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Trading Psychology

Trading Psychology

The importance of intelligence to trading INTELLECTUAL QUOTIENT The one we hear the most nonsense about and for 1 legit piece of info there are 500 TB of crap. People are super insecure about this. Even in investing circles, where individuals are at or above average, still insecure. Academics using Finnish data (because at 19-20 men have to pass an IQ test for the military) found that 25% top IQ (IQ > 110) make up 50% of market participants 25% bot IQ (IQ < 90) make up 9% of market participants So virtually everyone reading this should be average or above, and I don't do simple magical indicators so that probably adds another filter. Academics looked at tech stocks on the Helsinki stock exchange and found that in the sample period 1/1995-11/2002 the annualized returns (dividends etc included) were: - For the 42% with the lowest IQ 9.52%. The 1rst to 4rth stanine. IQ <96. I'll call them INT 1-4. - For the 4% with the highest IQ 14.45%. The 9th stanine. IQ > 126. I'll call them INT 9. A significant difference. Remember the vast majority are passive investors that just follow the market as a whole. Imagine 1/3 of a country invests, they have a separate life they're not all active. Much of the difference in performance - which is monotonously correlated with IQ - comes from lower IQ individuals joining at the wrong time. But even when ignoring the timing, and looking at returns as if they all joined equally over time (by adding weights to the data) scientists found that INT 9 (IQ > 126) returned 14.84% and INT 1-4 (IQ < 96) returned 12.65%. So not only wrong timing but also wrong stock selection. I am guessing they regrouped 1-4 to not humiliate people with intellectual disability (INT 1)? Sources: papers.ssrn.com papers.ssrn.com Proven by science, all the big liars saying it does not matter are big liars trying to be liked. About market timing. There is a clear pattern, it just jumps at you. Page 61 of IQ, Trading Behavior, and Performance you can see for yourself so I'll keep it short: Basically like it or not, people with an IQ over 105 (37% of the population), which already is the majority of market participants, are the ones buying during the bull market, and the average and below all rush in when prices start to go parabolic, making them go even more parabolic, smart people step away, and 1-5s hold the bag and keep buying when the price is clearly in a bear market (poor pattern recognition). To all the people that joined crypto in 2017 and are going "oh no not me": The Finnish data set only looks at men over 20. And the vast majority of those are well over 30. They had more than enough time to earn some money, hear about stocks, and get into investing. The European demographic pyramid is really terrible. And of course older people invest more than broke young people that study or barely started to work. People get into investing in waves. The tech bubble was when plenty of 20 yos (back then) got in. I didn't know I could invest by myself before 2017. All of us 20-30s are just a tiny minority that makes no difference stat-wise compared to the vast number of middle aged workers and retirees. For my defense I entered at the top, during the parabola but I was not a permabull, all the bagholding 1-5s were laughing at me for being bearish... I like it here, how it is now. If Bitcoin goes vertical to over 100K the 25% at the bottom will start to appear again. And start arguing. And making circular logic. And screaming. And sending threats. Oh boy. INT 6 represents 17% of the general pop & in this data 23-24% of market participants, INT 7-9 23% of the general pop is 36-37% of market participants. You know, even today after they lowered the level drastically, only 1/3 of people completes college education (or equivalent for us French), and they're not 1-4s. Seems obvious to me that someone that struggles with a division won't be making money in the markets, do people think this is manual labor? But whatever, as I said, IQ matters because these 4 things matter: 1. Pattern Recognition: The ability to understand the world through analogies. Predicting a crash because many elements are similar to the previous crash is not very different to looking at a bunch of dominos in an IQ test and guessing which one is next in the list. 2. Numbers skills: being able to quickly calculate risk, volatility, as well as understand probabilities. Good way to avoid holding a bag and waking up "Oh what? How am I down 75%? Didn't see that coming". You have to see that coming. You need to know how much you'll make or lose if the price goes up/down by x percent, how likely it is to happen using implied volatility, and much more. 3. Planning & Problem Solving: NEW problems. Not "learn by heart your school lesson" problems. Parrots and college professors do not make great traders. Learning by heart is useless. Every time it's different. "This time it's different". You can mix this with pattern recognition and it becomes obvious where I'm getting at: dumb money ALWAYS goes "this time it's different". You should be able to adapt to new variables, solve new problems, and be able to recognize how NOT different they are. All snowflakes are different. This is literally IQ at its finest and nothing more. You either see the "different" pattern of dominos and can solve the problem or you don't have the IQ and simply do not see it (and insult people that do see it call them stupid and conspiracy theorists). 4. Dealing with a lot of info: being able to analyse much information, while ignoring distractions. Academics that looked at data unsurprisingly found that higher IQ individuals had more diversified portfolios. And also, higher IQ individuals are able to analyse more data as well as ignore distractions (according to a BBC article). How to increase my IQ? There is a way. Only 1 way I know of: "Scientists found that multitasking reduced men IQ by 15 points, lowering them to the level of an 8 year old". I am certain it's not like this for women, prob just reduces it by 5 points or something, or maybe 0 idk. We men tunnel vision. So ye just focus on 1 goal only and get good at it. This "multitasking" will make you a complete noob. Literally an 8 year old to be more precise :D. Women have same average IQ as men also. I don't really know what the differences are for investing, probably not much. They're probably better at being organised too. That's just... so bad for me you have no idea. What a mess. Obviously it's also possible to learn about numbers and improve at it... And one learns to recognize snowflakes by studying plenty of snowflakes, regardless of his abilities (just will be easier for someone who scores higher that's all). EMOTIONAL QUOTIENT Why do I write so much? Good thing there is very little research about this, so not much to say. First, no, women do not score higher (in IQ either btw). Just because there is the word "emotional" in it people assume silly things. It's just a word. Irrelevant. So I'm calling it brzbjfbrhdjf from here on. These are pretty self-explanatory honestly. People with high brzbjfbrhdjf perform better than people with low brzbjfbrhdjf. There are exceptions. I found that people with LOW empathy made better debt collectors XD Better serial killers too I bet! A doc, not sure how serious, shows how they tested portfolio managers, and these had significantly higher brzbjfbrhdjf than average people. There is very little research on brzbjfbrhdjf, as opposed to IQ that has a lot of it, but there sure is a lot of "understanding" media articles about brzbjfbrhdjf, saying how great it is, as there are tons of articles saying how awful IQ is (insecure much?) and none praising it or just listing some of the positives. The market does not care where you bought, remember? It's about what the market is feeling, so go scream "BITCOIN IS GOING TO ZERO!" and find out if: - They are mocking you (honestly): They are complacent, euphoric or thrilled, depends. Can't really teach this... Have to "feel it" idk. - They are angry (includes mocking you but if you have high "empathy" & "social skills" you can tell they are mad): Anxious - They go "pfff", "I'm over it", they sigh: Well capitulated and depressed, bottom? So many people think the world revolves around them, and when there is someone they don't like they get persuaded that person is dumb or loses money XD They think if they believe hard enough it will happen? I find it stupid, so the term "emotional" intelligence might be accurate, the intelligence part anyway. I could go on but I think that's enough. If I find something interesting I'll share. It might be more important than IQ, OR not be more important but since all investors have high IQ anyway then IQ won't matter but "EQ" will differentiate between the mediocre ones and great ones. Having both = jackpots. OF COURSE here we talk about people that put in the hours. Obviously just having "good genetics" won't make you Mr Olympia if you drink beer all day long and never work out, know what I mean? People with low empathy can make money by the way, plenty of autists (famous for not being able to understand people feelings) are great money manager. Remember Michael Burry? Predicted the housing crisis and shorted morgage swaps, great at stock picks. Famous now, made lots of money. You know what else Michael Burry did? Short WAY too early. Because people were still way thrilled back then. And he quit managing other people money (I doubt he understood their stress), in an interview he explains how they were mad even after he made them lots of money. A guy with low empathy dealing with very emotional people (very emotional doesn't mean high "emotional" intelligence) and very little self-management (also little ba**s). 1. Self-Awareness: is the ability to understand how emotions affect yourself and other people. 2. Self-Management: is the ability to control impulsive decisions. 3. Motivation: is having a passion for what you do along with a curiosity for learning. 4. Empathy: as in the ability to understand how people feel (fear, euphoria, etc). 5. Social Skills: as in being aware of the people around you, people with different point of views. The military gets the best results by filtering at entry. Rather than punish everyone because of some gamblers, regulators ought to filter at entry. In some video game, would a MAGICIAN starting with 0 STR and built as a melee tank do well? No. People with low "IQ" and "EQ" have nothing to do in this business. Better to do something else. What else that I do not know. Society has a problem with low IQ individuals, there are no jobs for them. Tech advanced too fast humans can't keep up. Just convince intelligent women to focus on their careers and give welfare to dumb ones when they have kids, that'll solve the problem long term! I do not have autism (kinda disappointed), it's not that I do not KNOW this sounds distasteful to people, I am very aware of it, it's just that I don't give a rat's ass. Not going to start lying to be popular. Plus everyone can keep burying their heads in the sand, things will just keep getting worse. Specific to investing, people will low IQ/EQ will be told everyone can make it, buy a course or whatever, waste hundreds of hours, lose their money, quit. Oh great. But for a moment they felt really good and had high hopes. High hopes that got completely crushed. Great. At least some bullshiter got to be the nice guy! Most "1-4s" know they're not super smart and avoid the market, most people that get offended are 5+ but get offended in their name because they're so virtuous or something. But idk recently they're trying to "democratize" investing, and all sort of random people with no clue what they are doing and a gambling mentality are jumping in to pump the pyramid scheme higher. This can only end badly. So I wonder, are the people pushing for this nonsense really "well intentioned"? Or just trying to keep the pyramid scheme alive a bit longer and pump their holdings at the expense of "useless eaters"?

