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Key Patterns Of Price ActionKey patterns of price action. Below I will describe several key patterns, but on the diagrams you can see the analysis from a technical point of view. And also please pay attention to the rules, which I do not advise to ignore. The Cup with a handle pattern is formed according to the following logic: - On an upward movement, the bulls cannot push through the next resistance level , a correction begins. It is undesirable that there were impulses during a rollback, a moderate downward movement should be observed; -By basic rules, the bottom of the cup should be formed in the area of correction levels. A deeper rollback is allowed in modified models. In case of a deep correction after entering the market, the position is transferred to breakeven as soon as possible, the probability of the trend continuation is lower, it is better to insure; Double bottom It all starts with the formation of a new low on a downtrend, after which a rollback against the trend occurs. Then, the price goes down again and rests against the previous low. And finally, after pushing off from this level, an upward movement begins, which breaks through the level of the previous local maximum. It is after the breakout of this level (confirmation line) that the final formation of the 'Double Bottom' occurs and you can start buying. The same is with a reversal in an upward market. After the first high, the price should fall by at least 10%. Otherwise, it will mean that the bears are not strong enough. Saucer Let's start with the shape of the figure. Contrary to its name, the correct shape of the 'Saucer' figure rather resembles a bowl. As you can see, the figure is formed by a smooth price movement along a parabolic trajectory. The first half of the figure (the left side of the saucer) is a smooth descent from the edge of the saucer to its bottom. The second half of the figure (the right side of the saucer) is the same smooth rise from the bottom to the edge. Ideally, the second half should be a mirror image of the first. And the bottom should in no case be sharp . The classic 'Saucer' is formed, as a rule, on large timeframes from D1. But you can also find him on H1. Flat base In trading, the term flat means an area on the chart, without a clearly defined direction of price movement, that is, a trend. In other words, flat is the opposite of a trend. Misc Rules -all BP = 10 pips -ideal prior uptrend >30% -for wks abv avg vol: #up>#down -up 20% for new base - undercut base resets base count - 66% or 3rd stage base fails - 80% of 4th stage base fails - in base bottom look for - shakeout - tight closes - volume dryout - accumulation
Education
by DeGRAM
18
Trend Continuation Patterns with Real-Time ExamplesGood morning, Traders! Today we will make an educational post about the most used corrective patterns. There are numerous patterns, even more complex, such as Elliott counts where each internal wave of corrections is explored, but the reality is that it is not 100% necessary to apply it in the market. The idea of ​​this information is to provide a simplified, useful and applicable overview. For this, we will explain the corrective patterns and then we will show real-time examples that are being presented in the market at the moment or that have happened recently. The examples will be in high temporalities so that the charts are valid for a few days/weeks. One concept that encompasses all the corrective patterns that we are going to talk about is that they are all trend continuation patterns. That is to say, it is a correction that is formed and then continues to the previous trend. That said, in all cases, it is necessary that prior to the pattern, there is an impulse in that direction, that is, if we see a triangle, for it to have an upward resolution it is necessary that the previous trend be upward. While there are some cases where the patterns can go in both directions depending on the context, we won't get into them. Keep in mind that we ALWAYS have to analyze the context of the pattern correctly. For example, if we see a bullish continuation pattern forming near a major resistance or trend line that could interrupt the price movement, it is clearly not the place to put your money. You should always look for the correct pattern + the appropriate scenario for the trade, where the risk-benefit ratio that we obtain is appropriate. 🔸Pennant Pattern: is a type of continuation pattern formed when there is a large movement in a security, known as the flagpole, followed by a consolidation period with converging trend lines—the pennant—followed by a breakout movement in the same direction as the initial large movement, which represents the second half of the flagpole. 🔸Ascending Triangle: it is created by price moves that allow a horizontal line to be drawn along the swing highs and a rising trendline to be drawn along the swing lows. The two lines form a triangle. Traders often watch for breakouts from triangle patterns. 