Traders gaining momentum: Fall edition!Hey everyone! 👋
Grab your beverage of choice: it's time to sit back, relax, and take a look at some of the hottest up and coming authors on TradingView. All of these folks deserve a follow, so be sure to show them some love! ❤️❤️
If you think we’re missing someone, be sure to make it known below in the comments. Also, we’ll be doing these roundups from time to time so be sure follow us so you don’t miss any of them!
Let’s jump in.
We’ve sorted each Author by the asset class they focus on. Click on their profile and see if you like the ideas they're putting out!
Multi-Asset:
Trade_Journal
TrendLINEBoys
NoFomoCharts
ZenMode
Valerus_Forex
Vixtine
SquishTrade
LupaCapital
Stocks & Indices:
dpuleo19
nuggetrouble
rossgivens
MarthaStokesCMT-TechniTrader
Crypto:
decklyndubs
natef1
Currencies:
jamison_fx
DemoDiaryFX_Trading
CarterKyleCapital
Lightwork_
WallStreetIntelligence
And there you have it! Our roundup. As we mentioned before, don’t forget to follow TradingView for regular educational content :)
Think we missed any up-and-coming accounts? Point them out in the comments! Obviously, don’t shill yourself. 😉
Cheers!
-
Please remember Editors' Picks and all the authors we mention are our attempt to show undiscovered traders, unique market insights, and interesting educational material.
Anyone can be featured in Editors' Picks or in posts like this. All it takes is publishing an idea from your account. We try to be as fair as possible, following many of you, and reading all the different ideas published daily.
That's it! High quality content, consistency, clarity, and the will to help others is what we look for.
You can read all of our guidelines below:
www.tradingview.com
www.tradingview.com
www.tradingview.com
TradingView Tips
How to build a top-tier trading planHey everyone! 👋
Today, we will be looking at how to build an unstoppable trading plan in a few short steps.
While many successful traders often use different ‘variables’ when it comes to identifying trades, the core decision making process of all good trading plans remains mostly the same. Therefore, we’re going to go over a few key things that you shouldn’t be missing out on in your very own trading plan. Let’s get started 👇
Asset Selection 🏦🏦
All good trading plans need to define how they will select what assets they will be trading. For Futures and FX traders, this is a relatively straightforward process, as the universe of tradable symbols is small. However, for Equities and Crypto traders, the universe of tradable symbols is massive. How will you figure out which symbols present the most opportunity and the best risk/reward? Having a defined set of criteria for finding opportunities you’d like to trade is absolutely essential for maximizing your strategy’s expected value.
For example, a stock day trader might search for stocks gapping overnight more than 4%, on more than X amount of volume/shares traded. Or, a crypto swing trader might search for liquid cryptocurrencies with oversold or overbought conditions that could present a mean reversion opportunity.
No matter what the asset though, for traders, generally there are two key things to ensure you’re looking for:
Volatility ✅
Liquidity ✅
If an asset doesn’t have enough liquidity, then it will be hard to scale in and out of bigger positions over time.
If an asset doesn’t have enough volatility, then it will be hard to generate absolute returns from the small trading range. This isn’t always the case, as a few options strategies look to profit off of low volatility, but for spot traders, it is absolutely essential.
Execution Logic 🧠🧠
Once you know what asset you’re looking to trade, the next step is to define what actually counts as a trading opportunity. Almost all assets move every day - what “setups” can you define for yourself that offer the best risk/reward?
The best trading plans have logic that reads like a decision tree, so the trader doesn’t have to think too hard in the moment about the process - all of the hard decisions have been made prior to the in-the-moment situation.
These decision trees can become infinitely complex, but as long as you create and are comfortable with your own execution logic, then you can follow it and improve it over time.
There are two important elements to account for when creating decision logic:
Direction ✅
Execution ✅
While some traders are comfortable taking trades in either direction, many traders are only comfortable with taking trades in one direction, because it can be easier to simplify what you’re looking for in a trade. Because of this, most funds and traders will look to come up with a “view” first.
For example: “I will only look for long trades when the asset is above its 20d moving average.”
OR
“If the ISM PMI is greater than 50, then I will only look to buy stocks.”
Then, once you know what direction you’re trading in (it can be both!), actually figuring out PRECISELY what gets you into and out of a trade becomes necessary.
For example: “If I am looking for a long entry in a trending asset, I will only buy at a 30d high, while setting my stop at a 30d low.”
Having both direction and execution helps to clarify exactly what counts as a trading opportunity, and what is simply a pattern that only exists in your head. It's also key to controlling your risk and getting you out of bad situations should they arise.
Cash Management 💵💵
Finding assets to trade and trading them according to a high-quality plan matters little if you lose everything in a single trade you were sized too large in. Because of this, the best trading plans account for risk and drawdown by planning for the worst-case scenario.
Common strategies to control risk center around sizing trades (to risk no more than 1-5% of your capital at any one time, for example) using theme limits, sector limits, and more. Risk is a decision you make on the way in, not on the way out.
When placing a trade, know ~exactly what you are risking, and how that fits into your overarching position management strategy. See this article for more details.
So, there you have it! 3 quick steps to building an unassailable trading plan ready for the punches the markets will throw your way.
Well, what are you waiting for? Get to work 😉
-Team TradingView ❤️
How to improve your trading by looking at interest rates: Part 4Hey everyone! 👋
This month, we wanted to explore the topic of interest rates; what they are, why they are important, and how you can use interest rate information in your trading. This is a topic that new traders typically gloss over when starting out, so we hope this is a helpful and actionable series for new people looking to learn more about macroeconomics and fundamental analysis!
You can think of rates markets in three dimensions.
1.) Absolute
2.) Relative
3.) Through Time
In other words;
1.) How are rates traded on an absolute basis? AKA, do they offer an attractive risk/reward for investors?
2.) How are rates traded on a relative basis? AKA, what separates bond prices between different countries?
3.) How are rates traded through time? AKA, what is the "Yield Curve"?
In our first post , we took a look at how to find interest rate information on TradingView, and how rates fluctuate in the open market. In our second post , we took a look at some of the decision making that investors have to make when it comes to investing in bonds (rates) vs. other assets. In our third post , we took a look at rates on a relative basis between countries.
In today's final post, we'll be looking at how rates are traded through time - in other words, the Yield Curve. What information can you glean from looking at the Yield Curve? How can it help your trading plan? Let's jump in and find out!
For reference, let's first get a look at the Yield Curve:
This chart contains a couple different assets, so let's break them down quickly.
The white/blue area is the rate of interest you receive for 2 year bonds when you buy them
The orange line is the rate of interest you receive for 5 year government bonds when you buy them
The teal line is the rate of interest you receive for 7 year government bonds when you buy them
The yellow line is the rate of interest you receive for 10 year government bonds when you buy them
The purple line is the rate of interest you receive for 30 year government bonds when you buy them
As you can see, differing maturities for bonds pay different yields over time.
If you purchased a 2 year bond in early 2021, you'd be earning 0.15% yield PER YEAR.
At the same time, if you purchased a 30 year bond in early 2021, you'd be earning 1.85% yield PER YEAR.
The situation has changed since then. Currently:
If you purchase a 2 year bond, you're earning 3.56% yield PER YEAR.
if you purchase a 30 year bond, you're earning 3.45% yield PER YEAR.
In other words, the situation has completely flipped.
Why did this happen?
There are a few reasons, linked to many of the topics we discussed in the last few posts. Let's break them down.
1.) Central Bank Funds Rate risk
2.) Inflation Risk
3.) Credit Risk
4.) Market Risk
To start, from early 2021 to now, the central bank has raised the funds rate materially. This means that government bonds must see their yield increase. Why lend money to the government if you get more sticking your cash in a savings account?