Education

PATTERNS & PITFALLS #1 The market is designed to make you fall into traps, and make you doing things. By nature, we tend to overcomplicate things and trading is one of them. As in coding, the best way to code is to Keep It Simple Stupid (kiss). One of this thing is what i call “The Home Runs Chaser”. A large majority of retail traders, slowly tendto look everyday for a stock heading up to the moon. Why does this happen? How we slowly enter into that thinking process when we start trading? So you start trading for few days or few weeks, you see a stock on an uptrend and you go long, take money and then you see the stock going up fast after you exited, what do you tell yourself? “Damn it, i should have held it a little longer, if only...” And then it happens a few more times, and BINGO you’re in it, you’re in the trap designed by the stock market: - You start looking everyday for home runs. - Now you have the “win or loss” mentality So you allow yourself to lose it. You see gains but you’re focusing on the holy grail, the holy target! LOOKING FOR HOME RUNS WILL LEAD YOU TO NOT GETTING PAID !!! Plus it will frustrates you a lot because most of the time, you won’t have the home run. => We must enter the right way of course, as usual, BUT BUT BUT, we must take quick wins when it’s on our side. => Sometimes we have low wins when the stocks have low momentums and sometimes big wins if they are big. But at every trade: you should take partial profits along the way. Exemple: you enter long in stock XYZ at 20$ with 100 shares. Your target is 22$. Instead of waiting the price to reach 22$ to sell your 100 shares, what you should do is to take partial profits. So at $20.49 you sell 25 shares, then at $20.99 you sell again 25 shares. If it goes over 21$ then you wait for the price to reach 21.30 to sell again 25 shares BUT if the price goes back to 20.50, just sell 25 shares to secure a bigger win. The remaining of the 25 shares are sold at ~ $21.97 in the case it goes up, or sold at ~ $20.20 if the price drops. That’s how you secure a win and not let the trade goes against you..... And if you have to leave your computer, just use the trailing stop with an ok spread between the price and the stop just not to be stopped too quick if the price moves down a bit before going up.

Education

What Most People Get Wrong with Head and Shoulders Setups Let’s take a minute to chat about the Head and Shoulders pattern. It’s probably one of the most widely used, talked about, and commonly dissected chart setups on Earth and for decent reason. In my experience it’s a reasonably reliable chart setup if you follow the actual rules around it. Importantly, there’s some pretty basic market psychology to back up the setup. We really never want to pay attention to TA theories that can’t tie back to real actions or motivations in the real world, so this ticks off those boxes. Head and Shoulders Defined A Head and Shoulders pattern is defined by an increase in volume and price of an underlying followed by a drop. Then the price of the underlying goes back up but higher than the peak it just hit and with lower volume, again followed by a decline. The decline is stopped at or around the same price as the higher low created by the first price pop, resulting in another increase with even lower volume. The Head and Shoulders pattern is known as a reversal pattern. That is to say, if the Head and Shoulders forms with a higher head than left shoulder, the right shoulder would indicate a potential bearish turn upon completion. The Psychology of Head and Shoulders As I say a lot, if TA doesn’t tie back to the actual actions of human people in the market on some fundamental level, chances are great that it’s bullshit. So what are the basic market actions at play in the formation of this setup? In the initial run-up you have price action being driven by volume. This can be catalyst-driven or can be driven by a number of other fundamental factors. The end result is that price turns bullish and its action is driven by market participants actively trading the underlying. The head formation has comparatively very little volume, even on the sell-off side of the formation. Market participants who were gobbling up the stock are not buying and not selling enough for the price to be driven by volume. As a result you see the price rise in a somewhat inflated way because there are more buyers than sellers but very few of either. If 10 people want something only 5 people are willing to sell, you won’t have a lot of sales but the 10th person will be paying a hell of a lot more than they should by the end of it. The last run up (the right shoulder) is more or less the same, but with lower volume-driven price action as market interest in the underlying wanes. The pattern finalizes as the “run” appears to be over, participants exit, and there are substantially more shares being sold than bought which leads to a precipitous reversal in the stock price. What People Get Wrong The number one thing that people seem to forget about Head and Shoulders is the volume component of the setup. If you have a pattern that looks like a Head and Shoulders on the price chart but where the volume isn’t correct, then you straight up do not have a pattern that is a Head and Shoulders. So for example, let’s say you have a stock that looks like it’s forming a right shoulder to complete the setup. This is the chart for $BF.A (Brown Forman’s Class A shares): You can see the chart shares a bunch of the same cosmetic traits of a Head and Shoulder pattern if you don’t look at the volume. I wouldn’t even discount this setup as a Head and Shoulders if the volume was right despite breaking the neckline a bit there, your pattern finding needs to have tolerances for odd price action (news, etc) and the price recovered fast enough I would discount that. I wouldn’t hold it against you if you didn’t. However, the real story here is in the volume. The price was buoyed by an increase in volume when the “head” was formed with a ton of volume on the sell-off side of the formation, which means this is likely more of a continuation pattern than a reversal pattern. You can see this was the case as the price did not reverse down toward the lower low, rather it rocket shipped off the neckline. Summary As with any chart setup, indicator, or anything else you use, nothing should be used on its own. Everything should be used in context and no one thing is a perfect indication of future price action. When you decide that you want to trade on chart setups and patterns like this, it’s important that you’re taking the time to not just get a cursory understanding of the pattern. You have to make sure you’re getting the fullest view of the strategy possible. Otherwise you’re just playing make believe looking at charts and probably losing a lot of money in the process. - - - If you thought any of this was useful please make sure to subscribe to my Substack (link below) for lots of this type of content. I also do regular market commentary on my Twitter account (link below) so it's a good idea to follow that if you enjoy the kind of content I put out.

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by SwingTradeAssassin

Candlestick Patterns (Every Trader Should Know) Dragonfly Doji A “Dragonfly” doji depicts a day on which prices opened high, sold off, and then returned to the opening price. Dragonflies are fairly infrequent. When they do occur, however, they often resolve bullishly (provided the Forex pair is not already overbought as show by Bollinger bands and indicators such as stochastic). See daily attached chart of dragon fly candle, which was oversold and located at the lower band of Bollinger bands and at round numbers from 1.53000 to 1.53700. This is a great candlestick to plan for price action to continue to be bullish from, especially if this happened early in week. Noted dragonfly doji happened on a Thursday and lasted for around five days.

