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Trend Analysis

TradeCityPro Academy | Dow Theory Part 1👋 Welcome to TradeCityPro Channel! Welcome to the Educational Content Section of Our Channel Technical Analysis Training We aim to produce educational content in playlist format that will teach you technical analysis from A to Z. We will cover topics such as risk and capital management, Dow Theory, support and resistance, trends, market cycles, and more. These lessons are based on our experiences and the book The Handbook of Technical Analysis 🎨 What is Technical Analysis? Technical Analysis (TA) is a method used to predict price movements in financial markets by analyzing past data, especially price and trading volume. This approach is based on the idea that historical price patterns tend to repeat and can help traders identify profitable opportunities. 🔹 Why is Technical Analysis Important? Technical analysis helps traders and investors predict future price movements based on past price action. Its importance comes from several key benefits: Faster Decision-Making: No need to analyze financial reports or complex news—just focus on price patterns and trading volume. Better Risk Management: Tools like support & resistance, indicators, and chart patterns help traders find the best entry and exit points. Applicable to All Markets: Technical analysis can be used in Forex, stocks, cryptocurrencies, commodities, and even real estate. Understanding Market Psychology: Charts reveal investor emotions like fear and greed, allowing traders to react accordingly. 📌 Real-Life Example Imagine you own a mobile phone shop and want to predict whether phone prices will go up or down in the next few months. 🔹 Fundamental Analysis Approach You follow the news and see that the USD exchange rate is rising, and phone manufacturers plan to increase prices. Based on this, you predict that phone prices will go up soon. 🔹 Technical Analysis Approach You analyze past price trends and notice that every year, phone prices tend to increase before the New Year. This pattern has repeated for several years, so you assume it will happen again. As a result, you buy stock before the price hike and make a profit. This example shows that technical analysis allows you to make decisions based on past market behavior without relying on external news. 📊 I ntroduction to Dow Theory Today, for the first part of our lessons, we will begin with Dow Theory, which was developed by American journalist Charles Dow. Many traders still use this method for analysis and trading. Dow Theory is one of the fundamental concepts in technical analysis, developed by Charles Dow, the founder of The Wall Street Journal and co-founder of the Dow Jones Industrial Average (DJIA). This theory provides a structured approach to understanding market trends and price movements and is still widely used today by traders and analysts. Dow Theory consists of six core principles, which we will explain in detail: 📑 Principles of Dow Theory 1 - The Averages Discount Everything (Not applicable to crypto) 2 - The Market Has Three Trends 3 - Trends Have Three Phases 4 - Trend Continues Until a Reversal is Confirmed 5 - The Averages Must Confirm Each Other 6 - Volume Confirms the Trend 💵 Principle 1: Price is All You Need According to this principle, all available information is already reflected in asset prices. This includes economic data, political events, earnings reports, trader expectations, and even market sentiment. If a company releases strong earnings, its stock price might not rise significantly because investors had already anticipated this and bought in advance. ❗ Why This Is Important Technical analysts focus on price movements rather than external news since all information is already factored into the market. Instead of reacting to news, traders analyze historical price trends to predict future price movements. 📊 Principle 2: The Market Has Three Types of Trends Dow Theory states that markets move in three types of trends, each occurring over different timeframes: 1 - Primary Trend: This is the main movement of the market, dictating the long-term direction, and can last for years. 2 - Secondary Trends: These are corrective movements that run opposite to the primary trend. For instance, if the primary trend is bullish, the corrective trend will be bearish. These trends can last from weeks to months. 3- Minor Trends: These are the daily price fluctuations in the asset. Although minor trends can last for weeks, their direction will always align with the primary trend, even if they contradict the secondary trend. 💡 Final Thoughts for Today This is the end of this part, and I must say we have a long journey ahead. We will continually strive to produce better content every day, steering clear of sensationalized content that promises unrealistic profits, and instead, focusing on the proper learning path of technical analysis. ⚠️ Please remember that these lessons represent our personal view of the market and should not be considered financial advice for investment.
Education
by tradecitypro
8
Measured Moves: Understanding Harmonic SimplicityFew tools in trading are forward-looking and adapt to current volatility, Measured Moves do. Unlike traditional indicators, Measured moves offer a structured way to project price targets and turning points with no lag. Let’s take a deep dive into the harmonic simplicity of the measure move and look at how it can be applied to real-world market conditions. What Are Measured Moves? A measured move is a price projection technique that assumes market swings tend to repeat in a proportional manner. By taking the length of a prior move and projecting it forward, traders can identify potential areas where price might react, either as a turning point or a continuation zone. This makes measured moves one of the few truly predictive tools in technical analysis—offering guidance without the lag that comes with moving averages or oscillators. Beyond their predictive nature, measured moves are inherently adaptive. Markets move through phases of expansion and contraction, meaning fixed-length indicators can become unreliable when volatility shifts. Measured moves, by definition, adjust to the prevailing market conditions, making them particularly effective in dynamic environments. Example: DXY Daily Candle Charts Measured Move DXY Daily Candle Charts: Measured Moves Past performance is not a reliable indicator of future results Past performance is not a reliable indicator of future results Timing Profit-Taking with Measured Moves One of the most effective uses of measured moves is in setting profit targets. In trending markets, traders often struggle with the decision of when to exit—too early and they leave gains on the table, too late and they risk giving back profits. A measured move provides a logical framework for identifying where price may run out of steam. The process is straightforward: take the length of a completed impulse move and project it from the swing low (in an uptrend) or swing high (in a downtrend) of a subsequent pullback. If price approaches this level and momentum starts to fade, it suggests a natural area for taking profits. This method ensures that you don’t rely solely on intuition or arbitrary levels but instead use market-driven symmetry to guide exits. Example: FTSE 100 Breakout on Daily Candle Chart Past performance is not a reliable indicator of future results Past performance is not a reliable indicator of future results Entering Two-Legged Pullbacks Measured moves are also very useful for timing entries in corrective pullbacks—especially in two-legged retracements, which are common in trending markets. Price rarely moves in a straight line; instead, pullbacks often develop in two distinct waves or A,B,C,D pattern before resuming the dominant trend. This pattern can be frustrating for traders who enter too early, only to see price dip lower before the trend continues. By measuring the size of the first pullback and projecting it forward, traders can anticipate the likely endpoint of the second leg. When price reaches this level and starts to stabilise, it provides a higher-probability entry for traders looking to trade with the trend. This technique works particularly well when combined with broader support or resistance levels, reinforcing key zones where buying or selling pressure may return. Example: Gold Daily Candle Chart Past performance is not a reliable indicator of future results Past performance is not a reliable indicator of future results Combining Measured Moves with Candle Patterns Measured moves provide price-based structure, but confirmation from price action can refine entries and exits even further. Candlestick patterns help traders gauge sentiment at key measured move levels, offering a layer of confirmation before taking action. For profit-taking, if price reaches a measured move projection and forms a reversal pattern—such as a shooting star in an uptrend or a hammer in a downtrend—it strengthens the case for locking in gains. Conversely, for entries, a two-legged pullback that completes at a measured move level becomes even more compelling when a bullish engulfing pattern or pin bar forms, signalling potential trend continuation. By combining measured moves with candlestick confirmation, you avoid acting on rigid projections alone. Instead, you can use price action cues to validate measured move levels, improving decision-making and reducing false signals. Summary: Measured moves provide a structured, adaptable approach to navigating price action. Whether used for profit-taking or timing pullback entries, their ability to adjust to volatility and offer forward-looking projections makes them a valuable tool in a trader’s arsenal. When combined with candlestick patterns, they become even more effective, offering both precision and confirmation in a market that thrives on uncertainty. Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
CAPITALCOM:UK100Education
by Capitalcom