Secondly, inflation has picked up. This has been a result of supply shocks across the globe for commodities & services. As shortages have cropped up and demand has been steady or increasing, increases in the price of everyday goods has led short term bonds to "Catch up" to the yields of longer maturity bonds.
Thirdly, as GDP has shrunk over the last two quarters, the risk that the U.S. government will be unable to pay back its debt through tax receipts and bond issuance rises.
Finally, as we said in the second post:
When stocks are outperforming bonds, institutional demand for stocks is higher, indicating that people are feeling good and want to take risk. When bonds are outperforming stocks, it can be indicative that people would prefer to hold 'risk free' interest payment vehicles as opposed to equity in companies with worsening economic prospects.
This demand for bonds plays out across the Yield Curve. Demand for 'risk free' assets increases as the economic outlook worsens, meaning that the Yield Curve is indicative of how market participants think the market situation will play out over a given period of time. If the yield for 2 year bonds is higher than 10 year bonds, then market participants through their purchases and sales are articulating that they expect the next two years to have more economic risk than the next ten. In other words, they expect some sort of economic slowdown.
This is extremely useful for multiple types of traders:
Equities are tied to the economy - if rates are saying something about economic prospects, then it's smart to pay attention, as it may inform your asset selection process / trading style
FX is intimately tied with rates - if rates are moving, FX is sure to be impacted.
Crypto has shown a high inverse correlation historically with the "ease of money" index. If rates are going up, then non-interest paying crypto becomes less attractive.
Anyway, that's all for our series on Interest Rates!
Thanks so much for reading and have a great rest of your weekend.
- Team TradingView ❤️
How to improve your trading by looking at interest rates: Part 3Hey everyone! 👋
This month, we wanted to explore the topic of interest rates; what they are, why they are important, and how you can use interest rate information in your trading. This is a topic that new traders typically gloss over when starting out, so we hope this is a helpful and actionable series for new people looking to learn more about macroeconomics and fundamental analysis!
In our first post, we took a look at how to find interest rate information on TradingView, and how rates fluctuate in the open market. In our second post , we took a look at some of the decision making that investors have to make when it comes to investing in bonds (rates) vs. other assets.
Today, we'll be taking a look at how global investors understand interest rates, using three concrete examples.
Let's dive in!
As we mentioned last time, when it comes to understanding interest rates in any region, there are three main things to take a look at:
1.) Central Bank Funds Rate risk
2.) Inflation Risk
3.) Credit Risk
First, let's take a look at Credit Risk. 💥💥
Credit risk is something that happens when there is a risk that you may not get back the money you loan to a certain entity. For this series, since we're only looking at government bonds, this means the risk that the government won't pay you back.
Lesson: All things being equal, the more an entity (Company, Country) has to pay to borrow money, the less 'stable' they are in the eyes of investors.
Next, let's take a look at Inflation Risk. 💸💸
Inflation Risk is something that happens when there is a risk that your principal may lose buying power over time, faster than the interest rate, due to the rate of inflation.
For example, check out this chart:
In the Blue/White, you can see Turkish 1 year bond yields. In the green, you can see U.S. 1 year bond yields. Notice the difference in interest rates - the Turkish bonds pay 14%, and the U.S. bonds pay 3%. While the U.S. is a larger and more developed economy (and therefore runs a lower "credit" risk), some of the difference in yield comes down to the drastically different rates of inflation within the economy.
In the red, you can see the rate of inflation in the United States, and in the yellow you can see the rate of inflation in Turkey. Assuming a steady exchange rate, as Turkish Lira buy relatively less and less goods and services over time vs. The U.S. Dollar, investors will demand more yield to prevent against the loss in buying power.
Lesson: the direction of Interest rates tells you how investors think inflation might develop over a certain time horizon.
Finally, let's take a look at Central Bank Funds Risk. 🏦🏦
Central bank funds risk is something that happens when the Central Bank may move base funding rates adversely to your position.
Check out this chart:
It's the same chart as last time, but instead of the inflation rates superimposed on the interest rates, we've added the current Central Bank rates to the chart.
Remember, the Central Bank rate is the rate you get from the bank without "locking up" your money into a loan to the government.
Central Bank rate risk plays the biggest part in bond pricing, as you can see that interest rates and yields move together rather closely, especially as these are only 1 year bonds (we will look at the yield curve next week).
That said, given that Central Banks across the world are typically mandated to try and create stable prices for consumers, their actions are often dancing with inflation. Sometimes banks will raise rates too much and create deflation. Sometimes banks will raise rates too little and will be "behind" inflation (as many believe is currently the case).
Lesson: Interest rates are indicative of Central Bank policy, which is informed by several factors and varies from region to region. In other words - interest rates can describe the health of an economy. Too "High", and the Central Bank may have lost control. Too "Low", and the economy may be stagnant. These are generalizations, but they are a nice place to begin comparing regions on a relative basis.
And there you have it! Some concrete examples and lessons to be learned from looking at live moves in the market. Understanding these dynamics can be really helpful to building out a more comprehensive trading strategy. In other words, if you're trading FX, it's incredibly important to know interest rate differentials between countries, along with the underlying drivers of rates. Similarly, if you're looking at investing in a company, looking at that company's bond yields can tell you how much risk investors think the company has of defaulting on obligations.
Next week, we'll take a look at the Yield Curve, and include some more lessons about how you can use that information to begin forecasting prices and the overall economy.
- Team TradingView ❤️❤️
How to improve your trading by looking at interest rates: Part 2Hey everyone! 👋
This month, we wanted to explore the topic of interest rates; what they are, why they are important, and how you can use interest rate information in your trading. This is a topic that new traders typically gloss over when starting out, so we hope this is a helpful and actionable series for new people looking to learn more about macroeconomics and fundamental analysis!
Last week we took a look at how to find bond prices on our platform, as well as a few quick tips for understanding how and why interest rates move. If you'd like a quick refresher, click the link at the bottom of this post. This week, let's take a look at why understanding interest rates is important to your trading, and how you can use this info to your advantage.
You can think of rates markets in three dimensions.
1.) Absolute
2.) Relative
3.) Through Time
In other words;
1.) How are rates traded on an absolute basis? AKA, do they offer an attractive risk/reward for investors?
2.) How are rates traded on a relative basis? AKA, what separates bond prices between different countries?
3.) How are rates traded through time? AKA, what is the "Yield Curve"?
It's worth taking a little bit of a deeper look at each of these dimensions and how they work. This week we will begin by looking at interest rates from an 'Absolute' standpoint . 🏦
When it comes to looking at bonds as an investment vehicle on this straightforward basis, investors in the broader market will typically look at how attractive bonds are from a yield / total return perspective vs. other asset classes, like equities, commodities, and cryptocurrencies.
When it comes to gauging this total return question, the three main risks are important to know about:
1.) Central Bank Funds Rate risk
2.) Inflation Risk
3.) Credit Risk
In other words;
1.) Will the central bank rate move in such a way that makes the interest rate I'm receiving on a bond uncompetitive?
2.) Bonds are loans with timers. Will inflation eat away at my principal in terms of buying power faster than I'm being compensated?
3.) Can my counterparty make me whole when the bond comes due?
For the United States, the third question is typically "ignored" as lending money to the U.S. government is oftentimes viewed as "risk free", but in all scenarios understanding the attractiveness of bond yields over given time horizons vs. interest rates and inflation is a huge question.
In addition to that, absolute risk/reward for rates needs to be compared to other asset classes. If the S&P 500 is yielding 2%, paid out from the earnings of the biggest companies in the country, then how does the risk of holding equities compare to the risks of holding bonds? Understanding how institutions are judging this decision can often be gauged by looking at the movement of interest rates in the open market. When stocks are outperforming bonds, institutional demand for stocks is higher, indicating that people are feeling good and want to take risk. When bonds are outperforming stocks, it can be indicative that people would prefer to hold 'risk free' interest payment vehicles as opposed to equity in companies with worsening economic prospects.