Education

5 Strategy - To help you towards your long term Financial Goals!Hello Traders, Newbies & Fellow Friends! Today I decided to post this Educational & Motivational Post for Everyone to Read! I hope your Enjoy this Journey with me! Before we start! Id like to mention a few Things: Financial Freedom is Not an amount of money , Its a state of mind! Trust Your Brain, Not Your Gut - "When things are going well, people think it’s going to be springtime forever,” & “When things are dark and stormy, they think it’s going to be wintertime forever. But I’m a student of history, and it’s always cyclical." Cultivate Patience - Mastering your finances is just like mastering your mindset—it doesn’t happen overnight. It takes years, if not decades, to see a true transformation. “I think the secret to patience is knowing what your outcome is and focusing on still making progress, It’s about momentum and being a student of what works.” These five strategies can help you stay on track toward your long-term financial goals: 1. HOME in on what matters! Be strategic about the financial news that you consume. If you are trading on the Forex Market, there’s no need to check your chart every 10min. You will only drive yourself crazy. Instead, spend those 30 minutes doing something valuable like reading a book or watching a YouTube channel (Global Fx Education) about a financial strategy. “We’re drowning in information but starving for wisdom,” “The only way to stay strong and centered is to be clear on what you want to serve, stand guard at the door of your mind, and make sure you’re feeding your mind something besides Nonsense. - invest in yourself!! 2. LEARN to be comfortable with risk! Even the safest trading conditions have a level of risk—tolerating it is simply part of the game. “Risk is the secret to success,” “If you want to succeed at any level— in Forex Market, in your contribution to the world—you have to learn how to deal with this four-letter word.” Trading should be based on goals and what we’re trying to accomplish,” 3. FOCUS on what you already have! High achievers always tend to focus on self-improvement! But if you’re always focused on what’s missing, you’ll never be able to attain true happiness. 𝗖𝗵𝗮𝗻𝗴𝗲 𝘆𝗼𝘂𝗿 𝗺𝗶𝗻𝗱𝘀𝗲𝘁 to focus on what you do have: Perhaps you don’t possess enough money to travel and donate as much as you would like to charity, but you do possess enough to pay for a sizable share of your child’s college For Example. That’s big! 4. DON’T MAKE impulsive decisions. If you find yourself tempted to make rash decisions with your money, you’re not alone. “Humans aren’t really wired to be great investors; it’s just not the way we are built,” we often make decisions based on emotions or intuition rather than facts.” 5.KNOW your limits! The world’s most skilled investors didn’t make it big due to one or two lucky investments—they’ve spent their lives learning how to be the best at what they do.! Like an wise man always Told me - Rome wasn't Built in a Day, Take careful consideration in everything you do. Notes - Adjust Your Worldview With the volatility of the Stock market & Forex Market, political division across countries and unpredictability of the pandemic, it can often feel like we’re living during a terrible time in history. But a little dose of perspective can remind us that’s not necessarily the case. It’s human nature to see things with a negativity bias, But it’s important for Investors / Traders to have an optimistic outlook on the world. “If you accept that it’s a great time to be alive—life expectancy is going up, the population is growing, we’re innovating and we’re getting better every year—then that’s the kind of place where companies / Assets / Markets can thrive,” “And if they thrive, you’re going to do well as an investor / Trader.” Those who choose to view the world through an optimistic lens will prosper, Remember this - “Some people freeze to death in the winter,” while “Others learn how to snowboard and spend time with their family by a warm fire because they know winter is not forever.” Thank You All For Reading This Motivational / Educational Post! I hope it Has changed Your View / Trading Psychology For the future! I have Left my Previous Educational Posts Below! Something Great to do today - Like, Share this Post, Leave me a comment Below! Global Fx Education Stay Safe!

Education

Forex retail traders in a nutshell 99% of retail FX traders are scalpers or day gamblers or "swing" traders. According to a paper on the BOJ website I'll link below, in 2015 a mindblowing 57% of retail clients were "scalpers". 86% were either scalpers (0 to 1 hour) or day gamblers (1 hour to 1 day). They excluded those with positions held over 1 month, 1 week to 1 month was only about 5%, much much smaller than all the day gambling. "Share of accounts by investment time horizon" So it's not 86% of trades it's really 86% of accounts. For something very niche that no one does. www.boj.or.jp Can't blame the FX brokers for giving their clients, which are nearly all gamblers, what they want. These gamblers looking for excitation and with get rich quick dreams. Success rate of 0% not even 1% not sure what's going on up there. They're not even meant for this business at all. Becoming a trader when you have risk & loss aversion facepalm. "It's ok I can work on my flaws and improve" It is like if being an exterminator would pay a whole lot and so people with a phobia, terrified of rats would start getting into the business "Yes I'm scared to death of rats but I can make it work, for the money do not try to demoralize me". Or snakes & spiders maybe that's a better example, more people scared of wittle spiders. Clearly ridiculous. "My whole lower body is paralysed but that won't stop me from running a marathon (on my hands?) and winning!". Since Europe banned binary options (gosh what a scam), which was at least forcing day gamblers to have fixed losses, and with the exception of a few turbos, day gamblers really have their work cut out for them: At least with online casinos they have a fixed loss. Bet 1 coin lose 1 and that's it. But when they day gamble Forex there is not "hard loss" so they can keep letting the loss get bigger and bigger (due to loss aversion). Some regulators want to fight retail trading, and keep spreading FUD about it "99% lose". What do you expect? Doesn't mean it's soooo hard, 99% lose but do not forget 99% are drunk gamblers! Forex especially since the late 2000s and even more since 2013-2015 has very little trends, not much volatility, and not that much returns to offer, so it gets a more and more negative image but FX traders are allowed to look elsewhere when nothing happens. Maybe really dumb regulators are going to ban it the moment it turns and becomes very profitable again. They have all these mental flaws: - Risk Aversion - Loss Aversion - Caring what others do and think - Casino mentality - Emotional behavior in general (FOMO, regret, confirmation bias, denial, etc many more) About the casino mentality here are 2 articles about a recent comment by Charlie Munger: www.nasdaq.com www.investopedia.com These day gamblers, at least they should pick the correct tools where they might have a chance. The best one has to be the DAX (the Dow Jones might come close too): Pros: - Very small costs (house edge is the smallest) - Lots of activity while it is open for 8 hours - I think about 1/5 days are good trend days - 90% of days have the top or bottom of the day in the first 90 minutes I think, or something like that - There are other cool stats but I don't really remember - AND many other day gamblers also bet on it! The money gamblers hope to win has to come from somewhere, well here it comes from other day gamblers. So I'm guessing all the day gamblers just do the same thing? Buy the trend when there may be one, and what separates the winners from the losers is the ones with the biggest... personalities hold their winners and have what it takes to exit losers fast... And that's it... Zero intelligence... I do not know or understand what gets the vast majority into this whole super short term game, broker propaganda? That's just how gambling mentality works? 99% can't just all be gamblers? Did people lie to them and tell them this is how you are supposed to trade? Why did I never hear about this lie myself? Does it come from what they saw in some movies and tv? (I never watch tv).

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The game of probabilities (%)In this article we will explain some fundamental truths about trading that any beginner should know in order to start being successful: 1. You don't need to know what is going to happen next in order to make money. Because any given set of independent variables that define an edge has a random distribution of wins and losses. In other words, based on your performance, you should know that from 100 trades that you take you should have 65 wins and 35 losses for example. The unknown part is the sequence of that distribution. You can have 10 losses in a row or 20 wins in a row. This fundamental truth makes trading a game of probabilities . When you know and believe that, a win or a loss doesn’t have the same meaning as before. 2. An edge is nothing more than an indication of a higher probability of one thing happening over another. To achieve consistency, you must agree that trading isn't about wishing, guessing, or collecting information to decide if the next trade will succeed. The only proof you need is that the variables you're using to describe an edge (your system) are present at any given time. You're adding random variables to your trading regime if you are using "other" facts beyond the parameters of your edge to determine whether or not to take the trade. If you are not sure about your edge you won’t feel confident about it and if you don’t feel confident you will experience fear. 3. There is a random distribution between wins and losses for any set of parameters that define your edge. If you believe that trading is about being right, when you experience a loss, you will blame yourself for that loss when in reality if you respect your system’s parameters you should not take the blame for it. If you blame yourself then on the next opportunity you will be afraid of the outcome. As a result, you'll begin collecting information in support of or against the trade. If your fear of missing out (FOMO) outweighs your fear of losing, you will collect facts for the trade. If your fear of losing (FOL) outweighs your fear of missing out, you will collect knowledge against the trade. You won't be in the best frame of mind to achieve consistent outcomes in this event. 4. Every trade is special and unique. Even if our minds are perceiving some trades as being the same as others that we have in our memory, every moment in the market is unique. If each moment is unique, there's no way to predict for sure what will happen next based on your logical experience. Trade with care. If you like our content, please feel free to support our page with a like, comment & subscribe for future educational ideas and trading setups.