Learn How to Trade Cup and Handle Pattern on Forex & Gold If you are studying a price action, you should definitely know how to identify and trade Cup and Handle pattern formation. Being applied properly, it can generate big profits. In this educational article, I will teach you how to identify this pattern. We will discuss its psychology and I will share with you 2 trading strategies. 📏And let's start with the structure of the pattern. The pattern has 3 important elements: Cup - long-term correctional movement that tends to move steadily from a bearish trend to a bullish trend. Handle - short-term correctional movement with signs of bullish strength. Neckline - upper horizontal boundary of the pattern - a strong resistance that the price constantly respects. ⚠️Being formed, it warns you about a highly probable coming bullish movement. The trigger that confirms the initiation of a bullish wave is a breakout of the neckline of the pattern and a candle close above. Here is the example of a completed C&H with a confirmed neckline breakout, indicating a highly probably coming bullish movement. Depending on the preceding price action, Cup & Handle Pattern can either be a trend-following or reversal pattern. 📉If the pattern is formed after a bearish impulse. It is considered to be a reversal pattern. Here is the example of a reversal C&H that I spotted on EURUSD. 📈If the pattern is formed at the top of a bullish impulse , it is considered to be a trend following pattern. Here is the example of a trend following C&H that I spotted on GBPJPY. The thing is that while the price forms the C&H, buying volumes are accumulating. Even though, buyers are hesitant and reluctant initially, their confidence grows, and the accumulation leads to explosive neckline breakout. There are 2 strategies to trade this pattern. ✔️ Strategy 1. That approach is quite risky , but the reward can be quite substantial. You should monitor the price action when the price is creating a handle. Occasionally, the price starts trading in a falling channel: parallel or contracting one. Your trigger will be a bullish breakout of its resistance and a candle close above. Once the violation is confirmed, you can buy aggressively or set a buy limit order on a retest. Stop loss will lie below the lows of the channel. Target will be the closest key resistance. Here is the example of the handle being a falling channel. ✔️ Strategy 2. Wait for a breakout of a neckline of the pattern. Once a candle closes above that, it will confirm the violation. Buy the market aggressively or set a buy limit on a retest of a broken neckline then. Stop loss will lie below the lows of the handle. Target will be the closest key resistance. Here is the example of the trade based on a confirmed breakout of a neckline of C&P on NASDAQ Index. Applied properly, the strategies may reach up to 70% win rate. As always, the best pattern will be the one that forms on a key level. Try it, test it, and good luck in your trading journey. ❤️Please, support my work with like, thank you!❤️
FX:XAUUSDEducation
by VasilyTrader
1
Liquidity Sweeps: A Complete Guide to Smart Money Manipulation!🔹 What is a Liquidity Sweep? A liquidity sweep occurs when price temporarily moves beyond a key level, such as a previous swing high or low to trigger stop-losses and lure breakout traders into bad positions before reversing in the opposite direction. This is a classic smart money technique used to grab liquidity before initiating the real move. Financial markets need liquidity to function, and institutions (smart money) can’t enter or exit large positions without it. Instead of chasing price like retail traders, they manipulate price to engineered levels where liquidity is resting, allowing them to fill their orders without causing massive slippage. 🔹 How Liquidity Works in the Market To understand liquidity sweeps, it’s important to know where liquidity pools exist. These are areas where a high number of stop-loss orders and pending market orders are placed. Stop-loss liquidity: Traders set stop-losses above swing highs and below swing lows. When price hits these levels, stop-loss orders trigger as market orders, adding fuel for big moves. Breakout trader liquidity: Many traders enter buy trades when a high is broken and sell trades when a low is broken. Smart money often uses these breakout orders as liquidity before reversing the market. Essentially, liquidity sweeps allow smart money to take the opposite side of retail traders’ positions before moving the market in their favor. 🔹 Identifying Liquidity Sweeps on the Chart A valid liquidity sweep has three key components: 1️⃣ A Key Liquidity Zone: Look for well-defined swing highs and lows where stop-losses are likely sitting. Equal highs and equal lows are prime targets because many traders place stops there. Areas with high trading activity (volume profile levels, POCs) are also potential liquidity pools. 2️⃣ A Quick Price Spike Through That Level: Price briefly moves beyond a high or low, triggering stop-losses and luring breakout traders in the wrong direction. This move often happens suddenly, with a sharp candle wick or a short-term breakout that quickly fails. 3️⃣ An Immediate Reversal (Rejection): Price fails to hold above/below the liquidity level and reverses aggressively. Strong rejection candles like long wicks, bearish engulfing (after a buy-side sweep), or bullish engulfing (after a sell-side sweep) confirm the sweep. The stronger the rejection, the higher the probability that smart money just manipulated price to collect liquidity before the real move. 🔹 Types of Liquidity Sweeps 🔸 Buy-Side Liquidity Sweep (Bull Trap) Price spikes above a key high, triggering stop-losses from short sellers and inducing breakout buyers. If price fails to hold above that level and quickly reverses, it confirms the sweep. This is a signal that price is likely to drop as smart money absorbs liquidity before selling off. Example of a buy side liquidity sweep (BSL) 🔸 Sell-Side Liquidity Sweep (Bear Trap) Price dips below a key low, triggering stop-losses from long traders and trapping breakout sellers. If price fails to hold below that level and quickly reverses, it confirms the sweep. This is a signal that price is likely to rise as smart money collects liquidity before pushing higher. A liquidity sweep is not just a random wick, it’s a strategic price move designed to trap traders before a reversal. Example of a sell side liquidity sweep (SSL) 🔹 Why Liquidity Sweeps Matter Liquidity sweeps provide traders with some of the highest probability reversal signals because they: ✔ Show where institutions and smart money are active ✔ Confirm major support and resistance levels ✔ Help traders avoid false breakouts ✔ Provide excellent risk-to-reward setups Once a liquidity sweep is confirmed, price often moves aggressively in the opposite direction, as smart money has finished collecting liquidity and is now driving price toward their true target. 🔹 How to Use Liquidity Sweeps in Your Trading 1️⃣ Identify Key Liquidity Zones Mark previous swing highs and lows where traders are likely placing stop-losses. Pay attention to equal highs/lows and tight consolidations, as these areas tend to hold a lot of liquidity. Use volume profile tools to see where the highest liquidity clusters exist. 2️⃣ Wait for a Liquidity Sweep & Rejection Don’t enter just because price broke a high/low, wait for confirmation. A strong rejection candle (wick, engulfing pattern, pin bar, etc.) signals that the sweep was a trap. Lower timeframes (5m, 15m) can help confirm entry after a sweep happens on higher timeframes. 3️⃣ Combine with Other Confluences Liquidity sweeps are most effective when combined with: ✅ Fair Value Gaps (FVGs): Price often sweeps liquidity before filling an imbalance. ✅ Order Blocks: Smart money enters positions at order block levels after a sweep. ✅ Fibonacci Retracements: Sweeps often happen near the Golden Pocket (0.618 - 0.65). ✅ Volume Profile (POC): If a sweep happens near a Point of Control (POC), it adds extra confluence. The more confirmations you have, the higher the probability of a successful trade! 🔹 Common Mistakes Traders Make with Liquidity Sweeps Entering too early: A liquidity sweep needs confirmation. Wait for a clear rejection before trading. Ignoring higher timeframes: The strongest sweeps happen on 1H, 4H, and Daily charts. Lower timeframes can be noisy. Forgetting the invalidation rule: If price closes above/below the liquidity sweep level, the move may not be valid. Chasing price after a sweep: Always look for an optimal entry (retracement to a key level) rather than impulsively entering. 🔹 Advanced Tips for Trading Liquidity Sweeps 📌 Use Time-of-Day Analysis: Liquidity sweeps often occur before major sessions open (London, New York, etc.). Many sweeps happen during high impact news releases, be cautious. 📌 Look for Repeated Sweeps at the Same Level: If price sweeps liquidity multiple times without follow through, it increases the chance of a strong reversal. A double or triple sweep is a powerful confirmation that smart money is manipulating price before a real move. 📌 Use Liquidity Sweeps for Entry & Exit Points: Entering after a confirmed liquidity sweep can provide great risk-to-reward setups. Use liquidity sweeps as take-profit targets if price is approaching a key high/low, expect a sweep before reversal. 📌 Final Thoughts: Mastering Liquidity Sweeps Liquidity sweeps are one of the most powerful tools in a trader’s arsenal because they reveal smart money’s true intentions. By understanding how they work, traders can: ✅ Avoid being trapped by false breakouts ✅ Identify high-probability reversal points ✅ Follow smart money instead of fighting it Next time you see price breaking a high or low, don’t immediately assume it’s a breakout. Look for the liquidity sweep if it happens, it could be a game changer for your trading strategy. 🚀 Also, check out our Liquidity sweep indicator! __________________________________________ If you found this guide helpful or learned something new, drop a like 👍 and leave a comment. I’d love to hear your thoughts! 🚀 Make sure to follow me for more price action insights, free indicators, and trading strategies. Let’s grow and trade smarter together! 📈✨
KRAKEN:BTCUSDEducation
by TehThomas
1