This is the most straightforward way of looking at interest rates - how do they compare to the absolute risks in the market, and how do they compare to other "yield" streams? Do they make sense from a risk/reward perspective?
One final thing - If interest rates are rising, then the amount of return needed to "compensate" for taking risk needs to get higher and higher, or other assets like equities begin to look uncompetitive. Additionally, higher interest rates mean that future cashflows are worth less, given that most valuation calculations rely on the "risk free rate".
As an example, this implosion happened late last year, as people began selling bonds and interest rates began to rise. As interest rates rose, stocks that had a good chunk of their "value" priced into the future got hit the hardest, as the value of those cash flows in real terms dropped.
Interest rates can help a lot for putting the big moves in the market into perspective. 😀
That's all for this week! Next week, we will take a look at how credit risk and FX risk plays into relative bond pricing, and how different sovereign bonds may or may not appear attractive to one another on a relative basis. Our final week will look at the yield curve, and how risk over time affects demand for rates.
Cheers!
-Team TradingView
Here's last week's post if you're not caught up:
How to improve your trading by looking at interest rates: Part 1Hey everyone! 👋
This month, we wanted to explore the topic of interest rates; what they are, why they are important, and how you can use interest rate information in your trading. This is a topic that new traders typically gloss over when starting out, so we hope this is a helpful and actionable series for new people looking to learn more about macroeconomics and fundamental analysis!
The first question when dealing with interest rates is how to see the information on TradingView. While you can always click the "Bonds" tab under "Markets" and navigate to the "Rates" table, an even easier way to view interest rates across the globe is by using the 'search' terminal and typing in "10Y". Then, click "Economy", and you should be able to see all of the global 10 year interest rates markets:
This configuration will get you "10 year" rates, but you can get different maturity bonds by using other tickers. For example, you can see United States 3 month rates by typing "US03M", or Brazilian 10 year rates by typing "BR10Y". All of the rates markets in our system follow this ticker standard. Try one! It's easy.
For people who aren't familiar, here's the lowdown on how interest rates work.
Interest rates fluctuate in the open market just like stocks or cryptocurrency; they move inversely to government bond prices. In this way, you can simply look at government bond prices to get a sense of how interest rates are doing -> they will be moving in the opposite direction.
The reason behind this is that when bonds are issued, they are issued with a "par value" and a "coupon rate". Let's say that the par value for a government bond is $1,000, and the coupon rate is 2%. This means that every year, the bond issuer will pay the bond owner $20.
The thing is, after bonds are issued, they can be traded freely in the open market. Let's say that the $1,000 bond increases in value and begins trading at $1,030 because there is significant demand for some reason. Because the $20 paid to the bondholder is fixed, the actual "interest rate" that buyers get when they pay $1,030 for the bond a bit lower than 2% -> 1.94% to be exact.
Thus, changes in bond prices change the real time "interest rates" in the market!
One thing to note: Government bond rates are different than the Government-set "funds" rate, which is decided on by a country's central bank.
Next week in part 2, we'll take a look what drives supply and demand for government bonds / interest rates, and how monetary policy influences all the assets you trade. Plus, how you can use this information to your advantage!
See you next week!
- Team TradingView ❤️❤️
Trading Performance Psychology: Part 1The greater the difficulty, the more glory in surmounting it. Skillful pilots gain their reputation from storms and tempests.
- Epictetus.
Hey everyone! 👋
This week, we thought it would be interesting to dive into a less-commonly discussed topic: performance psychology - and discuss how it relates to Trading. Specifically, we're going to look at the following question: What actually drives outperformance from one trader to the next?
From a process standpoint, there are lots of things that aspiring traders can take from other performance disciplines (like sports) in order to better understand the necessary steps to get where they would like to be. Let's jump in!
Time is the common element to expertise ⏰
Mastery is built over time. First through exploration, then knowledge building, then well-structured practice.
To invest the great amounts of time and effort required for mastery, an individual typically bonds emotionally with the field, creating a long-term relationship.
Present in almost all extremely high performing traders is an inherent, intrinsic love of trading itself. This means a love for analyzing charts, working on strategies, looking at markets, and trying to fit the pieces together in one's head. In this frame - Trading isn't a job, it's a CRAFT . If you just love the status, the lifestyle, or the income, then it's likely that you won't reach the true heights of the profession. The highest performing traders spend hours and hours working on their trading; not because they WANT to, but because they LOVE to.
Finding a niche ❤️
The greats do not become great by working hard; they work hard because they find a great niche: a field that captures their talents, interests, and imagination. The best pitcher in the world might make a terrible hitter.
If you're early on in your journey (or lost), something to consider is trying to find a niche that you truly resonate with. A great deal of importance is placed on niches in other professions and institutionally within finance, as hospitals and banks have rotational programs to expose newcomers to different types of experiences.
Why then, don't individual traders do this? A great way to center your thinking is by constructing a rotational program for yourself. Here's a list of the most popular asset classes & trading styles. Give each a google, or look for ideas here on TradingView, and see what you resonate with most strongly. Set yourself up for long term mastery by actually finding something you love doing day in and day out.
Liquid Asset Classes:
-Stocks
-Currencies
-Cryptocurrencies
-Futures
-Fixed Income
-Volatility
Styles (Timeframe):
-Intraday - holding time is seconds to hours
-Swing - holding time is days to weeks
-Position - holding time is weeks to months
Which holding style fits with your temperament? What topics do you like learning about?
The Learning Process ✅
In trading and in life, we often hear that "Practice makes perfect". A better saying may be "Perfect practice makes perfect". How practice time is structured makes the difference between a performer who has five years of experience and someone who has one year of experience repeated five times over. So; how should you structure your practice?
In performance psychology, there's a concept known as a "learning loop". It has three parts.
Performance -> Feedback -> Learning (repeated).
This is crucial, because feedback is the key to improvement. Trading is a solo sport, which means that figuring out how to incorporate a feedback process that allows for reflection is absolutely critical.
P/L is feedback, but there can be some problems with it singularly as your feedback mechanism. Even the best traders who execute the best looking trades can be on the opposite side of variance on given days. Process is king. Get feedback from your performance that doesn't have to do with P/L so you can track the inputs to your decision making. Some traders take copious notes, some record their screens, and some record data points that aren't P/L related (hours slept, hydration, mood, etc).
(we have a notes feature built into the charts you can use for this purpose.)
If you gather up all of these items together to create a long term blueprint for building mastery, it should look something like this:
1.) Find out what you truly love about trading
2.) Explore it more deeply
3.) Stick with it through time and allow your intrinsic enjoyment motivate you through the ups and downs
4.) Structure your performance through that time in such a way that you can generate feedback for yourself
5.) Incorporate that feedback to continually improve your process. Allow learning loops to be your engine of long term performance.
-
Hope you enjoyed reading, and stay safe out there!
- Team TradingView
What makes a good trader?Hey everyone! 👋
What makes a good trader?
The eternal question.
Is it character? Intelligence? EQ? Dumb luck? Something nobody's yet mentioned?
Newbies and pros alike have long argued about this topic, and today, we want to hear from the TradingView community.
Using just one word, in the comments below, tell us your opinion. What separates a good trader from a bad trader? Besides profit ;)
If your comment contains more than one word, you're disqualified!
To get the ball rolling, we'll give the users behind top two comments a pack of our new, 2nd edition TradingView Tarot cards. The contest ends tomorrow, Monday June 6th, at the New York open at 9:30 am.
Have fun, and enjoy the rest of your weekend!
- Team TradingView
How to fail as a traderHey Everyone! 👋
Over the last few weeks, we've looked at a couple of the best ways to improve your trading, including learning to adjust to market conditions , building a proper trading mindset , and more. Today, we thought it would be fun to do the opposite. Instead of trying to help the community build up solid, professional trading practices - let's try to design a losing trader from the ground up! What attributes/decisions will we have to encourage to get a losing result?