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by financialflagship

How To Get Out of a Good Trade? - Setting Your TP Hi Traders, today's topic regarding 'How To Get Out of a Good Trade? - Setting Your TP' . Are you still struggling to set a proper profit target? Or are you still watching some of the best trades reverse against you? It can be frustrating sometimes watching some of the best runners turn into a breakeven OR losing trade. These are some of the methods I personally use to get out of a great position ( Trade Management ) 1. Technical levels (S&R zones) - This is mostly related to 'set and forget' type setup, you identify everything before hand, set your TP at key levels (broader thesis), leave it to run. But one thing when you're setting your target at key levels, you have to first understand the market condition then compare it to the current volatility. Eg. if the market is in a choppy range and you're setting your target at the all-time-high, it makes no sense (unrealistic) . - Also know that S&R are zones, so if you're setting your target at the absolute tip of the resistance, there'd be times where market just reverse against you, because mostly likely you've neglected the " zone " factor 2. Trailing Stops (Moving averages OR Prior high/ low) • Moving Averages This is great when you're looking for an extension sort of market movement, such as trading a flag/ exhaustion pattern. You're betting that the market will keep banging into your intended direction. How to trail it? You must first Identify the strength of the trend - Medium OR Weak trend (deep pullback) = 50ema to trail it - Strong trend (shallow pullback) = 18ema to trail it • Prior high/ low This is great when the market is in a strong trend, and your thesis is telling you that it MUST respect the higher highs & higher lows/ lower highs & lower lows sequence - Go down to lower timeframe such as 15m, everytime when price forms a minor level, trail your stops to that structural area - This method also helps you to keep track with the fresh momentum If you're constantly watching the market reverse against you, there few main issues are - You're having your target way too far (unrealistic TP), identify the daily ATR, then understand the probable and possible. - You're looking for an extension move in a ranging condition (market isn't going to keep ripping into one direction, there will be times where it ranges, this is when you MUST have a realistic target such as setting them at previous swing high/ low) 3. Fixed RR This is great if you're looking for a more systematic method to handle your TP & emotion at the same time - Eg 1:3RR - But by using this method, you'd somehow decrease your long-term expectancy as you're getting out of position way too soon sometimes - Yes you do eliminate some effort to figure out your TP in every setup, but you'd tend to have many ' re-entries ' too, as the frustration of getting out of a good position too early is overwhelming too. Feel free to comment below what's your worst nightmare in trading! "I know where I'm getting out before I get in." - Bruce Kovner Trade safe as usual. Do follow my profile for daily fx forecast & educational content.

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Should You Use Sessions Indicator?If you are new to trading Forex, should you have sessions indicator on your charts? Yes, 100%. Why, most of the liquidity and volume happens at end of Tokyo session to end of London session. This involved Tokyo/London overlapping one hour and London/New York overlapping four hours. You need to understand that price action during Tokyo session mostly ranges or goes sideways. You need to understand that price action during London session will mostly do a fakey or false move in wrong direction, then start trending. You need to understand that price action during New York session will mostly continue same direction of London session and/or reverse trend. You need to understand that price action after London session closes, will decrease with both liquidity and volume dropping suddenly for rest of session. Note: You need to know that 1st hour of any new sessions have the highest spreads and are not for trading, but for setting up future possible trades. Finally, from 10 p.m. to 2 a.m. PST/USA- either high or low of day will be made, 80% of time- then you can trade in trend direction of day. Sessions Indicator will keep you trading the right pair, at the right price, at the right time of day and during the right sessions. Why, trade AUDJPY during New York Session when both Sydney and Tokyo sessions are closed? Commonsense and keeping trading simple will help your bottom line, in Forex. The sessions indicator will work with any time-frame under 4 hours and keep a visual reminder of what session is open and closed - F.Y.I.