What Is an ETF and How Does ETF CFD Trading Work?What Is an ETF and How Does ETF CFD Trading Work? Exchange-traded funds, or ETFs, have gained significant popularity in recent years as a way to invest in a diversified portfolio of securities. But for the uninitiated, the world of ETFs can seem complex and overwhelming. So, what is an exchange-traded fund, and how does it work? In this article, we’ll cover everything you need to know about ETFs, the advantages and disadvantages, and we’ll explain how to trade ETF CFDs. What Is an ETF and How Does It Work? The ETF definition in investments is the following: exchange-traded funds (ETFs), sometimes called equity-traded funds, are financial products that track the performance of a specific index, commodity, or group of assets. ETFs are popular among individual and institutional investors thanks to their flexibility, low fees, and transparency. Like stocks, ETFs are traded on exchanges. This means that you can buy ETF shares when the stock market is open. Note that you buy shares of a fund, not the fund itself. Unlike stocks, however, ETFs don’t focus on a single asset. Instead, ETFs consist of multiple assets and even different asset classes, such as stocks, bonds, commodities, and cash. Some ETFs are passively managed, meaning they’re designed to track a specific market or sector. Others are actively managed and have professional portfolio managers who choose which assets to include in the ETF. ETFs are an effective way for traders and investors to diversify their positions. Because ETFs comprise a diverse range of securities, holders can gain exposure to different assets, markets, and sectors without having to trade each one individually. This can help reduce risk and volatility and potentially generate more stable returns over the long term. Differences and Pros and Cons of ETFs vs Mutual Funds While they share some similarities to mutual funds, one of the main differences between the two is that mutual funds are only traded at the end of the trading day according to their net asset value (NAV), while an ETF’s share price fluctuates throughout the day. Mutual funds pool money from investors to invest in a range of assets and are often actively managed by a professional portfolio manager. This means they typically come with higher fees and a higher minimum investment requirement. Generally speaking, ETFs are the more cost-effective and flexible option, as they offer lower expense ratios and allow for intraday trading. They also tend to be more tax efficient due to their reduced portfolio turnover rates. However, ETFs come with commissions, while mutual funds do not. Moreover, the passive management style of many ETFs can lead to lower returns compared to mutual funds, which aim to beat the market through active management. ETF Types There are many different types of ETFs out there that can be used to meet a wide variety of investment goals. Let’s look at some examples of exchange-traded funds. Index ETFs What is an ETF in the stock market? Equity ETFs are those that track a stock index. They vary in terms of the sectors, industries, company sizes, and countries they cover. Equity ETFs are divided into broad market and sector ETFs. Broad Market ETFs These ETFs track the performance of the entire market. They can be a useful tool for investors looking to gain exposure to the overall market without having to pick an individual instrument. One of the most significant broad-market ETFs is the SPDR S&P 500 ETF. Sector ETFs Sector ETFs offer investment in specific industries or areas of the market, like technology, healthcare, energy, and financials. These ETFs are ideal for investors looking to profit from the overall growth of an industry. Popular sector ETFs include the ARK Innovation ETF. Bond ETFs These ETFs invest in fixed-income securities such as government, corporate, and municipal bonds. Bond ETFs expose investors to the fixed-income market, which can be an effective tool for diversifying a portfolio. One of the bond ETFs is iShares 20+ Year Treasury Bond ETF. Commodity ETFs Commodity ETFs invest in assets like gold, silver, oil, and other natural resources. Commodity ETFs offer investors easy access to the commodity market and can help them hedge during market downturns. SPDR S&P Oil & Gas Exploration & Production ETF (XOP) is an example of a commodity ETF. Currency ETFs These ETFs invest in foreign currencies and are used to gain exposure to a particular country’s currency or group of currencies, meaning they can be used to hedge against currency risk. Primary currency ETFs include the Invesco DB US Dollar Index Bullish Fund. Leveraged ETFs Leveraged ETFs use derivatives to provide investors with magnified exposure to the underlying assets, typically 2x, 3x, or 5x. For instance, a 2x leveraged ETF based on the S&P 500 would drop 2% if the S&P 500 fell by 1%. Direxion Daily Semiconductor Bull 3X Shares ETF is one of the most popular leveraged ETFs. Inverse ETFs These ETFs allow buyers to invest in the inverse performance of the underlying asset. For example, an inverse ETF that tracks the S&P 500 would go up when the S&P 500 goes down. Inverse ETFs can be useful for hedging against market downturns but also shouldn’t be held long-term. An example of an inverse ETF is the ProShares Short S&P 500 ETF. How to Trade ETF CFDs Aside from buying ETFs on stock exchanges, you can trade them via CFDs. CFDs are derivative products that allow traders to speculate on the price movement of an underlying asset, such as an ETF. Unlike traditional ETF investing, ETF CFD trading does not involve owning the ETF itself. Instead, traders are exposed to the price movements of the underlying ETF when they open a position. At FXOpen, we have dozens of ETF contracts for difference (CFDs) that are ideal for short-term trading. One key benefit of CFD trading is the use of leverage, which allows traders to open larger positions with smaller amounts of capital. This can potentially amplify profits but also magnify losses. All of our ETF CFDs offer 1:5 leverage, so to open a $100 position, you’ll need $20 to cover the margin requirements. Moreover, ETF CFDs can be opened long or short, allowing traders to profit from both rising and falling markets. This can be especially useful when looking to hedge against an existing position or take advantage of short-term market movements. Unlike regular ETFs, CFDs are subject to overnight fees, which are charged for holding open positions overnight. However, the same as with regular ETFs, CFD traders receive dividends if applied. The dividend adjustment is positive for buy trades and negative for sell trades. Consider a Trading Strategy If you’re thinking of trading ETF CFDs, it’s important to have a trading strategy in place. One approach is a trend-following strategy, which involves identifying and entering in the direction of the trend of the underlying ETF. Many traders use technical analysis tools, like moving averages and trendlines, to help them gauge the direction of a trend. Seasonal trend trading can also work particularly well for ETF CFDs. Traders using this strategy look at historical market data and identify trends that tend to occur during certain times of the year. For example, a retail sector-based ETF might perform well around the holiday season, so traders could use this expectation to guide the direction of their trade. Some traders prefer breakout trading - taking positions in ETF CFDs when their prices break through key support or resistance levels. Breakout trading can be especially effective in ETF CFD trading because ETFs tend to be less volatile than individual stocks. This means that when an ETF breaks through a support or resistance level, it may continue in that direction for an extended period, providing traders with an opportunity to profit. Trading ETF CFDs: Advantages and Disadvantages While we’ve explained some of the key advantages and disadvantages of ETF CFD trading, there are other factors to consider. Here are some additional advantages and disadvantages of ETF CFDs to be aware of. Advantages Flexibility: ETF CFDs can be bought and sold quickly throughout the day, providing traders with the flexibility to adjust their positions in response to intraday market events. Broad Exposure: ETF CFDs offer exposure to a wide range of global markets and sectors, meaning that traders can diversify their positions and speculate on the price movements of a market or sector as a whole rather than relying on a single asset. Hedging: This broad exposure also allows traders to use ETF CFDs to hedge against their other positions and reduce their potential losses. For example, a trader long on tech stocks could use a technology-based ETF CFD to short the sector during earnings season to protect from downside risk. Disadvantages Only Tradeable During Specific Hours: ETF CFDs are only available to trade when their respective exchanges are open. This might only be 9:30 a.m. to 4:30 p.m. EST, whereas other types of CFDs, like forex CFDs, are available to trade 24/5. Potential Liquidity Issues: During periods of high volatility or low volume trading hours, some ETF CFDs can suffer from poor liquidity. This can widen spreads, increase costs for traders, and heighten the risk of slippage. Fund Closure: While rare, it is possible for an ETF to cease trading while you have an open CFD position. This would result in the liquidation of the position and the net profit or losses being realised. When combined with leverage, a forced liquidation could lead to significant losses. Your Next Steps Now that you have a solid understanding of ETFs and their CFD counterparts, you may wonder how to start trading them. Follow this step-by-step guide to get started: 1. Open an FXOpen Account: At FXOpen, we offer a wide range of ETF contracts for difference (CFDs) that you can begin trading in minutes. 2. Explore ETFs: The next step is to look for ETFs that align with your strategy. You can research factors like potential for growth and historical performance to help determine if an ETF is right for you. You may also want to consider elements like the ETF’s level of diversification and trading volume. 3. Place a Trade: Once you think you’ve found the ETF you want to trade, you can use one of four trading platforms at FXOpen to enter a position. This involves selecting the ETF CFD you want to trade, choosing the appropriate trade size, and setting stop losses to manage risk. At this stage, you could also set some targets for where you’d like to exit your trade. 4. Manage Risk: As your trade progresses, the only thing left to do is manage your position’s risk. You could do this by gradually moving your stop loss closer to breakeven, taking partial profits, and hedging your position with other ETF CFDs. Trade on TradingView with FXOpen. Consider opening an account and access over 700 markets with tight spreads from 0.0 pips and low commissions from $1.50 per lot. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
