idea that ETH needs to break a pattern, clear as day on the chart, to get buyers over the fatigue. The short term trendlines are telling us this and has proven themselves as guiding pattern formation. Logic thus would change the top of Decision 1 and bottom of Decision 2 to keep these lines inside it as we go. So, he is taking this time to expand more on his ideas around risk. We all have heard about the Kelly Criterion, but also about the 2% rule (cap your losses at 2% of total allocation – the total you have allocated to trade in a particular instrument like ETH). He would classify the Kelly Criterion as an advanced risk management tool, hard to pin down within so much variance that a market has. Advanced, you say? Then that must be what a new trader should use! Not so fast. New and even older hands typically calculate their acceptable risk before admitting defeat on a trade, via back testing. Here lies the rub as more important than; the “past results do not guarantee future results” understanding – there is the lack of experience in relation to their own emotional tolerance to red. You know: the old “close winners fast and let loser run” outcome. Money Man has written about the well-known break-even parabolic horizon a long time ago and link that below. He mused then that that parabola is what sinks even brick and mortar businesses. Now he wants to give his thoughts on the 2% (used in this explanation – but could be more or less) risk to total allocation. There is another parabola hidden here (in red) and finding your sweet spot is the goal. So, your sweet spot would depend on your tolerance to loss (percentage) and its relationship to the chart / price action (distance on chart in percentage). Many traders simply trade with their whole allocation and thus sit at the far left grey bar (100% of allocation in) and far left of the parabola, forced into a 2% below entry price stop loss placement. The other extreme is a trader who only uses 2% of their allocation on any trade to trade with and have no need for a stop loss if they believe in the 2% rule. There is the option to adhere to the 2% rule and adjust your position size according to where you would like to put your stop loss. The graph above tries to give a quick reference rule of thumb and illustrates how the distance of your stop loss parabolically grows the smaller your position size. Back of an envelope math but soothing to the adrenal glands if you can find your own sweet spot. Where does the whole 2% rule come from? Money Man does not know for sure but knows that it has been around for a long time and has thus been discussed and “peer reviewed” extensively. Also, and more importantly, it speaks to another reality in the antifragility of staking your options in your favour while keeping your risks in check – an advantage you can still reap even if the percentage is too low for your liking. The reason for including it is that it could be a bridge between “betting 100% on every trade” and having a very well-developed dynamic trade size to stop loss placement distance dependent on market conditions. Please double check the math that went into the above graph before use. Remember there are no guarantees, only probabilities. Very Important to me: Please like if you appreciate the effort, Please comment and develop this further and Please follow if you see this analysis thread going somewhere you would like to know about.
BITSTAMP:ETHUSDEducation
by Rule72
3
Epistemology of Technical AnalysisHow does the reliability of technical analysis relate to our understanding of it as a total population? Epistemology is a branch of philosophy that examines the nature of knowledge -- its presuppositions and foundations, and its extent and validity. The word epistemology is derived from the ancient Greek epistēmē, meaning "knowledge", and the suffix -logia, meaning "logical discourse." Epistemologists study the nature, origin, and scope of knowledge. Simply stated, epistemology is "meaning-making." Epistemology presupposes metaphysics. People tend to think of psychology as being the foundation for technical analysis , often without realizing that psychology arises out of, or is a subset of, philosophy. In other words, psychology is "a posteriori" to philosophy. Historically, psychology arose in order to include the empirical method when examining the metaphysical questions posed by philosophy. It has since brought various topics of study to the field of psychology, such as sensation, perception, intelligence, and memory. At first glance, the relationship between philosophy and psychology seems to have a dualistic nature, and is reciprocal: Modern-day science believes that the "phyisical" (psychology) -- a brain -- creates the metaphyisical, and that the metaphysical (philosophy) -- a thought -- allows us to understand the physical. Phillosophers argue, however, that "no account of knowledge can proceed without assuming that we already have some sample or example of it, or of the way the world works;" If we already know something, then we already have some insight into reality. Similarly, no account of trading analytics can proceed successfully, according to presupposed rules, without some concensus to those rules. My definition of technical analysis: A concensual set of rules for how to react to market stimuli. We can call TA a language, and it has rules akin to any other language. When we communicate through language, we operate by utilizing a concensual set of rules by which to respond to vocal stimuli. If two people try to communicate an idea to each other via divergent languages, the efficacy of communication is vastly diminished; consequently, if the market is being influenced by people who both DO know and DO NOT know technical analysis, the reliablity of our predictions for market trends is also vastly diminished. I would argue that the implications of this are stronger this market cycle than ever before, due to the exponential rise in new traders unfamiliar with technical analysis , and that this offset in reliability is proportional to the total trading volume they supply to the market. At the same rate, "whales" who hold the largest crypto bags are likely to be the most familiar with TA, or have those working for them who are adept at TA, and therefore have a significant oppositional influence to those people aforementioned. It makes you wonder how many people have given their economic stimuli to the power elite already bankrolling with their COVID-era monopolies. Stay safe out there. This is the most risky moment in the history of crypto for those of us with very little we can afford to lose.