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All candlestick patterns for Trading : Bullish reversal patterns Hello everyone 😃 In this article we present Most useful bullish reversal patterns of candlesticks and How to trade with them. ( Sorry for my irregular chart 🤦‍♂️ I'm not good in drawing 😁 ) 📊 What is Candlestick charts ? Candlestick charts are a type of financial chart for tracking the movement of securities. They have their origins in the centuries-old Japanese rice trade and have made their way into modern day price charting. Some investors find them more visually appealing than the standard bar charts and the price actions easier to interpret. Candlesticks are so named because the rectangular shape and lines on either end resemble a candle with wicks. Each candlestick usually represents one day’s worth of price data about a stock. Over time, the candlesticks group into recognizable patterns that investors can use to make buying and selling decisions. 📍 Bullish reversal Candlestick Patterns : Over time, groups of daily candlesticks fall into recognizable patterns with descriptive names like three white soldiers, dark cloud cover, hammer, morning star, and abandoned baby, to name just a few. Patterns form over a period of one to four weeks and are a source of valuable insight into a stock’s future price action. Before we delve into individual bullish candlestick patterns, note the following two principles: 1- Bullish reversal patterns should form within a downtrend. Otherwise, it’s not a bullish pattern, but a continuation pattern. 2- Most bullish reversal patterns require bullish confirmation. In other words, they must be followed by an upside price move which can come as a long hollow candlestick or a gap up and be accompanied by high trading volume. This confirmation should be observed within three days of the pattern. 📌 The bullish reversal patterns can further be confirmed through other means of traditional technical analysis—like trend lines, momentum, oscillators, or volume indicators—to reaffirm buying pressure. There are a great many candlestick patterns that indicate an opportunity to buy. We will focus on five bullish candlestick patterns that give the strongest reversal signal. 🈺 Now let's talk about patterns that we provided on chart.. ! - Hammer : Hammers have a small real body and a long lower shadow. 📚 The hammer candlestick shows sellers came into the market during the period but by the close the selling had been absorbed and buyers had pushed the price back to near the open. - Inverted hammer : The Inverted Hammer formation is created when the open, low, and close are roughly the same price. Also, there is a long upper shadow which should be at least twice the length of the real body. 📚 The Inverted Hammer candlestick formation occurs mainly at the bottom of downtrends and can act as a warning of a potential bullish reversal pattern. - Dragonfly DOJI : The open, high, and close prices match each other, and the low of the period is significantly lower than the former three. This creates a "T" shape. 📚 A dragonfly DOJI after a price decline warns the price may rise. If the next candle rises that provides confirmation. - Bullish kicker : This pattern is characterized by a sharp reversal in price over the span of two candlesticks. 📚 Traders use kicker patterns to determine which group of market participants is in control of the direction. - Bullish spinning top : A spinning top is a candlestick pattern that has a short real body that's vertically centered between long upper and lower shadows. 📚 Spinning tops are a sign of indecision in the asset; the long upper and lower shadows indicate there wasn't a meaningful change in price between the open and close. - Bullish engulfing : This pattern appears in a downtrend and is a combination of one dark candle followed by a larger hollow candle. 📚 Bullish engulfing patterns are more likely to signal reversals when they are preceded by four or more black candlesticks. - Bullish harami : It is generally indicated by a small increase in price (signified by a white candle) that can be contained within the given equity's downward price movement (signified by black candles) from the past couple of days. 📚 A bullish harami is a candlestick chart indicator for reversal in a bear price movement. - Tweezers bottom : A tweezers bottom occurs when two candles, back to back, occur with very similar lows. 📚 Tweezers are more meaningful as part of other trends, especially pullbacks. - Morning star : A morning star is a visual pattern made up of a tall black candlestick, a smaller black or white candlestick with a short body and long wicks, and a third tall white candlestick. 📚 The middle candle of the morning star captures a moment of market indecision where the bears begin to give way to bulls. The third candle confirms the reversal and can mark a new uptrend. - Morning DOJI star : A Morning Doji Star consists of a long bearish candle, followed by a Doji that has gapped below it, then a third bearish candle that closes well within the body of the first candle and in doing so confirming the reversal. It is considered a strong bullish price reversal candlestick pattern. 📚 It is considered as a signal of a potential upcoming reversal of the current trend of the market. - Bullish abandoned baby : It forms in a downtrend and is composed of three price bars. The first is a large down candle, followed by a doji candle that gaps below the first candle. The next candle opens higher than the doji and moves aggressively to the upside. 📚 This pattern signals the potential end of a downtrend and the start of a price move higher. - Three white soldiers : The pattern consists of three consecutive long-bodied candlesticks that open within the previous candle's real body and a close that exceeds the previous candle's high. 📚 Three white soldiers are considered a reliable reversal pattern when confirmed by other technical indicators like the relative strength index (RSI). 📌 These candlesticks should not have very long shadows and ideally open within the real body of the preceding candle in the pattern. - Three line strike : The bullish formation is composed of a big green candle, 3 up candles, and one down candle erasing the advance made by the prior 3 candles. 📚 After prices trend in a particular direction, they will pause before refreshing higher. This is seen as a continuation pattern and is different from a pattern that would signal a reversal. - Three inside up : The three inside up pattern is a bullish reversal pattern composed of a large down candle, a smaller up candle contained within the prior candle, and then another up candle that closes above the close of the second candle. 📚 Consider using these patterns within the context of an overall trend. For example, use the three inside up during a pullback in an overall uptrend. 📌 These patterns are short-term in nature, and may not always result in a significant or even minor trend change. - Three outside up : The three outside up and three outside down patterns are characterized by one candlestick immediately followed by two candlesticks of opposite shading. 📚 Three outside up/down are patterns of three candlesticks that often signal a reversal in trend. 📌 Each tries to leverage market psychology in order to read near-term changes in sentiment. - Three stars in the south : It is formed by three black or red (down) candles of decreasing size following a price decline. 📚 The pattern indicates a bullish reversal, although the price should ultimately move in the expected direction before taking a trade. This is called confirmation. 📌 The three stars in the south candlestick pattern is a very rare pattern that doesn't typically precede large price moves. - Bullish stick sandwich pattern : One candlestick pattern is the stick sandwich because it resembles a sandwich when plotted on a price chart - they will have the middle candlestick oppositely colored vs. the candlesticks on either side of it, both of which will have a larger trading range than the middle candlestick. 📚 Candlestick charts are used by traders to determine possible price movement based on past patterns; These patterns may indicate either bullish or bearish trends, and so should be used in conjunction with other methods or signals. - Matching low : The matching low pattern is created by two down candlesticks with similar or matching closing prices. 📚 The pattern occurs following a price decline and signals a potential bottom or that price has reached a support level. - Break breakaway : The first candle in the formation is long and black. The second candle is also long gaps away from the first in the direction of the trend. The third candle can be either color, but does not show a change in trend direction. The fourth candle continues in the direction of the proceeding trend. The fifth candlestick has a long white body, opens against the trend and continues in that direction to close the gap. 📚 The Bullish Breakaway pattern is a five candle reversal formation that occurs during a downtrend. - Bullish Tri-Star : Tri-Star patterns form when three consecutive DOJI candlesticks appear at the end of a prolonged trend. 📚 A Tri-Star is a three line candlestick pattern that can signal a possible reversal in the current trend, be it bullish or bearish. 📍 A Tri-Star pattern near a significant support or resistance level increases the probability of a successful trade. - MARUBOZU : A large real body, There will be no shadow at either sides of the candle, The color of the candle will be of a significant meaning. 📚 MARUBOZU means “bald head” or “shaved head” in Japanese, and this is shown in the absence of wicks or shadow on the candlestick, meaning that the opening or closing price will be the same as the maximum prices of the candle. The absence of shadow indicates that the trading session opened at a high price and close at a low price at the end of the day (or the opposite). 🔴 NOTES : - There are many bullish reversal patterns that we only present most useful patterns for trading ! - Most of them have 2 definition and direction ( Bearish and Bullish ) and we only present bullish reversal patterns ! - For better result in your trading, You need to confirm patterns through trend lines, momentum, oscillators, or volume indicators. ⏰ Best timeframes to work with candlestick patterns : Traders usually use Monthly, Weekly, Daily, 4-Hour, Hourly, 15-Minute and even 1-Minute timeframes. Ideally, traders pick the main timeframe they are interested in and then choose a longer and a shorter timeframe to complement the main one. The longer timeframes typically contain fewer and more reliable signals. The shorter timeframes usually contain more signals with less accuracy. There are several types of traders, and they have different trading styles. 📍 We will provide more contents for candlestick patterns in next weeks ! So stay tuned and support us with your LIKES, COMMENTS and FOLLOWINGS... Have a great moments. @Helical_Trades

Education

by Helical_Trades

Updated

A different side of the story Whenever the price is at a structure/zone/psychological level, market makers always find a way to build momentum before moving the market. I know a lot of people who post videos on youtube explaining some terms and market approach never touch the part of being trapped by the market makers and also failing to detect a pullback or reversal. This knowledge is needed and can only be obtained by those who really want to know how the BANKS trade against us. So lemme cut it short, as soon as the price is at a level, market makers give false signals/ bait to a lot of new traders or even old traders and they all take it at the same period of time. Its not that they know exactly where your stops are, or how much is on your account. They just move against you and you with a small account will be trapped in the hunt for the big accounts stops. So my advice to you is to always wait for this hunts to happen and sell or buy after that, Dont be a break and retest trader. Its very dangerous.

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The Psychological DANGER of Counter-Trend Trading I see many traders consistently trying to fade the trend, but be careful. In this post, I will explain the psychological problem that can arise from it. Every time you get something that you want in life or that is pleasurable, you get positive reinforcement, and your brain says "I want more of that stuff" and then the brain says: "Keep doing what you are doing" ---> Behavior is learned. (Your neurons in your brain got linked together). Once the behavior is learned, and the neurons linked, it is very hard (near impossible according to behavioral science) to extinguish this learned behavior! Old habits die hard. Thus, the trader keeps doing the behavior that over the long run will generate losses. WHY? because reversal points are momentary while trends are prolonged and if the trader is trying to constantly make money out of the market, he continues to do the learned behavior, hoping that "NOW there must be a big correction", even though a correction can be many months in the future. So now you are probably asking: "ok Mr. Ph.D. in psychology, what is your solution? I already learned the wrong behavior, am I doomed?" According to science, there is hope, instead of trying to extinguish the behavior, you need to re-write it with the new behavior (replace it with a new behavior). What does it mean in a trading context? That means that if you are in the past got burned from counter-trend trading, it is recommended to join the trend --> you will generate profits ---> positive reinforcement ---> newly learned behavior ---> ah-ha moment

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5 Tips for Newbie Trader💯1. Two dangerous extremes On the way to making a stable income in the financial markets, newbie traders face two extremes: a) First - you can learn a lot and for a long time, but you still can't go to real trading. b) The second is to start without knowledge. Both paths lead to failure. By the way, it is the traders who have lost funds from ignorance of the principles of trading, and mainly create a negative image of the financial markets. You can't make money without knowledge! And to separate the process of gaining knowledge from practice too. Therefore, a beginner in the financial markets must both learn and practice. 2. Best instruments to trade for a newbie trader Now forex brokers provide a wide range of financial instruments within one trading platform: currency pairs, CFD contracts on stocks, futures , cryptocurrencies, commodities ( oil , gold , silver , etc.). It's easy for a beginner to get lost in this variety. In order to facilitate the choice, study separately the features of the different types of markets. 3. Trading psychology: the third pillar of successful trading An important factor to pay attention to when reading books for beginner traders is the ability to manage your own emotions. Trading is an amazing area. All your habits, behavior patterns, strengths and weaknesses of character are immediately reflected in the trading account and bring results in monetary terms. So you either earn or lose. Newbie trader, faced with a storm of emotions in the process of trading, should know: he is not alone. Most traders experience the same feelings, and those who have been making money in this area for a long time have learned to turn them to their advantage. And we are ready to share tips. 4.What a beginner trader needs to know about money management You already know that trading in financial markets is a high risk area. However, this risk is completely manageable, and if you know how to do it, you will be able to earn consistently. In addition to a profitable trading strategy, a trader needs an understandable money management system and competent risk management. The safety of your account depends on them. Here are the ingredients for a good money management system: a) Stop loss. It must be set correctly, according to the requirements of the market and your trading strategy. It will allow you to reduce your risk if your prediction turns out to be wrong or out of date. b) The ratio of risk and reward in each trading position. Usually trading strategies provide for it at a level of 1: 3 and higher. The minimum allowed ratio is 1: 2, only then the deal makes sense. c)The volume of the trade entry. Along with a stop loss, it determines how much or a percentage of your trading account you risk on each trade. d) Risk per position. Based on the mathematical expectation of a trading strategy, it is necessary to decide what percentage will be the maximum risk in each transaction. The smaller it is, the safer your trade. 5. Trading and life: how to organize your work So, you have decided to start making money through trading. Motivating pictures with a trader who sits under a palm tree with a cocktail in his hands and spends an hour a day to check how profit is dripping into his account - this is clearly not about the start of a career. At the very beginning (and eventually too) you need to have an organized working day for trading. 1) Set aside time on weekdays that you will devote to trading. 2) Do not combine it with other activities: dinner, watching TV series, spending an evening with your family, etc. Trading requires extreme concentration. 3) If you are a beginner, take the study plan presented in this article, allocate the stages in time and systematically, without scattering, move along it to your first profit. 4) Before you start trading, do a market analysis every day. ___________________________________________________ P.S. Can you add more, wolves?🔥