AMEX:SPYEducation
by FXOpen
1
Bollinger Bands: Basics and Breakout Strategy🔵 What are Bollinger Bands? Bollinger Bands are a popular technical analysis tool developed by John Bollinger in the early 1980s. They help traders analyze price volatility and potential price levels for buying or selling. The indicator consists of three lines plotted over a price chart: Middle Band: A simple moving average (SMA), typically set to a 20-period average. Upper Band: The middle band plus two standard deviations. Lower Band: The middle band minus two standard deviations. 🔵 How Are Bollinger Bands Calculated? Middle Band (MB): MB = 20-period SMA of the closing price. Upper Band (UB): UB = MB + (2 × standard deviation of the last 20 periods). Lower Band (LB): LB = MB - (2 × standard deviation of the last 20 periods). The bands expand when volatility increases and contract when volatility decreases. length = 20 basis = ta.sma(src, length) dev = mult * ta.stdev(src, length) upper = basis + dev lower = basis - dev 🔵 How to Use Bollinger Bands in Trading Bollinger Bands provide insights into market volatility and potential price reversals. Traders often use them to: Identify overbought (price near the upper band) and oversold (price near the lower band) conditions. Spot volatility contractions, which often precede significant price moves. Confirm trend strength and potential reversals. 🔵 Bollinger Bands Breakout Strategy One effective strategy involves preparing for breakouts when the upper and lower bands contract, indicating low price momentum. Strategy Steps: Identify Low Volatility Zones: Look for periods when the bands are close together, signaling a potential breakout. Prepare for a Breakout: Monitor price action as it approaches either the upper or lower band. Entry Signal: Enter a trade when the price closes above the upper band (for a long position) or below the lower band (for a short position). Stop Loss Placement: For long entries (break above upper band): Set stop loss at the lower band. For short entries (break below lower band): Set stop loss at the upper band. Profit Target: Use a risk-reward ratio of at least 1:2 or close the position when price shows signs of reversal. Example Charts: 🔵 Final Thoughts This Bollinger Bands breakout strategy is simple yet effective. By recognizing periods of low volatility and preparing for breakouts, traders can capitalize on significant price movements. Always complement this strategy with proper risk management and confirmation indicators for optimal results. This article is for informational purposes only and should not be considered financial advice. Trading involves risk, and traders are solely responsible for their own decisions and actions.
VANTAGE:SP500Education
by BigBeluga
18
The Three Black Crows Pattern: Trading PrinciplesThe Three Black Crows Pattern: Trading Principles Various candlestick and chart patterns indicate potential market reversals. One such formation is the three black crows pattern that indicates a potential bearish reversal in the price of an asset. You can find three black crows stock, commodity, and forex patterns. This FXOpen article will help you understand how such a pattern is formed, explaining how it can be used to spot trading opportunities in the market and demonstrating live trading examples. What Are the Three Black Crows? The three black crows is a bearish candlestick pattern used in technical analysis to signal a potential reversal of an uptrend. It consists of three consecutive long bearish candlesticks that occur after a strong upward trend. The pattern suggests that the momentum has shifted from buyers to sellers, indicating that a downtrend could be about to begin. Key Characteristics: - Three Consecutive Bearish Candles: The pattern is composed of three long bearish candlesticks that open within the body of the previous candle and close near their lows. - Appears After an Uptrend: The pattern typically forms after a prolonged uptrend, signalling a potential shift in market sentiment. - Declining Price with Minimal Wicks: The candles should ideally have small upper and lower wicks, showing that the sellers controlled the market throughout the session. - Steady Decline: Each candlestick in the pattern opens higher than the previous candle’s close but then reverses to close lower. Psychological Interpretation The pattern reflects a growing bearish sentiment among traders. Each successive bearish candlestick suggests that sellers are taking over, and buying pressure is weakening. This gradual increase in selling activity is often interpreted as a sign that the market could be heading for a downturn. How Can You Trade the Three Black Crows Chart Pattern? The three black crows formation has general trading rules. They can be modified depending on the timeframe, market volatility, and risk tolerance. Entry Once the formation is confirmed with the third long red candle and additional indicators, traders enter a short position below its low. Take Profit The pattern doesn’t provide specific take-profit targets. Usually, traders use other technical indicators and strong support levels to determine a suitable take-profit point. Some traders set the take-profit order with regard to the risk-reward ratio, say 1:2 or 1:3. Stop Loss The theory states that a stop-loss order can be placed above the first candlestick’s high to potentially limit losses. Moreover, it should be based on the trader's risk tolerance and trading approach. Live Market Example The above example shows the formation of the three black crows’ pattern on a weekly chart of the EUR/USD pair. When the pattern formed, the relative strength index had just left the overbought zone, confirming a potential trend reversal. A trader could go short after the third long bearish candle at 1.42550 and place a stop loss near above the first pattern’s candle (at 1.51763). The profit target could be set at the next important support level of 1.23378. It took six months for the price to reach the target level. ​​Practical Trading Strategies Using the Three Black Crows Pattern Now, let’s look at two specific 3 black crows trading strategies. MACD Strategy The combination of the three black crows candlestick pattern and the MACD crossover offers traders a strong signal of a bearish reversal after a bullish movement. The three black crows formation suggests weakening bullish momentum, while the MACD crossover confirms the shift in momentum from buyers to sellers. Together, these indicators increase the likelihood of a sustained downtrend, offering an opportunity for traders to enter the market with greater confidence. Entry - Traders observe a bearish MACD crossover within a few candles of the three black crows, either just before, during, or just after. - Both conditions (pattern completion and MACD crossover) are typically met by the close of the third candle, signalling a potential opportunity for a sell trade. Stop Loss - Stop losses might be placed just beyond the swing point before the three black crows pattern to potentially protect against false signals. Take Profit - Traders often set take-profit targets at a risk-reward ratio, such as 1:2 or 1:3, to lock in potential returns. - Alternatively, profits might be taken at key support levels where the price may reverse. - Another option might be to exit the trade upon observing a bullish MACD crossover, signalling the end of the downtrend. HMA Strategy Using two hull moving averages (HMA), one set to 20 and the other to 50, provides traders with an extra filter to confirm that a downtrend is beginning following the three black crows pattern. The three black crows indicate a potential bearish reversal, but a cross of the 20-period HMA below the 50-period HMA helps confirm the strength of the downtrend. HMAs are used as they are more responsive to trend shifts than other moving averages. Entry - Traders look for a bearish crossover where the 20 HMA crosses below the 50 HMA within a few candles of the three black crows. - Both the pattern and the HMA crossover typically confirm the start of a downtrend, allowing traders to enter a short position. Stop Loss - Stop losses might be set just above the swing high before the pattern. - Alternatively, they might be placed above one of the HMAs, depending on the trader’s risk tolerance and desired level of protection. Take Profit - Take-profit targets might be based on a risk-reward ratio, such as 1:2 or 1:3. - Traders may also take profits at a known support level where price reversal is likely. - Another potential exit point is when the HMAs cross over again, signalling the end of the trend. Three Black Crows vs Three White Soldiers The three white soldiers candlestick pattern is the opposite of the three black crows. It is a bullish reversal setup that traders commonly use to identify the potential end of a prior downtrend and the start of an uptrend. It consists of three consecutive long bullish candlesticks with highs and lows higher than the previous ones and with little or no wicks. It suggests that the buyers have taken control of the market and that the price will likely continue rising. The candles together create a formation that resembles three soldiers marching in a bullish direction. This formation is usually considered a strong bullish signal when it appears after a prolonged downtrend, in contrast to the three black crows formation, which indicates a strong potential