Theoretically, the market is just a game of probabilities. How can we guarantee that our trader will lose? As it turns out, there are a couple easy behaviors we can combine to ensure that a losing outcome is a foregone conclusion.
Number 1: They never define risk 🤷🏼♂️
In trading, people often say things about "Risk management", "Defining your risk" or "Defining your out", but it can sometimes be difficult to determine, as a new trader, what the heck people are talking about. Define my risk? How? What are you talking about? What does this actually mean?
Put simply, defining your risk is a process of figuring out *where* you are wrong on a trade/investment.
For active traders, it can be as simple as picking a recent low or high, and saying "If this price is hit, then I'm exiting the trade. The short term read I had on this asset is no longer valid. I don't think I know what's going to happen next." For someone who is more of a position trader, it can be as simple as saying "I don't want to lose more than 10% (or some percent) of my capital at any point when I am in this position. I think that I have selected my entry well enough that a 10% drop (or x%) would mean that, for some reason or another, my thesis is no longer valid."
From a cash management / portfolio management perspective, defining your risk has another dimension: How much of your total capital do you want to potentially lose in a worst case scenario? Should each trade risk 50% of your capital? 20%? 5%? 1%? How much of your total bankroll will you lose before you stop?
In order to ensure that we have a losing trader, it's important that they doesn't have a plan for position sizing, setting stop losses, or setting account stop losses. This way, they won't have any consistency and will inevitably take a few big losses that knock the out of the game forever.
Number 2: They use lots of leverage 🍋
When combined with Number 1, using lots of leverage is a great way to accelerate the process of losing money. Given that a strategy that wins 50% of the time will statistically face a 7 trade losing streak in the next 100 trades, sizing up and using leverage is a great way to ensure that when a rough patch strikes, you lose all your capital. Letting trades go past how much you expected to lose is a great way to speed this process, because with the addition of leverage, things only need to go against you 50%, 20%, 10%, etc, before you're wiped out. You can't risk to zero.
Considering that the most aggressive hedge funds in the world typically don't use an excess of 5-8x leverage, even in FX trading, we will need our losing trader to use at least 10-20x leverage in order to speed up their demise.
Number 3: They hop from strategy to strategy 🐰
Bruce lee once said, “I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.”
In this example, sticking to one strategy, even if suboptimal, is the man who has practiced one kick many many times. The trader who strategy hops is the one who has tried almost every kick out there, but mastered none. In order to ensure that our trader is a losing trader, we need to ensure that they never develop any mastery and keep switching from strategy to strategy. We need to constantly dangle a new strategy, indicator, or trading style constantly in front of our trader. Thus, no matter what strategy the trader picks, they will lack the hours necessary to have anything but suboptimal trade execution, poor overall market sense, and a general lack of nuance & understanding.
Combined with number 1 and number 2, it's going to be nearly impossible for this trader to be profitable.
--
So there you have it; 3 ways to ensure that the trader will fail. Recognize any of them?
Our hope in writing this is not to discourage anyone from getting involved in the markets, but rather to continually shine a light on some of the bad habits we can get in when starting out. Avoiding rookie mistakes and bad practices that can stunt a career as a trader & create bad habits - no bueno! Let us know if you enjoyed, and we will continue to make more of these posts that go through some trading "best practices".
Have a great week!
-Team TradingView ❤️
4 things to remember about bear marketsHey Everyone! 👋
Whew, what a week. Assets across the board got smoked, and the Nasdaq officially ended the week in bear market territory. For crypto traders, Bitcoin, Ethereum, and some other crypto assets have been cut in half, or more. Despite the S&P 500 being down only 13-14% from highs, only 25% of all listed stocks are above their 200 day moving average. It's safe to say that after the massive bull run in nearly everything we've seen over the last two years, we are now officially in a bear market.
Because this may be the first bear market experienced by many in our community, we thought it would be helpful to put out a little guide of key things to remember about bear markets, to help people navigate this new market regime.
Let's jump in!
1.) Volatility makes your positions feel bigger in P/L terms 💥
Bear markets typically bring about more volatility in asset prices than bull markets. Over the last 20 days, we've seen an average daily move in the indices of about 3%, which is much larger than the rolling 20 day average in 2021 of about 0.9%. With the same amount of capital, this pickup in average range means that in $$ terms, your P/L moves have likely gotten much bigger than "normal". In March 2020, the average daily range in the S&P 500 was over 5%!
This is important to remember, because P/L can have a huge impact on trader psychology. Lots of professional money managers and hedge funds control for this factor, reducing exposure to keep daily portfolio volatility close to their target. Some funds are mandated to do this. While you're free to do what you like in following your trading plan, this is a key expectation to hold! Expect bigger moves than normal.
2.) The average bear market lasts about 2 years 📉
The 2 year number mostly refers to how long the average *stock* bear market lasts. So far in Crypto, the average bear market has lasted about 9 months. For comparison, in stocks, the average bull market lasts more than 6 years. So, while bear markets tend to be much quicker than periods of growth in equities, they also tend to be more memorable.
Recently, bear markets have been getting shorter and shorter - the last bear market in 2020 lasted barely a few months. Some attribute this to the Fed stepping in more and more, while others often claim that the better communications infrastructure we now enjoy in the 21st century is allowing information to be priced in much faster. While the trend is certainly towards shorter and shorter bear markets, they can still oftentimes last much longer than one expects. Adjust expectations accordingly!
3.) Cash is a position 💵
While USD inflation is currently high, running at about 7-10% (depending on which numbers you're looking at), the buying power of one U.S. Dollar doesn't actually change that much, day to day. The buying power of one share of SPY changes MUCH more rapidly, per day, and, recently, it's been losing buying power a LOT quicker. The most important thing to remember for bear markets is that staying alive is *THE* most important thing. As long as you don't blow up, you can live to fight another day. Fleeing poorly performing assets for cash is an option.
This has been happening recently. If you look at the major asset classes, people seem to be fleeing to cash. Bonds, Stocks, Gold, Crypto - it's all getting sold for cash. In a "Risk off" environment, typically conservative players will rotate from risk assets like stocks into "safer" stuff like Treasury bonds. That said, with the fed hiking and inflation running high, it seems people are skipping the 3% yield they can get in a bond in favor of the total flexibility you get with cash. Another option for hedging is to sell short assets you think will underperform, or buy puts on your portfolio (if available). You can directly see the price of sleeping well in the options market.
4.) Bottom picking is hard 🎣
While it is our job as traders to find opportunities that have a positive expected value, bottom picking has been historically very challenging. In the crash of 2020, many prominent hedge funds were under-hedged going into the crash, and over-hedged coming out of it. Effectively, some of the smartest people in the world did a poor job of picking where the likely bottom was.
Unless you have a very long term strategy that allows for consistent deployment of capital over time (DCA), trying to pick bottoms in downtrending markets can be a very low bat rate% strategy.
Well. That's it. 4 things to remember for newbies to bear markets. As we mentioned, the most important thing to do in a more difficult market is to stay alive! 🐻
Have a great weekend! 😄
-Team TradingView
3 tips for building a professional trading mindset 🎯Hey Everyone! 👋
Today, we're going to be talking about building a professional trading mindset. While this topic has been the subject of countless books and trading literature over the years, we thought it would be cool to break down a few of the most important takeaways for the TradingView community. Let's jump in!
1.) Start thinking in Probabilities 🔢
Let's take a quick look at one of the most important concepts in Trading and in life: Expected Value.
Expected Value is simply a number which indicates, based on probabilities, the value of executing a certain action. It can be positive or negative. Will this trade make money? Should I change careers? Should I marry my partner? It all comes down to Expected Value. Now - What makes up Expected Value? 2 things: Bat Rate% and Win / Loss.