🔸Flag Pattern: when price moves counter to the prevailing price trend observed in a longer time frame on a price chart. It is named because of the way it reminds the viewer of a flag on a flagpole. The flag pattern is used to identify the possible continuation of a previous trend from a point at which price has drifted against that same trend. Should the trend resume, the price increase could be rapid, making trade timing advantageous by noticing the flag pattern. 🔸Descending Wedge: The wedge pattern is a continuation pattern formed when the price bounces between two downward slopings, converging trendlines. It is considered a bullish chart formation but can indicate both reversal and continuation patterns – depending on where it appears in the trend. 🔸Rectangle: is when the price reaches the same horizontal support and resistance levels multiple times. The price is confined to moving between the two horizontal levels, creating a rectangle. Real-Time examples: AUD/USD Descending Wedge: EUR/GBP Rectangle: EUR/NZD Rectangle: GBP/USD Flag: NZD/USD Flag: USD/JPY Flag:
Education
by ThinkingAntsOk
How To: Trade the Trend with Trailing Stop Losses.Quanta provides infrastructure solutions to the electric power, oil and gas, and communication industries and has been consistently making higher highs since its March lows last year as part of the Covid reset and has been trending beautifully with relatively little volatility. The whole idea of trend trading is to try and find a trending stock like this one and stay in the trend as long as possible until that dreaded bend in the end where a stock will often sell off. One of the ways to do this is with a trailing stop loss . A trailing stop is a great conditional order type as your stop loss will continue to move up and maintain a set distance from the stocks highs as the stock price moves up, but it will never move down if the price moves down. So while the stock is going up, you will stay in the trade, but if there is a significant dip it will automatically exit you out. A good set and forget type strategy that works well if you aren't actively monitoring the market and want to protect your profits. In this case Quanta is up 200% over the last 12 months, and up over 300% since the March lows. If you had wanted to keep it since the March lows you would have needed a stop loss of around 25%, but you can see that more recently now that some of the market uncertainty has reduced a 13% trail would keep you in the stock. It's good to see that the stock is also respecting its 20 day moving average and using it largely as support as it trends upwards and these are often an easy way to keep an eye on whether the stock keeps moving up or whether there might be a down turn ahead. Quanta has just had earnings and still looks pretty strong. Will be interesting to see how long it will run for. Worth a watch. A 25% stop loss would have kept you in the trade longer, but has much more downside before it would exit you out of the trade.
NYSE:PWREducation
by zAngus
Using Linear Regression ChannelsLinear Regression Channels are a great way to identify potential key levels of future price action by graphing the normal distribution of a trend. When using the Regression Trend tool (located in the drawing panel under the “Trend Line Tools” group) two points on a trend are chosen, generally at the beginning of the trend and the end of the trend. When the two points on the chart are chosen, the normal distribution of the dataset is calculated between the two chosen points and displayed in the form of a linear regression channel. The center line in this channel is the Linear Regression Line or Mean, and the upper and lower lines are the Upper and Lower standard deviations from the mean as set in the tool’s settings (default settings are +2 and -2 standard deviations from the mean). The correlation of this linear relationship is displayed as Pearson’s correlation coefficient , or Pearson’s R. This can be displayed or hidden on the chart by selecting it within the tools style menu. Pearson’s R shows the strength of the correlation as well as its direction, with values moving between -1 and 1. As Pearson’s R moves further away from zero, the strength of the linear relationship between price and time increases. When using the Regression Trend tool, Pearson’s R will always be set as an absolute value (positive), but the direction of the trend can be visually identified. Mean reversion When a regression trend has a high correlation, this is due to the consistency of price action laying along the mean (center line), with fewer points moving above and below the mean line to the upper and lower standard deviation levels. One way to trade using a linear regression channel is to trade the price action as it moves away from, and back to the mean. As this tool is used, it is important to note that a channel graphed containing more bars and having a high correlation is more likely to have price continue in that trend than one that is graphed with only a few bars and having a high correlation. The length of the trend should be considered when trading these channels. With the Regression Trend tool, you can start utilizing statistical analysis in your trading strategy with only the click of a few buttons!