bearish reversal. Traders often use it as an indication to enter long positions, with a stop-loss order placed near the bottom of the pattern. Confirmation Tools Confirmation tools can help traders ensure that the 3 black crows candlestick pattern signals a true bearish reversal rather than a short-term pullback. Here are some key tools to consider when confirming the pattern: - Volume Increase: A spike in selling volume during the formation of the three black crows can confirm heightened pressure and a stronger likelihood of a trend reversal. - Momentum Indicators: Tools like the Relative Strength Index (RSI), MACD, or a Stochastic Oscillator can show a shift in momentum. An overbought RSI, a bearish MACD crossover, or bearish Stochastic divergence may reinforce the bearish signal. - Support Level Break: Watch for a break below a key support level after the three black crows form. This can further validate the downtrend, indicating that sellers are gaining control. - Bearish Candlestick Patterns: Additional bearish patterns, such as engulfing or dark cloud cover, emerging after the three black crows, can reinforce the likelihood of a sustained downtrend. - Moving Averages: A cross of a short-term MA below a long-term MA can offer further confirmation of a bearish reversal. Common Mistakes When Trading the Three Black Crows Pattern In 3 black crows trading, it's common to make several mistakes that may lead to poor results or false signals. Here are key pitfalls to watch out for: - Ignoring Volume: Failing to check for a rise in volume during the formation of the three black crows can lead to misinterpreting the pattern. Low volume may indicate weak selling pressure and an unreliable signal. - Trading Without Confirmation: Jumping into a trade as soon as the pattern forms without using additional confirmation tools like momentum indicators or support breaks can increase the risk of a false reversal. - Overlooking Market Context: The three crows candlestick pattern works in specific conditions. If the pattern appears in a sideways or range-bound market, it may not signal a true trend reversal, leading to misinterpretation. - Setting Tight Stop-Losses: Placing stop-loss orders too close to the first candlestick’s high can result in early exit due to market noise. Proper risk management with room for fluctuations is essential. - Neglecting Trend Strength: Ignoring the strength of the prior uptrend may lead to premature trades. The pattern is believed to be the most effective after a prolonged uptrend; using it in weak trends can result in false signals. Final Thoughts The three black crows pattern is a powerful bearish reversal signal that can help traders identify potential downtrends after a sustained uptrend. By understanding its formation, confirming the pattern with additional technical indicators, and implementing sound risk management strategies, traders can incorporate this pattern into their trading plans. However, as with any trading strategy, patience and proper confirmation are key to avoiding false signals. Once you have practised identifying the black crows, consider opening an FXOpen account to start your trading journey! FAQ What Do 3 Black Crows Mean in Trading? The 3 black crows’ meaning refers to a candlestick pattern signalling a bearish reversal. It consists of three consecutive long bearish candlesticks following an uptrend, indicating that sellers are taking control of the market. This pattern suggests a potential shift in momentum from bullish to bearish, meaning the price is likely to decline further as selling pressure increases. What Do Three Black Crows Indicate? The 3 black crows’ candlestick formation, after a prolonged uptrend, indicates a potential downside reversal. It means that sellers are taking control, and the price will likely trade downwards. What Is the Success Rate of the 3 Black Crows? The success rate of the three black crows pattern varies depending on market conditions, timeframe, and confirmation tools used. While it is generally considered a reliable bearish reversal signal, traders often use volume, momentum indicators, and support level breaks to confirm the pattern and improve success rates. What Is the Meaning of Identical Three Crows? The identical three crows is a variation of the traditional pattern. In this case, the three bearish candles open at the close of the previous candlestick, showing even stronger bearish pressure. This variation suggests that sellers are overwhelming buyers consistently, signalling an even more pronounced reversal. How Do You Trade Three Black Crows? To trade the 3 black crows pattern, traders wait for confirmation of a bearish reversal after the three consecutive down candles in an uptrend. They enter a short position once the pattern is completed and confirmed by additional indicators like increased volume or a break below support. They may place a stop-loss order above the high of the first candle and target key support levels below for profit-taking. Traders always manage risk carefully by using stop-losses and monitoring market conditions. Are Three Black Crows Bullish? No, the three black crows pattern is not bullish; it is a bearish candlestick pattern. It signals a potential reversal from an uptrend to a downtrend, indicating that selling pressure is starting to overwhelm buying pressure. Trade on TradingView with FXOpen. Consider opening an account and access over 700 markets with tight spreads from 0.0 pips and low commissions from $1.50 per lot. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
1
How to Trade Ending Diagonal: EURUSDOne of my favorite EW patterns: Ending Diagonal It usually appears in wave C or 5, we have wave C It consists of five waves and each of them are three waves All looks good as wave 5 is over wave 3 and Ending diagonal might be completed as EWO oscillator already shows Bearish Divergence between wave 3 and 5 This educational post to show trade setup on this pattern The bottom of wave b in wave 5 is a breakdown trigger (blue) as it means wave 5 is over Confirmation is on breakdown of wave 4 (orange) Target is at the start of the Ending Diagonal (green) Bonus track: One could consider sell on 61.8% Fib retracement as we see the first impulse down and now we watch this two-legged pullback.
Education
by aibek
Using Fair Value Gaps to find A+ entriesA Fair Value Gap (FVG) is a concept used in trading to identify areas of price imbalance on a chart. These gaps occur when there is significant buying or selling pressure, leading to rapid price movements that leave behind gaps on the price chart. Essentially, an FVG represents a zone where the market did not trade efficiently. Historical chart data can show that price has a tendency to dip back into these FVGs before the continuation of the overall trend. FVGs can be found on all time frames and can be used as a form of support and resistance. When price dips into these Gaps, that is the opportune time to enter a trade, allowing you to have a tight and logical Stop Loss below the FVG (PLEASE ACCOUNT FOR SPREAD).
OANDA:XAUUSDEducation
by SynapseTrade
1
Bitcoin mining cost and Bitcoin price appreciation RIOT earnings disclosed that 53% decrease in power credits directly affects miners’ operational costs, leading to higher Bitcoin mining costs. In the broader economic context, this ties into energy market dynamics and inflation control in several ways. Preventing upward pressure on industrial energy prices. Power credits or subsidies previously given to miners have kept their costs artificially low, allowing them to consume large amounts of energy without fully bearing the market rate. By reducing these credits, miners are exposed to real energy prices, discouraging excessive energy consumption and reducing competition for energy resources with industrial sectors (like manufacturing or logistics) that are critical to the economy. Why it matters When Bitcoin miners compete with industrial users for power, it can push up energy prices. Since energy is a major input cost for many industries, rising prices can ripple through supply chains, increasing the costs of goods and contributing to inflation. Aligning with Energy allocation priorities In many regions, energy regulators aim to ensure that critical industries, those tied to job creation, exports, or essential services, have priority access to affordable energy. Bitcoin mining, often seen as non-essential from a macroeconomic standpoint, might be deprioritized to keep energy-intensive sectors from facing higher costs that could contribute to consumer price inflation. Market correction & miner attrition With actual energy costs now directly impacting miners, many less efficient operations (those with older equipment or higher power costs) will struggle to remain profitable and may shut down. This natural market correction helps reduce overall energy consumption by the mining sector, easing pressure on the grid and stabilizing prices for other users. Survivors : Only miners with low energy costs, high-efficiency hardware, or renewable energy sources will remain competitive. The reduction in power credits is a policy lever to discourage energy-intensive activities that don’t directly contribute to broader economic stability. In doing so, it helps control energy costs for industries tied to GDP growth and job creation, ultimately working as an inflation management tool. For Bitcoin miners, this shift creates a survival-of-the-fittest environment, where only the most efficient operations can withstand real market conditions, while others may exit the market. As the cost to mine each Bitcoin rises , it establishes a new economic floor for the market. Miners are less willing to sell below their production cost, especially large-scale miners who can influence market liquidity. Historically, when mining costs increase due to factors like halvings, energy price hikes, or network difficulty, Bitcoin tends to gravitate toward or above these higher cost bases over time. Example: After the 2016 and 2020 halvings, mining costs surged, but Bitcoin’s price followed with significant upward movements in the months that followed, leading to new all-time highs.