Bat rate is the percentage of wins vs total outcomes. Win / Loss is the size of the average winner divided by the size of the average loser. In other words; What is the chance this works? How big is a win? How big is a loss? When you combine these numbers, you can much more clearly understand whether or not it makes sense to take a certain action.
Let's say, for example, that a certain trade idea has a 50% chance of working. A win earns you $2, while a loss loses you $1. Should you take the trade?
Let's find out. In this example, you take this trade 100 times. 50 times, you win $2, and 50 times you lose $1. You'd end up with a total profit of $50! ((50x2)-(50x1)). Clearly, this trade has positive expected value! So, even if you take the trade and end up with a loss, you still made the right decision, from an EV standpoint .
The tricky business with Expected Value is that Bat Rate and Win / Loss aren't hard numbers. They are estimates. Thus, building a feel for the likelihood of something happening, and building an understanding of the amplitude of wins and losses is a key skill to build for trading and life. An easy way to better calibrate your antennae for this is simply making a note of what you expect to happen in your trading journal. Over lots of repetitions, your ability to guess outcomes should improve.
2.) Self awareness 😵💫
In trading, actions of all market participants at all times are driven by 2 fears: The fear of missing out and the fear of loss . In other words, fear and greed. The thing is, depending on your brain chemistry and life experience, it's likely that one of these fears impacts you more strongly than the other.
Think of the following scenario: You put on a trade, and the position begins moving in your direction. The asset then begins trading sideways. Let's examine two ways this could go:
a - you close your position. Then, the asset begins ripping in your direction once more, tripling in price. You've missed this extra move, now that you've taken your position off for a small gain.
b - you don't take the position off, and the asset round trips back down to your stop loss, and you take an L on the trade.
Which of these scenarios is more painful to you? There's no *right* or *wrong* answer, but it's important to know which fear has a stronger hold on the decision making complex in your brain. If you find that you're more prone to FOMO, then try to figure out a strategy where you can squeeze every last drop of a winning trade. If you're more prone to the fear of losing, then try to figure out a strategy where the possibility of taking big or consistent losses is much less likely.
3.) Strategy fit is extremely important ✅
This tip piggybacks off of the last tip about self awareness, and really underscores the importance of consistency in interacting with the markets.
When you interact with the markets, having a written out, well understood trading plan is key to success. The biggest and most elite hedge funds in the world have clearly defined investment mandates, best practices, and business plans. What makes you think you don't need a plan?
That said, not all trading plans are created equal, and even the best laid plans of mice and men...etc.
When designing a trading plan, many new or intermediate traders focus solely on the money making aspect. As in, 'which strategy is going to earn me the highest amount of profit over a given period of time.' How can I gain some edge? Typically backtests, fundamental research, vision, and more play a part in helping define the criteria for a profitable strategy.
However, expert traders know that there's something even more important than defining your edge; ensuring consistency .
For example, let's say that you come up with a perfect trading strategy that should, in theory, in the future, allow you to trade extremely efficiently. The plan lays out a perfect set of criteria for buying market bottoms, and selling market tops. For newbies, this is the holy grail. However, just because you *understand* a strategy doesn't mean that you will be able to *execute* the strategy.
You could test this perfect strategy in real life, and if you're unable to execute the set of rules you've laid out for yourself in the heat of the moment due to your psychological makeup, then it doesn't matter how much edge the strategy has. You can't execute.
Thus, finding a strategy you can will yourself to execute with consistency, no matter what is happening in the markets, is of paramount importance.
In terms of expected value and self awareness, having a strategy that's 30% efficient but you can execute with 100% certainty is much more valuable than a strategy that's 70% efficient that you can only execute accurately about 40% of the time.
Not being stressed from a loss is the real flex. Design around preventing mistakes, not losses.
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Anyway, thanks again for reading, and have a great weekend! Let us know with a comment below if you learned anything, and we'll consider doing a full series on applied trading psychology.
Cheers!
- Team TradingView
What's the worst trading advice you've ever heard?Hey everyone! 👋
Last year, we asked the community to share some of the best trading advice they’ve ever heard, and we got a ton of great (and hilarious) responses .
This week, with a slow and choppy market across almost all asset classes, we thought it would be fun for people to list some of the WORST trading advice they’ve ever heard. It can be an individual call, or broader trading "principles”. No matter what it is, we’d love to hear it.
The best two replies get a TradingView mug. Contest ends Wednesday at noon EST when we will announce the winners.
Have a great week!
-Team TradingView.
How to find accurate analysts on TradingViewHey everyone! 👋
Last week, we put out a post about some of the authors that are gaining momentum on our platform, which led to lots of great feedback from the community. And, while we plan on releasing those “compilation” lists on a monthly basis going forward, we thought it would be nice to highlight other ways you can find insightful / skilled authors who are trading the same things you’re trading.
Let’s jump in.
Step 1 : Open a chart of whatever you like to trade.
This can be any asset, on any timeframe higher than 15 minutes - we don’t allow people to post on timeframes lower than 15 minutes.
Step 2 : Enable Visible Community Ideas
Head to the right rail, and make sure you’ve selected the idea stream tab. This is the shaking lightbulb icon. From this menu, select the lightbulb at the top. This will make all of the ideas published for your symbol and timeframe appear on your chart! If you don’t see anything, try going to a more ‘common’ symbol or timeframe. Check out the daily chart for AAPL or BTCUSD.
Step 3 : Who nailed the tops and bottoms?
With the visual interpretation of the long and short idea callouts, it should be easy to spot who’s been doing a good job of figuring out what's going to happen next. Who was first to the big run? Who was right to take some profits?
Once you’ve found someone who seems to do a good job at this, it's absolutely crucual to see how their other ideas have done! Be sure to go to their profile and check to see if most of their ideas have been accurate, or if they got lucky with one real winner.
Step 4 : Follow them!
This is a really easy way to build up high quality information flow, and buttress your process of idea generation. Even if the poster doesn't do a good job of trading their own ideas, there could still be an advantage in it for someone with good trading practices. A highly curated stream of follows can actually be a source of significant alpha!
Bonus Step 5 : Clean up your idea stream.
One thing you can also do is limit the visible ideas on your chart to people you follow. This should make it entirely obvious if someone you’re following is constantly wrong. If so, you can remove them easily from your idea generation feed by unfollowing them. Make the idea feed work for you, not overwhelm you!
See you all next week :)
-Team TradingView
Techniques For Getting Better Prices 🎯Hey everyone! 👋
Last week, we posted an idea about the three main order types that market participants use: Market orders, Limit orders, and Stop orders.
This week, we thought we’d take it a step further, and discuss some of the more advanced techniques that professional traders use to get better prices, using those three order types. 🎯
Technique 1: Use Limit-Thru orders instead of Market orders 📈
This is a popular technique among traders in nearly all scenarios. If you’re looking to “take” liquidity (you’re the aggressor in the trade), using a Limit-thru order is almost always a better option than using a Market order. Limit-thru orders are so-named because they are Limit orders - “I would like to purchase shares at this price and no worse” - but the aforementioned price is above the best offer.
For example, Let’s look at AAPL again. Let’s say the stock is bid at $175.01 and offered at $175.03. A buy Limit-thru order could be priced at $175.05. A Limit order like this is “thru” the price of the best offer, and is thus “marketable”.
The reason that Limit-thru orders are often better than market orders is because of market microstructure.
If you place the Limit-thru order as described above, then you might not get a full fill, but you won’t pay drastically more than you expected. With a market order, the market maker might fill you on your first set of 100 shares, and then move up offers on other exchanges where you get the rest of your fills.
The BATS exchange is closer to Manhattan than the NY4 datacenter, which houses a lot of the bigger exchange servers. This means that your order may hit BATS before the other exchanges. If a market maker knows that there is buying interest in something, they will fill the first 100 shares of something, then out-run your order to other exchanges that have more liquidity and potentially move up their offers, getting you a worse price.