NASDAQ:QQQEducation
by TradingView
53
The Psychological DANGER of Counter-Trend TradingI 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
NASDAQ:AAPLEducation
by ZoharCho
1
TradingPit Scalping Strategy - EUR/USD 15MThe strategy uses a short (30) and long period (200) exponential moving average which you can both change in the settings. The strategy is trend following and designed to only trade in the direction of the trend. It looks for pullbacks against the direction of the trend to buy and sell into the trend. Long Entry Conditions: - Short EMA above long EMA and price above short EMA - Pullback below short EMA - Entry on close above short EMA Short Entry Conditions: - Short EMA below long EMA and price below short EMA - Pullback above short EMA - Entry on close below short EMA
Education
by TradingPit
Theories of the Dow Types of trends Phase TRON Still a little)According to the Dow theory, there are 3 types of trends. When the market moves in a certain direction, it never makes it a straight line. The market always moves like this: a new peak; rollback; new peak. A rollback is followed by a new maximum value, a new rollback, and so on until the trend changes. As a result, any trend can be decomposed into several stages. Each stage will have its own maximum and minimum value. If the trend goes up, then each maximum value will be greater than the previous one. Similarly for a downtrend, where each low updates the previous low. According to the Dow theory, there are 3 types of trends: 1) main. 2) secondary. 3) insignificant (small). The main trend is a key market movement. To determine it, you need to open a larger timeframe on the chart, say, monthly or weekly. This global trend ultimately affects everything, including secondary and insignificant trends. According to the Dow theory, the global trend lasts 1-3 years, which, however, can change. The main trend remains valid until there are clear indications of its completion. One of such indications may be, for example, closing the price below the trend line. Secondary trend , as a rule, goes against the main trend or acts as a correction to it. This is how the main trend can go up, and secondary trends - down. According to the Dow theory, secondary trends last from 3 weeks to 3 months, and the rollback against the main trend lasts from 30 to 60% of its movement. Also, the secondary trend is usually much more volatile than the main one. All these values are conditional, depending on the characteristics of the trading instrument itself. Minor trend (small) . In theory, this is a market movement lasting up to several weeks. As a rule, it is a correction to a secondary trend. In reality, the duration of the trend depends on the trading instrument in question ______________________________ A trend has three phases. According to the Dow theory, each trend has 3 key phases: 1) phase of accumulation (distribution). 2) the phase of public participation. 3) phase of panic (realization). Accumulation phase. This is the first phase, the beginning of an uptrend. It is at this stage that traders and investors enter the market, which can rightly be called professional. They have the greatest amount of information (often internal - insiders) about the current state of the market and the first to begin active actions. Other market participants do not realize at this time the state and direction of the market. Typically, this phase begins at the end of the downtrend. At this point, most of the negative news has already been taken into account by the market, due to which investors, despite low prices, begin to see an asset in the future. Of course, detecting the accumulation phase is not so simple. Often it goes after a downtrend. And it, in turn, can be just a minor trend in the general downtrend. As a result, instead of a new trend, only a temporary pullback is obtained. From a technical point of view, the beginning of a new trend is always accompanied by a period of consolidation. This is when the market moves sideways and then begins to show an uptrend. The phase of public participation. Participation phase Advanced investors and traders enter the market during the accumulation phase. In their opinion, the worst is over. When the trend really unfolds, the stage of public participation begins. Economic data are improving, the market is full of good news. The more such news, the more market participants connected in this phase. This phase is the longest of all, it is also characterized by the most active movement. Highs are constantly updated - exactly what investors were waiting for. The phase of panic (implementation). This is the phase where experienced traders and investors exit the market, while less experienced traders enter the market. As a result, such investors and traders are excited to buy at the peak of the trend, shortly before its spectacular fall. The same phase is a reversal phase - professional investors and traders understand that the market has exhausted itself and begin to close their positions opened in the first phase. To determine this phase, you need to carefully study the signs that the market growth is complete. Moreover, the more active the market growth, the stronger the subsequent decline will be. A similar story when the main trend is bearish and goes down. The situation is mirrored, and at the implementation stage, a real panic is often formed, when many inexperienced investors and traders dump their assets and the price receives the last downward momentum before growth.