COINBASE:BTCUSDEducation
by Cryptovicci
A Trader’s Guide to ABCD PatternsIntroduction to ABCD Patterns The ABCD pattern is a tool in technical analysis that measures up and down moves within a trend. It consists of three consecutive price swings, forming a very specific shape as shown on the chart above. Note that the dark solid line on the chart above is the ABCD pattern while the dotted lines are retracement measurements. The ABCD pattern is valuable because it reflects the rhythmic and cyclical nature of market movements. While it may support such a nature, please note that past performance is not always indicative of future results. The ABCD pattern is often used as a way to map out existing and potential price movements. This pattern is composed of four key points: A, B, C, and D. From point A to B, a new prevailing trend begins. The market then retraces from point B to point C, followed by a resumption of the initial trend from C to D. This sequence can help traders draw and see the movements within a trend. One of the strengths of the ABCD pattern is its versatility. It can appear in both bullish and bearish forms, making it applicable across various markets, including forex like the FOREXCOM:EURUSD and other symbols. Additionally, it can be used in different market conditions, such as range-bound markets, uptrends, and downtrends, and across various timeframes, from intraday to long-term charts. Typically, the tool is used to measure the retracements between each move. The dotted lines on the chart indicate the size of the retracement compared to where the previous trend began. This makes it easy to see where the ABCD pattern is finding its bottom (or top) within the trend. By analyzing these retracements, traders can gauge the strength of the trend and identify potential entry and exit points. The key takeaway from the ABCD pattern is that it is a tool used to draw, measure, and see price movements within a trend. Imagine the market as a roller coaster ride with four key points: A, B, C, and D. At point A, the excitement kicks off with a fresh, dominant trend. As the ride progresses, it dips to point B, offering a brief pause. But hold on tight, because at point C, the initial trend roars back to life. Finally, traders eagerly anticipate the next twist at point D. This dynamic sequence allows traders to map out and visualize the market's journey. Did you learn something new? Our team of researchers and market specialists will be sharing more educational content, so be sure to follow our TradingView account for instant updates. Also, be sure to check out our latest ideas here . Thanks for reading! The FOREX.com team
FOREXCOM:XAUUSDEducation
by FOREXcom
How to Set Multiple TPs...for BeginnersHey Rich Friends, I wanted to share how I find multiple TPs for my Forex trades using free tools and only 1 technical indicator. This strategy is perfect for beginners because it is easy to follow and has clear confirmations for entering and exiting a trade in profit, even if it hits your Stop Loss. I keep my charts clean and let price action do the talking. Here's my setup: ✅ Session Breaks & Horizontal Lines – I mark the previous day’s highs, lows, and key levels to identify potential areas of interest. ✅ Stochastic for Entries & Exits – I use the Stochastic indicator to time my trades when the price reacts at my key levels (80 and 20 are very important here!) ✅ Horizontal Lines = Potential TPs – Instead of setting a take profit, I let the market tell me when to exit based on price action around these levels. Less noise, more precision. Drop a "7" if you made it to the end of the video and let me know if it was helpful! Peace and Profits, Cha
Education
by MoneyMantraCha
36
SOLUSD: How to Draw Quarter's Theory LevelsApplying Quarter’s Theory to SOL/USD helps traders identify key psychological price levels where institutional players might step in. With Solana’s volatility, these quarter levels (25%, 50%, 75%, and full dollar increments) act as crucial areas for potential reversals or breakouts. Current Market Outlook SOL/USD is currently trading around a major quarter level, signaling a potential shift in momentum. If buyers push above $150, the next logical upside target is $175, while a breakdown could send prices back to $125—both key quarter points. How to Trade It Aggressive traders can enter at quarter levels with tight stops, aiming for quick price movements. Conservative traders should wait for a breakout confirmation and a retest before executing trades. Renko charts can help filter noise and confirm trend strength, making it easier to spot clean setups. Is SOL/USD Gearing Up for a Big Move? With SOL/USD sitting at a crucial level, the next move could be significant. Will we see a drop toward $125, or is a deeper pullback coming? What’s your take? Drop a comment below!
CRYPTO:SOLUSDEducation
by TLTurnerTV
2
AUDUSD: How to Draw Quarter's Theory LevelsThe Quarter’s Theory , popularized by Ilian Yotov, is based on the idea that the market moves in predictable 25, 50, and 100-pip increments. When applied to AUD/USD, these psychological price levels become crucial for identifying potential reversals and breakouts. Current Market Outlook AUD/USD is currently trading near a key quarter level, indicating a potential reaction zone. The pair is hovering around 0.6500, a psychological price barrier that often serves as support or resistance. If buyers step in, the next upside target is 0.6750, while a break lower could send prices to 0.6250. How to Trade It Aggressive traders can look for confirmations near quarter levels and enter trades with tight stops. Conservative traders might wait for a breakout and retest before committing. Combining Quarter’s Theory with Renko charts can help filter out noise and confirm strong trends. Will AUD/USD Hold or Break? Quarter’s Theory gives traders a structured way to navigate price movements. Whether AUD/USD holds or breaks through the current quarter level will determine the next significant move. Are you watching these levels? Drop your thoughts below!
Education
by TLTurnerTV
Leap Ahead with a Dynamic Setup: Trading with Andrew’s PitchforkThe Leap Trading Competition: A Chance to Trade Micro Euro Futures TradingView’s "The Leap" Trading Competition provides an opportunity for traders to apply their futures trading strategies in a competitive environment. Participants can trade select CME Group futures contracts, including Micro Euro Futures (M6E). This article presents a structured trade setup using Andrew’s Pitchfork, a technical tool that helps define potential trend direction and breakout levels. The setup involves two intersecting pitchforks near a key UFO support level, signaling the possibility of either an uptrend continuation or a confirmation of a new downtrend. Understanding Andrew’s Pitchfork and Market Structure Andrew’s Pitchfork is a technical analysis tool used to identify trend channels by plotting three parallel lines from a major price swing. The tool helps traders anticipate support, resistance, and breakout levels based on median lines. In this setup, two pitchforks define opposing market structures. The green pitchfork represents an uptrend, suggesting that price could continue higher. The red pitchfork represents a developing downtrend, indicating a possible reversal. The intersection of these pitchforks at a key UFO support level marks an important decision point for the market. The Dynamic Trade Setup: Long and Short Scenarios In a long trade scenario, entry is confirmed if price breaks above the Upper Median Line (UML) of the red pitchfork. The target for the trade is the Median Line (ML) of the green pitchfork, representing trend continuation. A stop loss is placed below entry at a distance that ensures a minimum 3:1 reward-to-risk ratio. In a short trade scenario, entry is confirmed if price breaks below the Lower Median Line (LML) of the green pitchfork. The target for the trade is the Median Line (ML) of the red pitchfork, confirming further downside movement. A stop loss is placed above entry at a distance that maintains a minimum 3:1 reward-to-risk ratio. Because the UML, LML, and ML levels change dynamically with each bar, breakout levels and targets must be adjusted accordingly. If price remains inside the pitchfork structure, the setup remains neutral until confirmation occurs. Contract Specifications and Margin Requirements Euro FX Futures (6E) details: Full contract specs: 6E Contract Specifications – CME Group Contract size: €125,000 Tick size: 0.00005 per EUR/USD ($6.25 per tick) Margin requirements depend on broker conditions and market volatility, currently around $2,600 per contract. Micro EUR/USD Futures (M6E) details: Full contract specs: M6E Contract Specifications – CME Group Contract size: €12,500 (1/10th of 6E) Tick size: 0.0001 per EUR/USD ($1.25 per tick) Lower margin requirements provide access to traders with smaller accounts, currently around $260 per contract. M6E offers a lower-cost alternative to 6E, making it a useful instrument for adjusting position sizes and managing risk effectively. Traders should consider market conditions and leverage when determining position sizes. Execution and Trade Management Before executing a trade, price must confirm a breakout by fully breaking above UML for long trades or below LML for short trades. Additional confirmation through volume trends, momentum indicators, or candlestick patterns may help validate the move. If price does not confirm the breakout, the setup remains invalid. If price re-enters the pitchfork channel, traders should reassess market structure before taking a new position. Stop losses should be maintained at levels that align with a structured risk-reward plan. Conclusion Andrew’s Pitchfork provides a structured approach for trading trend continuation and reversals. This setup allows for both long and short breakout opportunities, depending on how price reacts at key pitchfork levels. For traders in The Leap Trading Competition, this setup highlights the importance of disciplined execution, waiting for confirmation, and managing risk effectively when trading futures. When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com - This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. General Disclaimer: The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
CME_MINI:M6E1!Education
by traddictiv
4