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by Berzerk_invest

All candlestick patterns for Trading : Bearish reversal patterns Hello everyone 😃 In this article we present Most useful bearish reversal patterns of candlesticks and How to trade with them. ( Sorry for my irregular chart 🤦‍♂️ I'm not good in drawing 😁 ) 📊 What is Candlestick charts ? Candlestick charts are a type of financial chart for tracking the movement of securities. They have their origins in the centuries-old Japanese rice trade and have made their way into modern day price charting. Some investors find them more visually appealing than the standard bar charts and the price actions easier to interpret. Candlesticks are so named because the rectangular shape and lines on either end resemble a candle with wicks. Each candlestick usually represents one day’s worth of price data about a stock. Over time, the candlesticks group into recognizable patterns that investors can use to make buying and selling decisions. 📍 Bearish reversal candlestick patterns : Bearish reversal candlestick patterns can form with one or more candlesticks; most require bearish confirmation. The actual reversal indicates that selling pressure overwhelmed buying pressure for one or more days, but it remains unclear whether or not sustained selling or lack of buyers will continue to push prices lower. Without confirmation, many of these patterns would be considered neutral and merely indicate a potential resistance level at best. Bearish confirmation means further downside follow through, such as a gap down, long black candlestick or high volume decline. Because candlestick patterns are short-term and usually effective for 1-2 weeks, bearish confirmation should come within 1-3 days. To be considered a bearish reversal , there should be an existing uptrend to reverse. It does not have to be a major uptrend, but should be up for the short term or at least over the last few days. A dark cloud cover after a sharp decline or near new lows is unlikely to be a valid bearish reversal pattern. Bearish reversal patterns within a downtrend would simply confirm existing selling pressure and could be considered continuation patterns. There are many methods available to determine the trend. An uptrend can be established using moving averages, peak/trough analysis or trend lines. A security could be deemed in an uptrend based on one or more of the following : - The security is trading above its 20-day exponential moving average (EMA). - Each reaction peak and trough is higher than the previous. - The security is trading above a trend line. 🈺 Now let's talk about patterns that we provided on chart.. ! - Hanging man : The hanging man is characterized by a small "body" on top of a long lower shadow. The shadow underneath should be at least twice the length of the body. 📚 The hanging man represents a potential reversal in an uptrend. While selling an asset solely based on a hanging man pattern is a risky proposition, many believe it's a key piece of evidence that market sentiment is beginning to turn. The strength in the uptrend is no longer there. - Gravestone DOJI : A gravestone DOJI is a bearish reversal candlestick pattern that is formed when the open, low, and closing prices are all near each other with a long upper shadow. 📚 A gravestone DOJI is a bearish pattern that suggests a reversal followed by a downtrend in the price action. 📌 A gravestone pattern can be used as a sign to take profits on a bullish position or enter a bearish trade. - Bearish kicker : This pattern is characterized by a sharp reversal in price over the span of two candlesticks. 📚 Traders use kicker patterns to determine which group of market participants is in control of the direction. 📌 The pattern points to a strong change in investors' attitudes towards a security that typically follows the release of valuable information about a company, industry, or economy. - Shooting stars : A shooting star is a bearish candlestick with a long upper shadow, little or no lower shadow, and a small real body near the low of the day. 📚 A shooting star occurs after an advance and indicates the price could start falling. The formation is bearish because the price tried to rise significantly during the day, but then the sellers took over and pushed the price back down toward the open. - Bearish spinning top : A spinning top is a candlestick pattern that has a short real body that's vertically centered between long upper and lower shadows. 📚 The real body should be small, showing little difference between the open and close prices. 📌 Since buyers and sellers both pushed the price, but couldn't maintain it, the pattern shows indecision and that more sideways movement could follow. - Bearish engulfing : A bearish engulfing pattern is a technical chart pattern that signals lower prices to come. The pattern consists of an up (white or green) candlestick followed by a large down (black or red) candlestick that eclipses or "engulfs" the smaller up candle. 📚 A bearish engulfing pattern can occur anywhere, but it is more significant if it occurs after a price advance. This could be an uptrend or a pullback to the upside with a larger downtrend. 🔴 The pattern can be important because it shows sellers have overtaken the buyers and are pushing the price more aggressively down (down candle) than the buyers were able to push it up (up candle). - Bearish harami : A bearish harami is a two bar Japanese candlestick pattern that suggests prices may soon reverse to the downside. The pattern consists of a long white candle followed by a small black candle. The opening and closing prices of the second candle must be contained within the body of the first candle. An uptrend precedes the formation of a bearish harami. 📚 A bearish harami is a candlestick chart indicator for reversal in a bull price movement. 📌 Traders can use technical indicators, such as the relative strength index (RSI) and the stochastic oscillator with a bearish harami to increase the chance of a successful trade. - Dark cloud cover : Both candles should be relatively large, showing strong participation by traders and investors. When the pattern occurs with small candles it is typically less significant. 📚 Dark Cloud Cover is a candlestick pattern that shows a shift in momentum to the downside following a price rise. The pattern is composed of a bearish candle that opens above but then closes below the midpoint of the prior bullish candle. 📌 Traders typically see if the candle following the bearish candle also shows declining prices. A further price decline following the bearish candle is called confirmation. - Evening star : An evening star is a stock-price chart pattern used by technical analysts to detect when a trend is about to reverse. It is a bearish candlestick pattern consisting of three candles: a large white candlestick, a small-bodied candle, and a red candle. 📚 Evening star patterns are associated with the top of a price uptrend, signifying that the uptrend is nearing its end. - Evening DOJI star : The Evening DOJI Star is a bearish reversal pattern, being very similar to the Evening Star. The only difference is that the Evening Doji Star needs to have a doji candle (except the Four-Price Doji) on the second line. The DOJI candle (second line) should not be preceded by or followed by a price gap. 📚 The pattern, as every other candlestick pattern, should be confirmed on the next candles by breaking out of the support zone or a trendline. If the occurrence is confirmed, then its third line may act as a resistance area. It also happens, however, that the pattern is merely a short pause prior further price increases. - Bearish abandoned baby : A bearish abandoned baby is a specialized candlestick pattern consisting of three candles, one with rising prices, a second with holding prices, and a third with falling prices. Technical analysts expect that this pattern signals at least a short-term reversal in a currently upward trending price. 📚 This is a rare pattern that has a fairly strong track record for forecasting a short-term downward trend. The key item of the pattern is the middle day, which should have a gap in front of it and following it, and which should close the session with price unchanged. - Three black crows : The black crow pattern consists of three consecutive long-bodied candlesticks that have opened within the real body of the previous candle and closed lower than the previous candle. 📚 Three black crows is a bearish candlestick pattern used to predict the reversal of a current uptrend. Traders use it alongside other technical indicators such as the relative strength index (RSI). - Tweezer top : A tweezers topping pattern occurs when the highs of two candlesticks occur at almost exactly the same level following an advance. 📚 Tweezers are more meaningful as part of other trends, especially pullbacks. - Three inside down : The three inside down pattern is a bearish reversal pattern composed of a large up candle, a smaller down candle contained within the prior candle, and then another down candle that closes below the close of the second candle. 📚 The down version of the pattern is bearish. It shows the price move higher is ending and the price is starting to move lower. Here are the characteristics of the pattern. - Three outside down : The three outside down describe a pair of three-candle reversal patterns that appear on candlestick charts. The pattern requires three candles to form in a specific sequence, showing that the current trend has lost momentum and might signal a reversal of an existing trend. 📚 The first candle marks the beginning of the end for the prevailing trend as the second candle engulfs the first candle. The third candle marks an acceleration of the reversal. - Advance block : Advance block is the name given to a candlestick trading pattern. The pattern is a three-candle bearish setup that is considered to be a reversal pattern—a suggestion that price action is about to change from what had been an upward trend to a downward trend in relatively short time frames. 📚 An advance block is a three-period candlestick pattern considered to forecast a reversal. The pattern's success at predicting reversal is barely above random. - Bearish stick sandwich : One candlestick pattern is the stick sandwich because it resembles a sandwich when plotted on a price chart - they will have the middle candlestick oppositely colored vs. the candlesticks on either side of it, both of which will have a larger trading range than the middle candlestick. 📚 These patterns may indicate either bullish or bearish trends, and so should be used in conjunction with other methods or signals - Matching high : The first line of the pattern appears as a long line whereas the second one can be either long or short. Both candle lines need to close at the same level. Additionally, the opening of the second candle need to be higher than the opening of the previous candle. 📚 The Matching High is built of two MARUBOZO candles having white bodies. In other words, it can be a White MARUBOZO or a Closing White MARUBOZO. - Bearish breakaway : The bearish breakaway is a formation of five candlesticks where the first is always bullish and the last is always bearish. The middle candlesticks will be rising and can be either bearish or bullish, but will usually be bullish. 📚 A bearish breakaway is a chart formation that can appear in a rising market when the price starts to pull or break away gradually to the downside. - Bearish Tri-Star : Tri-Star patterns form when three consecutive DOJI candlesticks appear at the end of a prolonged trend. 📚 A Tri-Star pattern near a significant support or resistance level increases the probability of a successful trade. - MARUBOZO : The black MARUBOZO is simply a long black (down, or red on the charts below) candle, with little to no upper or lower shadows. The pattern shows that sellers controlled the trading day from open to close, and is therefore a bearish pattern. 📚 How to avoid false MARUBOZO signals and setting stop-loss : If bearish, take a short when price falls below; Place a stop above candlestick. 🔴 NOTES : - There are many bearish reversal patterns that we only present most useful patterns for trading ! - Most of them have 2 definition and direction ( Bearish and Bullish ) and we only present bearish reversal patterns ! - For better result in your trading, You need to confirm patterns through trend lines , momentum, oscillators, or volume indicators. ⏰ Best timeframes to work with candlestick patterns : Traders usually use Monthly, Weekly, Daily, 4-Hour, Hourly, 15-Minute and even 1-Minute timeframes. Ideally, traders pick the main timeframe they are interested in and then choose a longer and a shorter timeframe to complement the main one . The longer timeframes typically contain fewer and more reliable signals. The shorter timeframes usually contain more signals with less accuracy. There are several types of traders, and they have different trading styles. 📍 We will provide more contents for candlestick patterns in next weeks ! So stay tuned and support us with your LIKES, COMMENTS and FOLLOWINGS... Have a great moments. @Helical_Trades