This doesn’t always happen, but the way the markets are set up allows for antics like this. Pros will often use Limit-thru orders (where the order price is offer+0.02c, for example) to sidestep these issues. The same is true when reversed for selling assets.
Technique 2: Work your orders. 💪
Fun Fact: The Orderbook you see may not be the real Orderbook. It’s true!
When it comes to the market for any given security, there are two types of limit orders: “Lit” orders, and “Dark” orders. When looking at the depth of market, you are only seeing some of the picture!
Sometimes, there will be hidden orders in between the price you want and the price that’s shown. By placing your order within the spread, it’s possible to get better prices than you would have otherwise from dark orders / pegs / etc.
Additionally, if you place your order in between the spread, you become the new best price on your side. This may encourage someone looking to take the opposite side of the trade to come and meet you where you are. This is especially true in options markets where spreads are often wide and slow moving. Working your orders (posting them, and moving them around) will almost certainly get you better fills than hitting the best posted price on the other side of the trade.
Just make sure you don’t miss the move while waiting to get filled!
Technique 3: Use the Orderbook to your advantage. 🧾
It’s rare when it happens, but occasionally non-sophisticated market participants will “show their hand” in the market. This typically involves one large lit limit order that sticks out like a sore thumb in an orderbook. If this person begins to signal aggression, you might be able to score an awesome price on the assets you’re looking for.
For example: Let’s say that you’re looking to buy some AAPL stock, and you pull up the orderbook (depth of market). From here, you can see that there’s a massive sell limit order that is slowly moving it’s price lower and lower in an attempt to get filled. This kind of obvious sell pressure can lead to a significant price move as the market front runs all of the liquidity the whale is looking for. This may continue for some time until the whale starts getting paid. When this happens, the stock has likely found a local area of demand, which is probably a much better price than what you were expecting when you pulled up the order ticket. Bottom line, it can make sense to take advantage of these situations if you see them before sending out orders.
That’s it! Some tips and tricks for getting better prices using orders and the orderbook.
-Team TradingView 💘
If you missed it, this was the beginner idea from last week:
How Different Order Types WorkHey everyone! 👋
Today we wanted to take a look at the 3 main order types that exist when it comes to interacting with the markets, and explain a bit more about what they do, and when they are useful.
Sound good? Let’s jump in! 🚀
Before we talk about the different order types that you might see when you place a trade through TradingView’s platform, it’s important to understand how almost all markets work in the first place.
When it comes to any market, at any time, there is a “BEST BID”, and a “BEST ASK”. 🔢
The BEST BID is the highest price that someone is willing to pay for a given asset, and the BEST ASK is the lowest price that someone is willing to sell a given asset for.
Let’s think about that again. When it comes to stocks, for example, your broker will present you with a consolidated marketplace of orders (orderbook) for a given stock. Let’s say you’re in the market for some Apple shares. You can see that the stock is “trading at” $175.50. What does that mean?
It means that the lowest price that someone is willing to sell their Apple shares might be around $175.52, and the highest price that someone is willing to pay for Apple shares might be around $175.49. 💹
How are these market participants making their intentions known? By placing LIMIT ORDERS. ⌛
1.) A LIMIT ORDER is a type of order that you send to the trading venue when you’d like to buy or sell something at a certain price.
In the Apple example above, let’s say that you’d like to buy some Apple, but you don’t want to pay a penny more than $175.25. When you enter this order and click “send”, your order goes to the venue, and JOINS the orderbook, at the price of $175.25. You are now “LIVE” and in the market. Your broker will deduct the cash it would require to fulfill that order from your buying power while your order is live.
Next question: If people have their limit orders out in the order book, how would price ever work its way down to you? 🔽
There are a couple ways, but one of them is most common: MARKET ORDERS ⌚
2.) A MARKET ORDER is an order that is sent to the market and immediately takes action to buy or sell an asset at whatever the prevailing prices are.
Lots of people use market orders because they virtually guarantee that you will get the resulting position you want, instantly. The downside is that once you send a market order, you can’t control the price you get. Prices may change in an instant, and you may end up with a position at a price that you no longer want.
Back to our example: if you’re waiting to get filled with your order in AAPL, buying shares at $175.25, then whoever pays you will be crossing the spread, probably with a market order. 💵
Let’s assume that you get filled by buying shares in AAPL at $175.25, and you’d like to get out of your position if the stock trades under $175. In this case, you’d use a STOP ORDER. 🛑
3.) STOP ORDERS are orders that you send to the market that live on Nasdaq/NYSE servers. They have a trigger price, and once the trigger price is hit, they execute a Limit Order or a Market Order based on your inputs. These are STOP LIMIT ORDERS, and STOP MARKET ORDERS.
This sounds complicated, but it’s more simple than it sounds.
Again; back to our example. Let’s say that you get filled on your buy in AAPL at 175.25, but then your stop order gets hit at 174.99 (you wanted to get out if the stock went under 175).
If the stop order is a market order, you will get hit out of your position, no matter the price. Simple as that! ✅
Next week, we will be covering some of the order techniques that professional traders use to get better prices. 🦾
Stay safe out there!
-Team TradingView 👀
How To Find New Stocks To TradeHey Everyone! 👋
Ever get tired of looking at the same tickers? Looking to learn about different sectors of the economy? Want to broaden the number of assets you trade?
Check out our Sparks .
We created Sparks to quickly inspire you to dig deeper, to find new and interesting opportunities in markets. Sparks are curated watchlists built around interesting themes.
Here are a few examples:
AI Stocks : For when you want to bet on the rise of the machines 🤖
Legacy stocks : Companies that have been owned by the same family for generations ⌛
The Death Industry : Someone has to make money on coffins, right? 💀
Space Stocks : For when you want your portfolio to blast off into zero G. 🚀
Check them out and then let us know what your favorite Spark is by sharing a link in the comments below! Three lucky people will win some special prizes including 1 year of Premium, 1 year of Pro+, and 1 year of Pro. Bonus points (a chance to win a TradingView mug) if you add a quick summary of why that spark is your favorite.
Drawing ends at Noon EST, this Wednesday. Good luck to all! 😎
-Team TradingView
All The New Tools and Features We Built For YouAs the New Year kicks off, let’s take a moment to remember the basics: ✅ never trade or invest blindly, 🧐 always do your research, and patience is king ⌚.
In our last update of the year, we want to share all of the new features we launched over the last 12 months! 🎉🎉 We also want to thank each and every one of you who have helped to make this platform better with your constant awesome feedback. We're always listening and improving our platform so you can perform your best research.
Look first. Then leap.
Now, let's get right to it - here are all of the new features and tools we launched:
Introducing Quick Search 🔍
Quick Search makes finding drawing tools and chart functions a breeze. Type in a keyword and then select the tool you need. For example, try searching “Trend” or “Price” to see all the tools and functions related to these two words - try Quick Search
Desktop 1.0 Has Arrived 🖥️
Our Desktop app has all the functionality of our flagship web product, but also includes added features like tab management, tab linking, and special Tokyo Night colors - get it here
Pine Script’s Epic Year 🌲
We rolled out more improvements to Pine than ever, among them Pine Script v5 , interactive inputs , tables , and the ability to edit your code in a separate window . And finally, our thriving community of script authors has published 10,000+ new, free Community Scripts during the year! - see every Pine update
Mobile App Upgrades 📲
This year, we launched new mobile features for alert management, market news, widgets, watchlists, and tons of performance upgrades - get our free Android and iOS apps.
Spark Your Research 🔥
We continue to improve Watchlists so you’re always informed about your favorite symbols. We launched Sparks , Timelines & Snaps , and the ability to share your Watchlist with friends.
More Brokers, Exchanges, and Data 🏦
We partnered with 10+ new brokerages including Tiger Brokers, Bitstamp, SaxoBank, easyMarkets, Tickmill. We added new data sources spanning DeFi, DEXs, macroeconomics, and more. And we’re celebrating our best partners with our second annual Broker Awards !