Education
by SpartaBTC
6
How To Read a Chart Part III - Perspectives on TrendsDow - Elliott - Murphy Introduction As I am going deeper into the subject of reading a chart, we definitely need to cover trends. As the saying goes: “the trend is your friend”. But where does it start and where does it end? In the following article I’m going to cover basic principles in use for more than a century. Furthermore, the Dow theory is still in use by prop trading companies, hedge funds and banks. And the reason is quite simple: trade what you see. A. Charles Dow and the Dow theory Not being the first nor the last, one of the most popular perspectives on markets and the basis of all technical analysis is reaching back to Charles Dow in the late 19th century. Dow set up some simple rules to analyze markets and to follow trends. First and foremost, the overall market discounts everything, which means that all available information is to be found within price. Additionally, the market renews itself within cycles, which is also the reason why the indices are always in a long bias, because the weakest companies get replaced by new strong and upcoming businesses. The market is, like the capitalist economy in general, moving in progression and regression. While old ideas - and therefore businesses and their models - are fading out, new ideas entering the circle of evolution. (If you want to know more about the psychological background, from a sociological background, check Max Weber’s The Protestant Ethic and the Spirit of Capitalism at shorturl.at or Franz Boas’ The social organization and the secret societies of the Kwakiutl Indians regarding the need of the renewing of economic cycles from a cultural point of view at shorturl.at). Secondly, as stated, the market is built from two basic patterns - movement and correction. These patterns are expressed in a primary, secondary and tertiary trends, as plotted in the title image. So we have to state that a trend is only existent if there is a move and a regression and a move exceeding the first top. Everything else remains interpretative! Let’s have a quick look at a chart. Above you’re seeing the BTCUSD from end 2019 ‘till mid 2020 on Bitfinance. In gray I’ve plotted moves that aren’t trends at all. I hereby repeat the obvious reason why:: a trend needs at least a higher high or a lower low from any starting point. But what’s within the plot above is just one high one low and something that might be called sideways. The first time in this very long time period we’re having something that might be called a trend I’ve plotted in green, as you’re seeing below, even if it is not a “beauty”, neither close to perfect. So let’s scale into the hourly and take a closer look. I’ve set up the chart to close - which was one of Dow’s most sacred rules - and plotted the secondary downward trend in dotted red. This trend has shown signs to come to an end when a higher low has been made. But at this point the downward trend was still valid, even when the black line had been crossed. Why? There are two rules for continuation and reversal: In the case of a downtrend the latest high and the latest low are still valid, until they are confirmed by a new lower low OR the reversing trend has not only been broken (which is called a failure swing), but the new trend size is similar to the previous (non failure swing). The second case happened at point (3) and was confirmed at point (4) and (5) continuing higher (green dashed line). I’ve also plotted a tertiary trend - red for down and green for up - in the following picture. This trend is also visible in the hourly chart and might be easier to visualize in the 10- or 15-minute chart. Also the fragility of the lower trend is visible. There are even more trends inside those three, but the smaller the trend the noisier the single moves and the more fractures are evident. Overall, a trending push should be short in time, a regressive one long in time; a strong move might only be corrected by 33%, a mediocre one by 50% and a weak one by 66%, as a rule of thumb. As another general rule, Charles Dow has been looking at different composite indices, and he discovered through close and steady observation, that one index ought to confirm the other; if not, there might be something “wrong” in the overall market conditions. The context of intermarket analysis was born. B. Ralph N. Elliott and the Elliott Wave theory Based on the Dow theory and the beautiful recurring cycles of growth in nature also known as Fibonacci numbers, Elliott came up with his theory of motive and corrective waves and their measurability, taking the Dow theory a step further and implementing a psychological approach. What does this mean? Elliott supposed that - generally speaking - the beginning of a trend is not only marked by significant volume and rapid moves but also with heavy and steep corrections. And the reason is blatantly logical: As many traders are not yet convinced of a turn, they still sell or buy in direction of the previous one.Therefor, the so-called wave 1 is often corrected to a high degree or formed by widely overlapping price ranges (leading diagonal) as the overall market conditions are not clear yet. But when it is becoming obvious that the previous trend might have come to an end, new money is floating in and traders are jumping on board to profit from the new cycle. The hesitant and slow building up in volume and price movement is unleashing itself in an explosion. That’s