Education

by Helical_Trades

The Importance of a Trading Plan - How To Create One?Hi Traders. Today's topic is regarding 'How To Create a Trading Plan?'. Throughout my personal trading career, trading plan is often neglected by majority of novice Traders. A trading plan shouldn't be something complicated and heavy, simplicity is the key. Set realistic objectives and checklists that you are able to stick to it strictly on a daily basis. These are some of the important elements should be included 1. Instruments Know which instruments you are trying to focus on. In your earlier phase, focus on one instrument, really dig into it, put in the work to master the craft. 'Diversification may preserves wealth, but concentration builds wealth.' - Warren Buffett 2. Timeframe Multiple timeframe / Top-Down analysis is vital, it allows you to identify the long-term trend & short-term sentiment. But avoid distracting yourself with too many timeframes OR irrelevant timeframes. I'd always suggest to not look at more than 3 timeframes. A. Entry timeframe: Identify a timeframe that you'd find your entry triggers and place your trade, such as 5-30m charts (Lower timeframe) B. Analyzing timeframe: Identify two higher timeframes that'd allow you to view the bigger picture better, such as 1h - 4h charts (Higher timeframe) Eg. If you are a scalper, it is pointless for you to analyze the weekly chart. Eg. If you are a swing trader, looking at the 5m chart could be too intensive for your brain. 3. Risk Management This is the most important aspect that'd determine your long-term profitability. A. Risk per trade: Percentage-based risk is the most common method to manage your risk, such as 1-2% risk per trade. B. Maximum daily & weekly drawdown: Identify what's the worst scenario you'd allow yourself to sink into. There will be times where you are trading on tilt, things just get worse. This is when your maximum drawdown comes into play, pulling yourself out of the emotional vortex , prevent yourself from those irrational behaviour. 4. Personal Strengths & Weaknesses Explore your personality. Trading is about knowing your strengths & weaknesses, then leverage them into your advantage. There's no way you can completely eliminate emotion in trading, we're all human. But what's more important is to organize your mind to control its performance. A. Aggressive: If you're an aggressive trader, focus more on a trending condition, you should probably avoid the sideway condition (over-trade/ revenge trade tendency) B. Conservative: If you're an overly conservative trader (fear & hesitation elements), you should probably reduce down your checklist and simplify your trading system. 5. Strategies/ System This relates to your personal strengths & weaknesses too. Develop strategies/ system that suit your personality the most, then keep improving it. Identify which market condition you're the best at (Trend/ Range/ Channel), then develop successful strategies to capitalize on these market states. 6. Routine/ Action Plan Successful Traders tend to find trading to be a 'boring' process, they simply scan through charts, identify setups that fits into their criteria. Have a set of routine, simplify them and stick to them everyday even if you feel lazy. Eg. Spend 1h per day to analyze the market before you jump onto any trades Eg. Journal your trades every night Eg. Spend 1h per day to review & reflect your progress If you still don't have a Trading Plan, take action and create one now! 'Success comes from consistency, not what you do occasionally.' - Neoh Trade safe as usual, keep your risk managed. Do follow my profile for daily fx forecast & educational content.

Education

How to identify a correction for the next impulse move ? How to identify if a correction is finished/completed and ready for the next impulse move ? Hello everyone: In this educational video I will go over how to properly identify a correction in price action analysis. I recently made a price action workshop live stream video that went over everything on impulse - correction, structures/patterns, continuation and reversal corrections, but I still get a lot of questions on identifying corrections itself. How to draw, use the trendlines to identify a correction, and how to understand they are going to complete/finish. In my opinion this is the most important part in technical analysis. We need to understand that the market moves in phrases, it can only be in the impulsive phrase or corrective phrase. The key to trading is to understand when a correction finishes, we are going to get the impulsive phrase which will give us traders a better edge in the market to enter, where the momentum is strong. I have made many educational posts on price action analysis, specifically on continuation or reversal correction, which I will put the links below. Any questions, comments, or feedback welcome to let me know. Thank you Jojo Price Action Workshop www.tradingview.com Impulse VS Correction Continuation and Reversal Correction Multi-time frame analysis Continuation Bull/Bear Flag Reversal Ascending/Descending Channel Reversal Double Top/Bottom Reversal Head & Shoulder Pattern Reversal “M” and “W” style pattern Reversal Impulse Price Action Expanding Structure/Pattern

Education

17:21

by jojofang0901

Pending Entry Sell Limit Order (4/4)A pending sell limit is an order placed above price and expecting price then to go down. If you think that price action will continue downwards, but first retrace upwards then use a pending sell limit order. Two risks: Price action not reversing high enough to hit your entry price before going down and second possibility is price action continues upwards hitting your stop loss before going downwards. On noted EurUsd daily chart, trade setup gave a 1:3 risk reward. 50 pip stop loss and 150 pip target or profit. On larger couple or few day trades on higher daily time frames, using lower lot sizes might be part of your risk management and plan.