What else did we do this year? Here's a full list of new features: ✅☑️
- New chart features - 📈
Add tweets to the chart
VWAP alerts
Customize indicator visibility
Customize object visibility
Emojis on the chart
Multiselect alerts
Custom price labels
Technical Ratings
Change color of multiple tools at once
- Pine Script Features - 🌲
Pine Script v5
Make your own drawing tool
Alerts with dynamic messages
Pine Tables
More color in Pine
New Pine math functions
- TradingView Desktop - 🖥️
TradingView on Linux
M1 Chips
- Watchlist Improvements - 📃
Introducing Sparks
Advanced View Watchlists
Customize Watchlist column width
Improved live streaming tools
Share Watchlists
Timelines & Snaps
- Other Exciting Achievements - 🤌
First Bitcoin chart in space
#1 Finance Site
Rebrand & new logo!
Spotify Playlist
TradingView is now even safer
Advanced privacy settings
The first-ever Broker awards (second one on the way!)
- More Brokers and Broker Integrations - 🏦
Welcome Saxo!
Welcome Exmo!
Welcome Bitstamp!
Welcome Optimus Futures!
Welcome easyMarkets!
Welcome Bingbon!
Welcome CurrencyCom!
Oanda in Europe!
Welcome TimeX
Welcome CapitalCom!
Welcome Chaka!
Welcome Global Prime!
Welcome Tickmill!
Welcome Tiger!
- More Data and Partnerships - 🔢
More historical data for everyone
More DeFi data
FRED data comes to TradingView
New DeFi exchanges
Matba rofex data
Nordic data
DEX data from Sushiswap, Honeyswap, and more
Glassnode data
Thanks for reading! We have more planned in 2022 and we can't wait to show you what else we're working on. See you soon!
- The TradingView Team
The Top 3 Elements Found In All Good Trading PlansHey everyone! 👋
This month, in preparation for the new year, we have been theming our posts around the concept of building a solid trading plan. Our first post asked you to think about the kinds of factors that can predict long term success. Our second post looked at why trading plans are so important. Both of these posts you can find linked at the end 👇
Having talked about the *what* and the *why*, it’s time to talk about the *how*.
Today we will be taking a look at the top 3 elements found in all good trading plans!
1️⃣ Element 1: Every good trading plan knows why it wins.
In trading, there are two variables that matter: Bat Rate, and Win / Loss.
► Bat Rate describes what percentage of the time a trade ends up as a win. A trader with a 90% bat rate wins 9 out of every 10 trades.
► Win / Loss describes how big the average win is, relative to the average loss. A trader with a 0.5 Win / Loss takes losses twice the size of his wins.
If you multiply these numbers together, you will get an “Expected Value”.
For example, a trader with a Bat Rate of 50% (wins half of the time) and a Win / Loss of 1 (Losses the same size as wins) is a perfectly “Breakeven” trader.
In order to make money in the long term, all you need to do is make the multiplication of these values be a positive value. The breakeven trader above only needs to win 51% of trades to begin making money, if his W/L remains constant.
☝🏽To get these numbers into positive “expected value” territory, every good trading plan needs to devise a way to systematically find trading opportunities that it thinks have an edge. The inputs of this system are completely up to the trader, but they are typically rooted in repeating price patterns, fundamental observations, macro trends, or other patterns and cycles. Backtesting can be useful here for getting a general idea of whether or not an idea for a trading strategy has borne out to be true over time.
In short, no matter what it looks like, good trading plans identify their edge before risking capital. Why start a business without a business plan?
2️⃣ Element 2: Every good trading plan takes into account the emotional character of the trader.
This is the hardest element to quantify, but also arguably one of the most important pieces of a good written trading plan - the ability to work around a trader’s individual strengths and weaknesses. This is less important for banks and hedge funds, as decisions are typically made with oversight, but for retail traders, there is no-one around to temper your personal flaws.
You can do whatever you want! - but it’s a double edged sword of responsibility that your trading plan needs to prepare you for.
In short, you can best get an idea of where you are emotionally weakest by looking at your trading history. Nobody can do this for you, so it requires quite a bit of self-awareness. However, the rewards of removing emotional risk from a trading plan make it worth the effort.
😱 All trading is based on fear. You need to understand which fear is stronger - the fear of missing out, or the fear of losing capital. Figure out which is stronger, and plan accordingly.
Just because you understand a certain strategy and other people make money trading it, doesn’t mean that you will be able to. Executing with 100% consistency at 30% efficiency is more important than finding a strategy with 100% efficiency that you can only trade with 10% consistency. Make life easy on yourself!
3️⃣ Element 3: Every good trading plan outlines risk.
Whether you have one thousand dollars or one billion dollars, ignoring risk is a sure way to experience massively increased monetary and emotional volatility, which can have a huge negative impact on long term profitability. Here are a few simple-to-implement mechanisms that Banks, Hedge Funds, and Prop Firms use to reduce risk significantly - good trading plans don’t skip these.
💵 Total Account Stop
Exactly what it sounds like: once you lose a certain percentage of your capital, you stop trading, liquidate your positions, and assess what went wrong. Only once you’re satisfied that you have fixed the issue are you allowed to re-enter the market. In the industry, this number is commonly 10%.
💵 Per Theme Risk
This ensures that you aren’t too concentrated on a single “bet”, even if the bet is spread across multiple instruments. For example, if you own multiple companies in the same sector, their performance will likely be correlated to some degree even if they have different products or services. Adding a hard cap to this type of risk can massively reduce risky or over concentrated allocations.
💵 Per Position Risk
Many successful Professional Traders and Hedge Funds use the concept of “Free Capital” in order to manage risk. “Free Capital” is the amount of money in hard dollars that makes up the buffer between an account’s current equity, and the total account stop number.
For example, If a currency trader at a bank has a 10% total account stop out, and runs a $10,000,000 currency book, then he can really only “lose” $1,000,000 before his bosses pull him aside to have a talk. His “Free Capital” is $1,000,000. He will then size his positions to where he only risks 1-5% of his Free Capital per trade. This way, he has room to be wrong a minimum of 20 times in a row before any negative consequences come his way. Implementing a “free capital” risk limit per position ensures that you have a TON of room for error.
Yes, this typically prevents you from doubling your account overnight, but again, that isn’t the goal. Long term profitability is.
Some people call this per position risk “one R” (one risk unit).
☝🏽Whatever it looks like, including a plan for managing your risk is essential for *actually* managing your risk. If these plans aren’t written out and acted upon, they’re also a lot easier to ignore.
🙏🏽 Thanks for reading; we are looking forward to making 2022 a record setting year with you. 📈
If you got something out of this, make sure to share it with a friend, so they can also go into 2022 a better trader! 🍀
- The TradingView Team ❤️❤️
Would You Stake Yourself?Hey everyone! 👋
This month, in preparation for the new year, we will be continuing to theme our posts around the concept of building a solid trading plan.
Last week, we took a look at a hypothetical scenario, where a rich acquaintance of yours needed help deciding between two traders he's thinking about staking. This led to the question: "Who would you stake?".
This post will continue right where that one left off.
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After getting the contact info, you reach out to interview the two traders.
You speak with Trader #1, and he appears to be quite intelligent, with wide and deep market knowledge. He’s shown you a few market predictions that he’s already gotten correct, and walks you through how he finds opportunities. You’re impressed.
You speak with Trader #2, and he also appears to be quite intelligent, with broad market knowledge, in addition to a history of profitable investment / trade ideas. He walks you through how he finds opportunities, and, similar to Trader #1, you’re quite impressed. In addition, he also presents you with written details about how he plans to manage risk, his maximum drawdown, and a whole litany of other clearly defined rules that keep risk under control and quality trade ideas coming.