why wave 3 and wave C are mostly longer than wave 1 and often indicated by unclosed gaps confirming trend strength as traders are jumping on the ongoing new trend. As most traders are already positioned and new money doesn’t float in at the same pace, positions get slowly liquidated and the last traders, who are not positioned yet and are hoping for a late move and easy profits, are stepping in but fail to push strong enough. Consequently, wave 5 is usually shorter than wave 3, less impulsive, failing to make new highs or formed by overlapping prices (ending diagonal). Again, we’re able to see this in any timeframe or any trend size, like on this 2 hour chart of USD/JPY below. There are a bunch of rules, f.e. motive waves have to consist of 5 and corrective waves of 3 subsequent waves, but there are many, many more. Especially in Neo-Wave, the RSI is used to confirm the strength of a move. If you want to know more about this very specific subject, you may want to check out this very lovely made Elliott wave cheat sheet by @ArShevelev : I’d like to add something that is ALWAYS missing in cheat sheets and overlooked by Elliott Wave analysts: The rules regarding price ranges are also to be taken into account for time ranges. The picture only unfolds itself if time and price and volume are analyzed to find opportunities, as Dow also took into account. And even adding up to that, I’d like to quote an ingenious Elliott friend of mine: “If you are asking 10 different Elliott Wave specialists you’ll get at least 9 different analyses.” And this is not the only obstacle in using Elliott Wave analysis. C. John Murphy and technical analysis As Elliott before him, Murphy added his very own personal perspective on the Dow theory. He expanded the approach of index confirmation to a whole intermarket analysis, using volume and plotting trend lines to indicate trend strength. Exaggerated in the picture I’d just like to show - and here you should bear in mind that you can’t look into the future - that I don’t suggest trading trend lines. Which one would trade? Which one should you have taken? Are the other traders drawing the same trend lines or do they plot differently, maybe also due to different prices as in all markets usual, not only in ForEx, but especially in DEX, and also in stock markets, as I’ve covered in the previous chapter. Have you already been stopped out or are you still waiting for your entry for weeks, months or years? As you may be successful trading trend lines, you still need to consider that those are very very subjective. You need to ask yourself this: Who is having the same analysis as I do? Maybe someone is looking at a different data feed as I’ve already mentioned, maybe someone else is looking at close only, maybe using Heiken Ashi, maybe, maybe, maybe. There are too many ifs and whens for my personal cup of trading. If you like to get detailed information about Murphy’s approach, you can get his book here: amzn.to At this point I wanted to quote something as “Trade what you see.” from Edwin Lefèvre’s tremendously entertaining book Reminiscence of a stock operator, but as I’ve started this article weeks ago, I forgot which phrase it was. Still you should read or listen to it (open.spotify.com) In either way, all technical analysis is based on the same principle: higher prices, higher highs, higher interest, higher volume or vice versa. Don’t overcomplicate it, whatever your strategy might be and don't forget to take time into account, to estimate the proper trend sizes. ___ Note: As I’m writing a book about reading a chart, I am going to post a couple of short articles on this topic and others related to it, e.g. trend, volume , Dow theory, auction theory and behaviorism. If you are spotting some errors or if you like to add something, feel free to comment or pm. Cheers, Constantine - p.s.: This article is not intended as any kind of trading advice. Thanks to all for reading and I hope it will help you in your analysis and your trading career. Thank you all for the interest in my book and to answer your questions: there is no release date yet as it is still a work in progress and it will be an educational novel. Cheers, Constantine -
Education
by constantine_trading
68
How to read a Chart - Part I: Perspectives on VolumePart I - Perspectives on Volume A. Plain Volume Introduction As volume is the most important indicator on price and trend, it is often overlooked and more often not even used. But overall, volume is by far the easiest indicator of all, especially if used in conjunction with price and trend. As many traders are relying on indicators, trying to ready something out of it - especially trend strength, possible turning points and divergences, exhaustion, breaks, flops, fall-outs, lagging trends and so forth can be seen on a blank chart. Volume and Direction Below you’ll see trending where price is following volume and vice versa (Fig. 1). I’ve colored the volume in black, because too often the volume is colored on behalf of the close of the price range (candle or bar), which is confusing, irritating or even misleading. As you see, I’ve taken a screenshot of the 15 minute time frame of NIO, but the following doesn*t rely on any specific stock, instrument or asset or any specific time frame; but as always you should take two things into account: the higher the time frame the more reliable and valuable the data and the lower the time frame the noisier the data but the closer the perspective