BINANCE:BTCUSDEducation
by UnknownUnicorn17277390
11 Rules for the Ordinary Trader Through your trading carrier, you will learn to develop your own paths and ways to become successful in your own way, but there are many things that will give you a boost of knowledge in your trading carrier. Down bellow lists 11 different rules I have gathered from many sources. Rule 1: Price has memory. What happened the last time a stock hit a certain level? Chances are it will happen again. Watch trades closely when price returns to a battleground. The prior action can predict the future. Rule 2: Profit and discomfort stand side by side. Find the setup that scares you the most. That’s the one you need to trade. Don’t expect it to feel good until you take your profit. If it did, everyone else would be trading it. Wisdom from the East: What at first brings pleasure in the end gives only pain, but what at first causes pain ends up in great pleasure. Rule 3: Stand apart from the crowd at all times. Trade ahead, behind or contrary to the crowd. Be the first in and out of the profit door. Your job is to take their money before they take yours. Be ready to pounce on ill-advised decisions, poor judgment and bad timing. Your success depends on the misfortune of others. Rule 4: Buy at support. Sell at resistance. Trend has only two choices upon reaching a barrier: Continue forward or reverse. Get it right and start counting your money. Rule 5: Manage time as efficiently as price. Time is money in the markets. Profit relates to the amount of time set aside for analysis. Know your holding period for every trade. And watch the clock to become a market survivor. Rule 6: Don’t confuse execution with opportunity. Save Donkey Kong for the weekend. Pretty colors and fast fingers don’t make successful careers. Understanding price behavior and market mechanics does. Learn what a good trade looks like before falling in love with the software. Rule 7: Control risk before seeking reward. Wear your market chastity belt at all times. Attention to profit is a sign of immaturity, while attention to loss is a sign of experience. The markets have no intention of offering money to those who do not earn it. Rule 8: Big losses rarely come without warning. You have no one to blame but yourself. The chart told you to leave, the news told you to leave and your mother told you to leave. Learn to visualize trouble and head for safety with only a few bars of information. Rule 9 : Enter in mild times, exit in wild times. The big move hides beyond the extremes of price congestion. Don’t count on the agitated crowd for your trading signals. It’s usually way too late by the time they act. Rule 10: Perfect patterns carry the greatest risk for failure. Demand bruises on your trade setups. Market mechanics work to defeat the majority when everyone sees the same thing at the same time. When perfection appears, look for the failure signal. Rule 11: See the exit door before the trade. Assume the market will reverse the minute you get filled. You’re in very big trouble when it’s a long way to the door. Never toss a coin in the fountain and hope your dreams will come true. Yours truly, Jacob Schildcrout **Note, I dont take credit for these rules, these have been gathered from sources for your convenience***
COINBASE:ETCUSDEducation
by JacobSchildcrout
3
FOMO | Share your tips and tricksHi Traders, Yesterday was a good day to catch lot pips with the huge impulse up on DXY fueled by news. Most traders was anticipating this move but but did you enter because of FOMO? For me, I saw the sell on GBPUSD but did not take it because it was not part of my trading plan and I did not want to jump in just because of FOMO. So how do I handle FOMO: 1. Taking a break from looking at others' trading analysis. Although this is a great platform, it can get overwhelming looking at hundreds of different trading analysis every day. Especially, seeing traders post ideas stating "this is the next big move you do not want to miss". This induces fear which makes traders enter a trader without doing their own analysis and proper risk management . 2. Acknowledging that a BIG move happens EVERY week. So if you miss this one, take the time to prepare for the other one that WILL happen next week. 3. Staying true to your trading plan. Perhaps you can go a step further by marking up chart at night with potential setups and only taking those trades on the following day. Even if you see another opportunity developing in the day, don't take the trade. Another way is to limit the number of trade you will take in any given day. I have come a long way, but still have a longer way to go with managing the psychological part of trading. Let's start the discussion. How do you deal with FOMO? Do you have other tips and tricks you would like to share.
Education
by UnknownUnicorn8360477
2