Assuming we are still in the position of choosing which trader to stake, most, if not all, individuals in this situation would pick Trader #2 because of his attention to preparation and risk control, in addition to having a ‘business plan’. Trader #1 may be smart and highly capable, but he’s shown no evidence that he has a process to continually generate good trade ideas, while ensuring that he doesn’t lose everything. Trader #2 has “done the work”, and proven that he’s worthy of the capital.
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Whether they know it or not, anyone who manages their own money is constantly faced with the same decision. If you step outside of yourself, are you more like trader #1 or #2? Is your trading plan worthy of investment? Would you invest in someone else who’s taken the same trades that you have? Does that person have a plan? Have they “done the work”?
Keeping yourself honest about what is working and what isn't is a superpower!
Hopefully this emphasizes the importance of building a trading plan. Next week we will take a look at what factors are typically needed in order to build an effective one.
If you’re not like Trader #2, comment below about the steps you’re taking to become better prepared for what the market throws at you!
2022 approaches. Let's crush it together.
-Team TradingView
If you missed last week’s post, you can catch up here:
Who Would You Stake?Hey everyone! 👋
This month, in preperation for the new year, we will be theming our posts around the concept of building a solid trading plan!
Later posts in December will look at the key elements involved in building a rock-solid game plan, but today, to introduce the concepts in a fun way, we will be looking at a completely hypothetical situation.
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Let’s say that you’re walking down the street, and a stranger approaches you with a business proposal; he’s recently sold his business, and come into a significant amount of capital - $10,000,000. Additionally, word of the sale has gotten to two separate aspiring traders, who have approached him asking him if they can manage his money in return for a fee.
The stranger has heard from a family friend that you’re interested in trading, and he wants your help in picking out which trader to invest the money in. In return for your help, He’s going to split the profits he makes 50-50 with you.
Obviously, it’s in your best interest to help him make a decision that will make the most money for the longest period of time, with the least amount of risk.
The stranger then pulls out contact information for both traders, and asks you to interview them separately.
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Here's our question to you: if you only get to ask the traders three questions to gauge their likely future performance, what would you ask them? What questions dive to the heart of risk, reward, and sustainability?
We look forward to your replies, and in next week's post, we will begin looking at how some of the likely responses can go towards building out a consistent, profitable process!
- Team TradingView
What Did You Learn About Trading This Year?Let’s face it, 2021 has been a crazy year. Between the meme stock mania, the exponential growth of cryptocurrencies, and the NFT flipping craze we have seen over the last few months, it’s been a year of unprecedented moves. And, when unexpected things happen, everyone tends to learn new things - about risk, about themselves, and about the world around them.
To celebrate our awesome community (which has also grown exponentially this year!) we’re giving 5 people who enter the contest below the chance to win hyper-exclusive prints we commissioned from British artist Gordon Ellis-Brown.
All you have to do to enter our randomized draw is comment below with the biggest lesson you learned this year, and how you plan on using it to improve your trading in 2022.
Entries will close Tuesday, November 30th at 10am ET, and the winners will be announced shortly thereafter.
If you follow our social channels, you will have no doubt seen us giving these prints away all last week as a way of celebrating our Black Friday and Cyber Monday sales, but we also want to make sure that everyone here has a chance to win.
Good luck to everyone, and thank you all for making this community so special; it wouldn’t be the same without you :)
-Team TradingView
Three Ways To Master AlertsHey Everyone! 👋
We hope you’re enjoying Black Friday week, and have helped yourself to some of the great discounts we are offering over the next few days. We only do this once a year, so it really is the best time to get a plan!
Now, let’s jump into today’s topic: Alerts.
While alerts have a ton of potential applications when it comes to trading, they are often underutilized because it can take some time and ingenuity to build a system where they can work well. Let’s get started:
1. They can help build good habits 💪
Stop us if this sounds familiar: you hear an awesome investment story, and then immediately go out on the market and purchase the asset, with no plan in place.
While this can work, it’s not a great strategy for long term success, because in reality it can be extremely hard to sit in that position without a plan and trade it efficiently. You may choose to exit the position based on nothing more than momentary greed or fear, and moves like that can prevent consistency and long term profitability.
Alerts are great because they can take out the guesswork of entering and exiting a position. Simply set alerts for the prices you would like, then place a trade if, and only if, the conditions are met. Then, let the market do its thing, and let the probabilities work in your favor.
Alerts can turn the experience of trading from a constant search for ideas - and always feeling behind - into a relaxing job of waiting for your own pre-approved conditions to trigger before taking action. In short, alerts can make you much more well prepared for the market’s ups and downs.
2. They increase freedom and reduce anxiety 🧘
There is a well known maxim in trading and in life that states that negative emotions are felt twice as strongly as positive emotions. This factoid has lots of applications, but it can be especially useful to understand as a trader.
Consider the following investors:
A dentist who checks quarterly reports from his brokerage
A position trader who checks his positions once a month
A swing trader who checks his positions once a week
A Day trader who checks his positions once a day, if not more
Given the natural volatility that markets experience, which market participant is least likely to be mad or upset? The dentist. Why? Because he is receiving less data points from the market. Even world class day traders are exposed to tens or hundreds of negative situations in their positions on a day to day basis as a result of volatility, which they cannot control. This level of negative stimulation can reduce mental health and trading effectiveness.
Alerts allow well prepared traders with some edge to step back from the markets and allow the trades to come to them.
3. Our alerts don’t let anything fall through the cracks ✅
While the previous two points are benefits when it comes to price alerts, our alerts also step the game up considerably when it comes to user utility. Once you have setups that you like to trade, you can set alerts on trendlines, technical indicators, customizable scripts, and so much more, so you can ensure that your favorite setups aren’t being missed.
This can be as simple as a long term investor setting RSI alerts on Dow 30 stocks, in order to buy dips in strong names, to as complex as an intraday futures spread scalper setting alerts for pricing inefficiencies within his top 40 contracts.
Our customizable alerts can really allow well organized traders to capture every opportunity as they see fit.
Thanks for reading, and stay well!
TradingView Team
Tips For Securing Your TradingView ProfileSecurity and privacy are incredibly important to us. We have an entire team dedicated to it! We want all members to be absolutely confident that they have the tools they need to ensure their accounts are secure, safe, and protected. Let's get started.
The Obvious Tips
Don't use the same password everywhere or else one breach could expose all accounts. Make sure your passwords are unique and not easy to guess. Make sure to use strong passwords and special characters like @ # ! / < ? % when possible.
Don't fall for scams! Always double and triple check links that you click. Don't give out your log in credentials to anyone. One helpful tip is to make sure you have the official www.TradingView.com homepage bookmarked on your browser. You'll also want to ensure you have the TradingView mobile apps on iOS or Android. Don't download imitators! Only use the official TradingView.com platform and apps.
The Tools Available To You
All TradingView members have access to individual security features within their Profile Settings . Head to your Profile Settings page to get started. Once you've made it to your Profile Settings, click the Privacy and Security tab . From here you can manage the full security of your account including several unique features:
• Enable Two-Factor Authentication
• Review linked social accounts
• Check sessions and logged in history
• Log out of individual devices
• Log out of all devices
• Disable/Enable chat
• Ignore users
• Complete control of your profile, how it looks and the information shown
For those interested in managing their individual trader Profile , we have tools that let you quickly change your profile picture, connected social media accounts, about & bio, location, and an entire notification suite for on platform notifications and email notifications.
Bonus Tips!
Two factor authentication is a must-have for those interested in the ultimate level of security. It means you can use a second device, like your phone, or an authentication app to confirm every log in.
If you're looking to learn more about all of the security features available to you, check out our Help Center. For example, this post explains more common tips to securing your account ! There's even more within our Help Center , which is free for everyone to learn more about markets and TradingView.
Thanks for reading!
- Team TradingView