and the earlier the possibility to (re-)act. Below you’re seeing the same chart with slight annotations. The red arrow above the price bars is showing short selling or profit taking, while the red arrow above the volume is showing increasing volume. The green arrow below the price bars is showing rising interest and buying, while the green arrow above the volume is also signaling soaring interest. In both cases, the volume is moving in the same direction as price and so this is considered to be a healthy move. In contrast to the blue arrows above price and volume might be considered as diffident and reluctant buying. As the price is going up or even sideways, the concurring volume is vanishing and fading. According to this, the purple arrows are picturing a quite similar price action, but speaking in terms of selling. This can be considered as profit taking, restructuring open positions and overall as a regressive move. Why doesn't price go in one direction only? Why are these regressive moves occurring? As especially the big trading floors, investment companies, hedge funds and the commercials are trying to get large slices of an asset, it takes time to get and to load up the desired amount. Think of it like this: If you are getting a new furniture like a table or a lamp, you`ll easily put it into the trunk of your car, but if you’re going to move from one flat to another, you’ll need a truck a certain period of time to load up or you’ll even need to drive a few times forth and back before everything is in its new place. Trend strength Based upon the former information we are now able to see the basic price moving in trend and regression, but sometimes - or even too often - the two aren’t trodding in the same direction. This is giving clues about the strength of an ongoing move as visualized by the orange arrows in the following figure and is usually easier to spot in upward than in downward movements (the reasons why, I am glad to explain in another chapter). Divergences As being one of the most favored tools of interpretation, divergences are also one of the most tremendous and even without any special tools to discover on a blank chart. We speak of divergence if the indication is showing another price direction as the chart itself is. In a regular point of view of the Dow Theory a trend is established by higher highs and higher lows, whilst a sheer price action divergence is considered to be the appearance of a lower high or a lower low in an uptrend and for a downtrend vice versa. A price/volume divergence is seen in the image below. As marked by red circles, the consecutive higher highs aren't emphasized by increasing volume, rather the opposite is true: the volume of the subsequent high is at best at the same level as the precedent. This is considered classic divergences. Volume peaks and lows For the final part of volume basics on a naked chart, we need to have a look at volume spikes. To estimate move and direction properly, we need to ask where the spike has happened. If the previous move was up, the volume should also have risen to a certain extent to display the healthiness of the move. Usually, the peak of the blank volume is appearing on the end of a move, either up or down; therefore, a reversal might happen soon indicated by the red and green arrows in the figure hereinafter). On the other hand, if a higher than usual volume is occuring at a resistance and breaking through, a future move seems likely. But if the peak is happening within a range at no specific point of interest, then sellers or buyers most probably have cashed in and closed their positions. When going for volume lows, it is quite easy: lows are usually appearing if there is no interest in buying or selling B. Volume Delta and Cumulative Volume Generally speaking, all of the analysis as written above might also be taken into account if looking at volume deltas. In the figure below. For this I’m using the “Simple CVD over MA” ( ) to exemplify the ease of use of volume; the settings are cumulative volume over previous bar, smoothed over the last 14 periods of the weekly time frame - displayed on the daily chart. Within this indicator, the asset is uptrending if the volume is above the zero line, and the histogram is colored green if the actual cumulative volume is higher than the previous. This indicator, even if not very sophisticated, is visualizing the volume trend with a quick blink. The fading cumulative volume is indicating a regression until the valley has started to form (tagged in orange); furthermore, the histogram color is providing a good - or even the perfect - entry for a quick trade or a longer term swing; whilst the summits signaling a level for profit taking or a partial close of a position. As a matter of fact, considering the upward sliding of the price just before the first green arrow whereas the volume is heavily fading, might also be regarded as divergence although they are easier to spot if either the calculated time frame or the ma period is set to a smaller value than used in the example. Just bear in mind: As nothing in life is safe to a hundred percent, reading volume is stacking up the probabilities on your side. ___ Note: As I’m writing a book about trading, I am going to post a couple of short articles on topics like trend, volume, Dow theory, auction theory and behaviorism. If you are spotting some errors or if you like to add something, feel free to comment or pm. Cheers, Constantine - co.n.g.