Education

Pending Entry Buy Limit Order (3/4)If you want to buy a pair at a lower price and think price action will go lower before price action goes higher in your trade direction, then use a pending buy limit order which is placed below current price and if your entry price is hit on its retracement, then buy limit order is activated. You are in trade. Two risks are price retracement does not hit your entry price and take off in a bullish or upper wards direction without your trade and/or price retraces thru your entry prices and keeps going lower and hits your stop loss. To avoid some of these use major support or resistance areas, previous price action left on chart and fib ret tool, which a lot of price reversals hit the 50% to 61.8% then reverse up in bullish trend or major trend direction. On EurUsd daily chart, noted 1:4 risk reward trade with a 40 pip stop/160 pip target. Use the right risk management for your account size and trade according to your plan. Good luck.

Education

Pending Entry Sell Stop Order (2/4)In this situation you would set a pending enter sell stop order below current price action, excepting price action to hit price and keep on going downwards to your target or take profit. Always, trade according to your plan and risk management, especially with larger stop losses and targets. The noted EurUsd daily chart was a set up of 1: 2.5 risk reward with 40 pip stop loss and 100 pip target.

Education

Pending Entry Buy Stop Order (1/4)Pending buy stop orders are placed above current market price action, and you expect price to keep on going up. These can be on any time frames, but daily is great if you are too busy to monitor your trades on a short basis. As noted on daily EurUsd chart, on Monday (pink line) a pending buy stop was placed above current price action, once price action later on Monday was hit then trade was activated with a 40 pip stop loss (margin, leverage, lot size etc... your risk management will decide this) and a take profit or target or 1.19000 or 120 pips up, by looking to your left on chart. This would have been a 1:3 risk reward setup, for this set it and forget it trade.

Education

Pair? Price? Time? & Session?- Before Entering A New Trade.Before Taking Any New Trades, Ask Yourself These Questions: What pair? Is base currency in current session. What price? Is current price action around round numbers? double zeros or higher are psychological numbers of banks and retailers. *On chart I use .500, .750, .000 & .250 ending numbers which on GBP pairs are quarter levels (or 12.5 pips) zones. Total ADR on this chart is 75 pips. What is current time? Beginning of a session (higher volume & liquidity) during London and New York sessions. What session is set up pattern to enter a new trade? Sydney, Tokyo, London or New York session. Higher volume? Beginning of sessions are a great time to initiate new trades, in direction of momentum and trend. Highest volume and liquidity is between London open to London close time, which is around 12 hours per day. *London overlaps Tokyo and London overlaps New York session. High liquidity? Overlapping sessions (best) and where two major sessions are working, so double liquidity and volume at play. Refer to noted possible five trades that could have been taken on noted 1 hour chart of GBPAUD during Fridays session. A lot of possible profit pips with the right stop losses and risk management- please trade according to your plan and strategy. For entries I use fractals, trends, momentum, volume, liquidity, fib ret reversal levels of (50% to 61.8%-golden zone), engulfing, harami and pin bar candlestick setups to enter with right pair, right price, right time and during right session. Good Luck.

Education

Irrational behavior: Victim mentality, risk & loss aversion People that call themselves neuro-economists make all sorts of experiments, the ABCD questions are from Kahneman and Tversky from 40 years ago, I found these examples on stanford website. There was another similar study, or series of studies in Lyon, France. They got people to speculate and when they dangled the carrot in front of them they basically created Bitcoin: Some researchers looked at institution traders and found the ones taking the most risks had the highest male hormones. I wonder how it is for the girls? They sometimes take big risks I'm sure, and let's ignore the dumb gambling mentality ones that's not who I mean. Maybe they rather get into bonds and stick to small risks safe returns? Any degen out there? All the big losing (famous) rogue traders are boys, so maybe there is something here, still I think the main reason is they hold bags and add to them. Nick Lesson is a legend, a superhero, he turned a 20 thousand loss into an 800 million one, why aren't people fighting to hire him? Can I hire the guy? Going to take his valuable advice and do the opposite. 20k into 800,000k! Another legend is Karen the supertrader, I don't think her high T made her lose millions. Just loss aversion and being a complete psychopath. I guess at some point it's not risk taking but loss aversion, technically/logically they are taking enormous risks out of fear of losing, but they are not logical so... Markets have been around 4000 years and derivatives at least 10,000. And people still don't get why. It is a place for risk averse persons yes, but they are the end user, the "client", the markets help out people get rid of their risk at a price. Once again, 0 logic: It makes absolutely no sense that risk-averse and loss-averse players would try to make money in the markets. The subject is fascinating to me, I have this impression I have dropped on an alien planet where nothing makes sense and it feels so fantastic, like I am in a Star Trek episode. I think (I am quite certain of it) we can see this in full display with Bitcoin: These are not winning odds... Also notice all these Bitcoin baghodlers that like to talk a lot in hindsight NEVER tell anyone what their position is and NEVER have an idea on their profile. Emotional (illogical) brain and low hormones (even moar risk aversion) is a bad combination... You look at some people that lied to police to avoid losing their job or reputation and that would never have lied to get the job in the first place... The majority always runs away from profit when it is objectively much better, and instead chooses the much smaller but guaranteed reward. And the majority will choose taking huge not worth it risks to avoid a loss, rather than just take a small loss and be on their merry way. I find it stunning than the majority of people could literally have the holy grail, and they would still mess it up because they are scared. This game (obviously) is not about changing and managing your emotions. Or autists would all be billionaires it's so obvious... Guess who these "it's easy it's all about emotions" ads are targetted to? What it takes is thousands of hours of screen time, practice, backtesting, reading, number crunching. The emotion stuff everyone learns about at the start is just a way to weed out the ones not meant to play this game. There are plenty other activities out there. As far as I am concerned if an individual has it deeply rooted in their subconscious this "bug", there is no way to rewire the brain this deep. For the (13% according to these questions lol) that have the ability to compete, it's a matter of spending the time getting good and rub hands when noobs cheerfully pile in, in a bubble or when trading gets popular in general (and then they create bubbles). The predators can abuse these cheerful greedy noobs and have a huge feast. When they baghold for ages or keep holding the price down it's less interesting though. But part of me wants to have this image of stomping noobs. Well Bitcoin was bagheld more than usual because they saw it go up so many times before (still super irrational and still sold the bottom for the most part, somehow XD), but hey they are pumping the S&P like the Nasdaq in 2000 right? The noobs are also going to sell GME fast right? After buying it up fast. (Sad I can't short). I don't think this info is really useful to be honest, the people without the illogical bug won't get much out of it (it's cool to know where the illogical as regulators say "inefficient" patterns come from), the people with the illogical bug will be in denial and convinced they are part of the winners. Is this anything more than an ego stroke and having a laugh while belittling illogical risk averse people? Well I think it's interesting, and plenty of scientists do too.

Education

When trading futures pairs, ZOOM OUT!I started trading NEO perpetual futures ( BINANCE:NEOUSDTPERP ) mid to late 2020 IIRC. Binance only had so much history on the trading pair. The "start" price for the coin was $25 and I started trading this pair around the $4 to $5 range. I got comfortable with the pair at the low time frames, I never really looked above 4 hour. I remember when the price reached $19 - $26 range. I'd made decent returns scalping and swing trading at this range. Looking back, I some how shut out the idea that the coin would go any higher, I'd made my money, time to move on to another coin. I wasn't buying spot in these days, at least outside of BTC and ETH, so the thought of holding never crossed my mind. I wonder if i'd had the sense to look at NEOUSDT to see the true price history relative to current prices if I'd have a different perspective on NEO. TLDR; I was a futures scalper, I made some gainz, but futures price action history (on your exchange) starts when the coin gets listed there. that "starting" point on that chart could be a high or a low for this coin. ZOOM OUT! Find an exchange that lists the _full_ coin's price history before you convince yourself the coin has reached its max potential. Not financial advice.

Education

by b6d1016fdeb149be865b678a8ac935

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