NYSE:NIOEducation
by constantine_trading
145
❗ What to look for when I post an idea - Check the Trade Log! ❗A quick video running through how my ideas work and why they're different! Trading for me is all in the detail and the planning now. Know your numbers and your data and you can plan properly. You know if your strategy or system works or not and you can ensure your risk management is in line with probability. Rule number one is... You cant run out of money, else you're out of business, right? You can even run out of money with a profitable strategy, if you risk to much and hit a losing streak - even if the strategy is profitable! Trading is a long game, not about retiring off that one lucky trade you might hit over the course of a week. You'll also give the profits back with interest anyway. Talking from experience! Have a great weekend, any questions - feel free to reach out vis the DM. ------------------------------------------ I try and share as many ideas as I can as and when I have time. My trades are automated so I am not sat in front of a screen daily. Jumping on random trade ideas 'willy-nilly' on Trading View trying to find that one trade that you can retire from is not a sustainable way to trade. You might get lucky, but it will always end one way. ------------------------------------------ Please hit the 👍 LIKE button if you like my ideas🙏 Also follow my profile, then you will receive a notification whenever I post a trading idea - so you don't miss them. 🙌 No one likes missing out, do they? Also, see my 'related ideas' below to see more just like this. Interested in access to my strategy so you can be in these trades the moment they're valid? Drop me a DM . The stats for this pair are shown below too. Thank you. Darren
Education
by pow_removetheguesswork
29
How to read a Chart - Part II: Perspectives on Price IWhat to look for Introduction As my previous post made unexpected waves within the community, I suppose you might be disappointed by this one, but you should still take your time reading this article and take some time thinking about it. Moreover, you might wonder, why the first article has been about volume instead of price or the chart itself and now it seems like we’re taking a step back. To come straight to the point, volume is playing a decisive role in the feasibility of reading a chart. Price is secondary, hence it is more important to know how price and therefore structure is built by trading activity. The Cute and the Ugly I During my trading education at a hedge fund, we held daily sessions to present trading ideas and charts. The aim was simple: taking screen time, understanding price (action) and getting used to what to look for from a blatant technical perspective. Only when we found what we were looking for, we dove into further research (which will not be covered in this article). By looking at the hourly and daily chart of the Zoom Inc. I am exemplifying “beauty” and “readability” by comparing the data feeds of two stock exchanges: the Bolsa Mexicana de Valores (BMV) and the Chicago Board Options Exchange (BZX, former BATS). As the dailies might only differ slightly, there are quite a few visible fissures. Those are getting even more evident if viewed on a lower time frame like the hourly. The chart from the BMV stock exchange is riddled, perforated, and a riddle per se consisting of gaps, flat and overly large candles than on anything providing clear and straightforward information. Long story short, you should always use the data from the stock exchange with the most traded volume, in general - not always - this ought to be the main stock exchange of the company’s country. For assets like commodities, ForEx and similar, you should look at the futures’ charts whenever possible, even - or especially - if you’re trading CFDs. The Cute and the Ugly II So now that you know which stock exchange to use the data from, how to choose a stock on a mere glance, rapidly, hundreds of stocks a day by manual screening? To point this out, we’re having a look at the chart of the GameStop Corp. Even though this stock was on everybody’s lips, the wicks and tails, the gaps, the (non-)existing patterns and the price action having formed this asset into a biest; no hedge fund, no prop trading company neither a bank would take the risk on picking up positions, at least not on a short or mid term basis, not based on technical analysis. In contrast to this, liquidity - and thus volume - is playing a key role in building price and structure and consequent to this enhancing readability as you’re seeing in the chart of Crude Oil futures below. What we've found Now, you should slowly be able to see a chart and the price through the eyes of big investor, although you aren't one. Big companies are not taking bets, not trading pink sheets for half a quarter cent; they are stacking the odds in their favor by trying to avoid the unpredictable. After reading this article, what would you prefer? Making a small amount on a day-to-day basis or waiting years after years for the one chance to be rich in one shot? As a colleague of mine once stated: As traders, we're positioning ourselves to make money continuously to then catch a bigger move. ___ Note: As I’m writing a book about reading a chart, I am going to post a couple of short articles on this topic and others related to it, e.g. trend, volume, Dow theory, auction theory and behaviorism. If you are spotting some errors or if you like to add something, feel free to comment or pm. Cheers, Constantine - p.s.: This article is not intended as any kind of trading advice. I didn’t expect that my previous article made that much waves. Thanks to all for reading and I hope it will help you in your analysis and your trading career. Thank you all for the interest in my book and to answer your questions: there is no release date yet as it is still a work in progress and it will be an educational novel.
CME:BTC1!Education
by constantine_trading
26