THE FEAR IS REAL. MAKE USE OF IT FOR THE LONG TERM!Disclaimer: The following article is not investment advice. It is solely prepared for educational purposes, specifically regarding the Indian markets and aimed at people interested in long-term investments. The numbers mentioned reflect the data available at the time of writing. Hello people, We are witnessing significant movements in the Indian markets, with news of small-cap stocks entering a ‘bear market’, mid-caps falling nearly 16%, and the major index, NIFTY 50, down about 11% since September. This has led to a decline in SIPs (by 109%) and raised questions about the resilience of common Indian equity investors. SMID stocks have performed the worst since the Covid crash, and various narratives are circulating, such as ‘BUY THE DIPS’ and others equally discouraging equity investment altogether. Regardless of these narratives, it is evident that during substantial declines or bear markets, even fundamentally strong stocks—those suitable for long-term investments—can be purchased at discounted prices. These are the stocks widely considered the right choice and can be made use of for this phase of the market according to proficient professionals. The question remains: which are they? This article highlights a few of these stocks based on my analysis. I share them to raise awareness, especially for those looking for such opportunities, but I am NOT advising you to buy them. What makes this content relevant is that it comes from someone who has been monitoring the market out of initiative, from a genuine interest over the past 3-4 years. So let's begin. My top pick stock ticking all the boxes is Mahanagar Gas . It has impressive financials and is a fundamentally strong mid-cap company. It's both a value stock and a good growth stock (two common investing styles are value investing and growth-based investing). The stock's P/E ratio is 12.6, indicating it might be undervalued. The current price is ₹1,343, and the intrinsic value (according to Screener) is ₹1,479. As a mid-cap stock, it holds significant growth potential with a medium risk level—lower than that of small caps. It’s currently priced at a 31% discount. Next I see Indus towers . Again good fundamentally, making it a good pick for long-term investors. As a large-cap stock, its growth potential is less than mid or small caps, but it’s still solid and carries lower risk of all. Its P/E ratio is 9.18, indicating potential undervaluation. However, one downside is that although its debt-to-equity ratio is 0.75 (which is good), its enterprise value exceeds the market cap, possibly suggesting high debt or overvaluation (which I doubt). Additionally, promoter holdings have decreased by 3% in the last quarter. Among the other options are Godawari Power and Andhra Petrochemicals . Godawari Power is a solid mid-cap stock, with one exception: its 10-year sales growth or compounded revenue growth does not exceed 10% over the last 10 years, a key criterion for long-term investments. However, its 7-year sales growth surpasses 10%, which is positive. With a P/E ratio of 14.5 and a 31% discount from its previous high, it seems undervalued and carries medium risk, with the potential for high growth. Last option is Andhra petrochemicals which unlike the others on this list, is a small-cap stock, making it suitable for those with a high-risk appetite. It has strong fundamentals and meets all the criteria required for long-term investment. The current price of ₹58.7 is below its book value of ₹64.8, and the intrinsic value is ₹154, indicating an attractive investment. It’s also interesting to note that when the price-to-book ratio is below 1 (P/BV < 1), it’s often considered an amazing deal .But again, this is a small-cap stock, so proceed with caution. Criteria Used All the stocks listed here have passed my evaluation based on four key areas required for a growing business: profitability, liquidity, leverage, and operational efficiency. Other factors considered include undervaluation, debt-to-equity ratio, and so on. Going forward, I am aware that there is a possibility of the markets falling further, which cannot be ignored. The narrative around March 20th and its significance in the market cycle is still present, and I would encourage caution. For those hesitant to invest now, I suggest keeping an eye on the charts. Wait for a solid bullish signal to appear, and confirm it with USOIL and USDINR charts. These are crucial for concluding about the trend of our markets. Additionally, perform a reality check on your investments: assess where your money is allocated, determine reasonable conservative targets, and evaluate the time frame for returns, apart from the projections made by portfolio managers and fund managers and their years of experiences too. Stats such as NIFTY MIDCAP 100 index giving negative returns from 2008 to 2014, is evident by directly observing the charts itself. I hope this information was valuable to you. Don't lose faith in the markets. Happy investing! “Be fearful when others are greedy and be greedy only when others are fearful.” – Warren Buffet
NSE:NIFTYEducation
by ThePassionate_investor
How to Trade Gold Using COT Data📌 Step-by-Step Analysis & Prediction 1️⃣ How to Trade Gold Using COT Data Scenario 1: Gold is Rising Commercials are heavily short (84%) → They expect a potential pullback or reversal. Institutions are long (84%) → This suggests strong bullish momentum. Retail traders are long (68%) → This confirms that the public is following the uptrend. 🔹 Trading Strategy: Look for resistance zones around $2,950 - $3,000 (historical key levels). If commercials start reducing shorts, the uptrend may continue. If commercials stay net short, expect profit-taking and a potential correction. Best trade: Wait for bearish confirmation and short near resistance with a stop-loss above $3,050. Scenario 2: Gold is Falling Commercials are now long (16%) → They expect prices to recover. Institutions are reducing longs (16%) → Hedge funds are exiting long positions. Retail traders are still short (32%) → This suggests fear in the market. 🔹 Trading Strategy: Look for support zones around $2,850 - $2,875. If institutions start adding longs, this confirms a bottom formation. Best trade: Look for bullish confirmation and buy at support, targeting $2,950+. 2️⃣ How to Trade USD Using COT Data Scenario 3: USD is Rising Commercials are short (77%) → They expect USD to weaken soon. Institutions are long (73%) → They are driving the uptrend. Retail traders are also long (52%) → Retail is following the institutions. 🔹 Trading Strategy: If DXY is at resistance (105-106), expect a reversal. Best trade: Wait for USD weakness confirmation and short the USD against strong currencies like EUR or JPY. Scenario 4: USD is Falling Commercials are long (23%) → They anticipate a USD recovery. Institutions are reducing longs (27%) → Hedge funds are exiting bullish positions. Retail traders are short (48%) → This suggests retail is bearish on USD. 🔹 Trading Strategy: If DXY is near support (102-103), expect a USD bounce. Best trade: Look for bullish confirmation and buy USD against weaker currencies (e.g., short EUR/USD). 🔵 Final Trading Plan Check COT Data Every Friday → Look for shifts in institutional and commercial positions. Confirm with Technical Analysis → Identify key support/resistance levels. Use Sentiment as Confirmation → If retail is overly long/short, the reversal could be near. Set Stop-Loss & Targets → Define clear exit points to protect capital. Would you like a TradingView indicator to automate this COT-based analysis? 🚀
FX:XAUUSDEducation
by alkalbanib39
1
Shooting Star Pattern: Meaning and Trading RulesShooting Star Pattern: Meaning and Trading Rules In the fast-paced world of trading, recognising key chart patterns is crucial for informed decision-making. One pattern that traders often look for is the shooting star trading pattern. This article will delve into what a shooting star pattern is, how to spot it on a chart, its associated trading strategies, and its distinctions from similar patterns. What Is a Shooting Star? A shooting star in trading is a bearish candlestick pattern that can signify a potential reversal of an uptrend. It consists of a single candlestick with the following characteristics: - A small body that is located at the lower end of the candlestick. - A long upper shadow that is at least twice the length of the candle's body. - A short or nonexistent lower shadow. The appearance of the setup suggests that the price opened near its low and rallied significantly during the trading session but ultimately closed near its opening price. This pattern indicates sellers regained control after a brief period of bullishness. While the formation is considered more probable when it closes red, it’s possible to see a green shooting star. A green shooting star candlestick simply indicates that sellers weren’t able to push the price down quite as aggressively. How Can You Trade the Shooting Star? The shooting star trading strategy involves the following key points: - Entry: After identifying the candle in the strong uptrend, consider entering a short position. To validate the pattern, you may wait for the next one or two candles to close below the shooting star. - Take Profit: Although candlestick patterns don’t provide specific entry and exit points, you can use common technical analysis techniques. For example, you may set a take-profit level based on the support level, Fibonacci retracement level, or nearest swing lows. - Stop Loss: You may want to protect your position with a stop-loss order. This is usually placed above the high price of the shooting star. This helps potentially limit losses if the pattern doesn't lead to a reversal. Let's consider a live market example of a shooting star in the stock market to illustrate the concept. A trader analyses the Meta stock chart and spots a shooting star stock pattern after an extended uptrend. They wait for confirmation, i.e. for the next bar to close lower. Upon confirmation, they decide to enter a short trade, setting their take-profit target at a significant support level and placing a stop loss above the formation’s high. How Traders Confirm the Shooting Star Signals Confirming the shooting star pattern's reliability involves a multifaceted approach, adding robustness to your trading decisions. Traders look beyond the candlestick itself, integrating various technical analysis tools to validate signals. Key confirmation methods include: - Volume Analysis: A high trading volume accompanying the shooting star candlestick pattern can strengthen the signal, indicating that the reversal is supported by significant market participation. - Subsequent Candles: Observing the next few candles for bearish confirmation is essential. A strong bearish candle following the shooting star suggests that sellers are gaining momentum. - Technical Indicators: Indicators can offer confirmatory signals, particularly momentum indicators like the Relative Strength Index (RSI) and Stochastic Oscillator. A moving average crossover can also add confluence. - Support and Resistance Levels: The proximity of the shooting star to established resistance levels enhances its significance. A shooting star forming near a resistance zone often signals a strong reversal point. - Above Swing High/Low: A shooting star pattern that breaks into the area just above a key high or low before reversing can signal a stop hunt/liquidity grab. - Contextual Analysis: The broader market context, such as prevailing trends and economic news, can influence the pattern's effectiveness. Aligning the shooting star with broader market sentiment increases the pattern’s reliability. Shooting Star and Other Candlestick Formations Let's compare the shooting star with other patterns with which it is often confused. Shooting Star vs Inverted Hammer The shooting star and inverted hammer look similar – they have small bodies and long upper shadows. However, they differ in their implications. The former is a bearish reversal pattern found in uptrends, while the latter is a bullish reversal formation seen in downtrends. Shooting Star vs Evening Star Both formations signal an uptrend reversal; however, the shooting star is a single-candle setup, whereas the evening star consists of three candles, including a large bullish candle, a small-bodied candle, and a large bearish candle. Shooting Star vs Gravestone Doji The shooting star and gravestone doji are both bearish reversal patterns. The shooting star features a small body at the lower end of the candlestick with a long upper shadow, signifying a failed rally. In contrast, the gravestone doji has no or a tiny real body, as the open and close prices are identical or nearly identical, with a long upper shadow and no lower shadow. The gravestone doji suggests strong indecision in the market, with buyers initially driving prices up but ultimately failing to maintain that momentum, which often signals a sharp reversal. Shooting Star vs Hanging Man The shooting star and hanging man also share similarities but differ in appearance and market positioning. The shooting star is a bearish pattern occurring after an uptrend, indicating a potential reversal as bears managed to pull the price down at the end of a trading session. Conversely, the hanging man appears at the top of an uptrend as well but has a small body at the upper end and a long lower shadow, reflecting that sellers were able to push the price down significantly before buyers pulled it back up. The hanging man suggests that selling pressure is starting to outweigh buying interest. Advantages and Limitations This formation offers traders valuable insights, but it comes with its own set of advantages and limitations. Understanding these can help traders use the pattern more effectively within their strategies. Advantages - Early Reversal Signal: It provides an early indication of a potential trend reversal, allowing traders to prepare for or act on a change in market direction. - Simplicity: The pattern is straightforward to identify, even for less experienced traders, making it an accessible tool for technical analysis. - Versatility: It can be applied across various markets and timeframes, with traders often spotting the shooting star in forex, stock, and commodity markets as well as across both short-term and long-term charts. Limitations - False Signals: The pattern alone is not always reliable and can generate false signals, especially in volatile markets or when not used with other confirmation tools. - Lack of Precision: It does not provide exact entry or exit points, requiring traders to rely on additional indicators or analysis to determine these. - Dependency on Context: The effectiveness of the formation is highly dependent on the broader market context and trend strength, limiting its standalone use. Final Thoughts Understanding chart patterns like the shooting star is essential for making informed decisions in trading. Remember that while this formation can provide valuable insights, it is more effective in conjunction with other tools for signal confirmation. As a trader, staying informed about market developments and continuously honing your skills could be a key to effective trading in the dynamic trading environment. Open an FXOpen account today to trade in over 600 markets with tight spreads from 0.0 pips. FAQ Can Candlestick Patterns Be Time-Sensitive? Yes, candlestick patterns vary depending on the timeframe. A shooting star on a 1-minute chart provides short-term signals, while a shooting star on a daily chart may signal a longer-term reversal. However, the choice of timeframe goes hand in hand with your market strategy and goals. How to Improve Candlestick Pattern Recognition Skills? Improving your candlestick pattern recognition skills requires practice and study. You can analyse historical charts, use trading simulators, read educational materials like those at FXOpen, and engage with experienced traders to gain insights and practical experience. Why Are Candlestick Patterns Important in Trading? Candlesticks visually represent price action and help traders identify potential trend reversals, continuations, and key support and resistance levels. They are valuable tools for technical analysis. What Is the Meaning of a Shooting Star Pattern? The shooting star pattern is a bearish reversal candlestick that forms after an uptrend. It signals a potential shift in market sentiment, where buyers initially drive the price higher, but sellers take over, pushing the price back down near its opening level. Is a Shooting Star Candlestick Bullish? No, a bullish shooting star does not exist. It is a bearish pattern, indicating that an uptrend may be losing momentum and that a reversal to the downside could be imminent. A similar bullish formation is the inverted hammer. Is a Shooting Star a Doji? A shooting star is not a doji. While both patterns can signal reversals, a doji has nearly identical opening and closing prices with no significant body, reflecting indecision, whereas a shooting star has a small body with a long upper shadow, indicating a failed rally. How Can You Trade a Shooting Star Candle? Trading this candle involves looking for confirmation of the reversal, such as a bearish candle following the pattern. Traders often set stop-loss orders above the shooting star's high and target profit levels near key support zones or previous lows. Trade on TradingView with FXOpen. Consider opening an account and access over 700 markets with tight spreads from 0.0 pips and low commissions from $1.50 per lot. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
NASDAQ:METAEducation
by FXOpen
1
To Short or Not to Short that is the question???Let me explain the risk-reward profiles for long and short positions: Long Position: When you buy an asset (go long), you purchase it hoping its value will increase Maximum loss: Limited to your initial investment (if asset goes to $0) For example, if you buy a stock at $100, your maximum loss is $100 per share Maximum gain: Theoretically unlimited, as the asset's price can keep rising If the stock goes to $200, $300, $1000+, your profit keeps growing Short Position: When you short an asset, you borrow and sell it, hoping to repurchase it cheaper later Maximum gain: Limited to your initial sale price (if the asset goes to $0) For example, if you short a stock at $100, your maximum gain is $100 per share Maximum loss: Theoretically unlimited, as the asset's price can keep rising If the stock rises to $200, you lose $100; at $300, you lose $200, and so on The asymmetric risk-reward comes from math: Long positions: Asset can't go below $0, but has no upper limit Short positions: Can only profit until $0, but losses grow with each price increase Shorting comes with several additional costs that make it more expensive than going long: Borrowing Costs (Short Interest) You must pay interest to borrow the shares you're shorting Rates can range from very low (0.25%) to very high (50%+) annually for hard-to-borrow stocks This cost reduces your profits or increases losses over time Margin Requirements Need to maintain a margin account with collateral Higher margin requirements for short positions (typically 150% of position value) Risk of margin calls if the position moves against you Dividend Payments Short sellers must pay any dividends to the lender of the shares This is an additional cost that long position holders don't face Can significantly impact profitability for high-dividend stocks Stock Recall Risk The lender can recall their shares at any time This may force you to close your position at unfavorable prices It is particularly risky during short squeezes These costs mean that even if your directional view is correct, you might still lose money on a short position due to holding costs. Asymmetrical Moves "Markets take the stairs up but the elevator down" The opposite happens more often! During bubble collapses and market crashes: Downside moves can be gradual as denial, hope, and orderly selling create a stepped decline Some investors average down, providing temporary support Circuit breakers and trading halts can slow dramatic falls During upside rallies, especially short squeezes: Price can explode upward very rapidly as shorts rush to cover Fear of Missing Out (FOMO) creates buying panic Margin calls force immediate buying Limited available shares can cause bidding wars Now let's evaluate the same thing for Options Trading: in a hypothetical situation, a call option can theoretically move toward infinity, whereas a put option has a limited downside. Here’s why: A call option gives the holder the right to buy an asset at a fixed strike price. If the underlying asset’s price keeps rising indefinitely, the call option’s value also increases indefinitely. In theory, there's no upper limit to how high a stock price can go, meaning a call option's price can rise infinitely. A put option , on the other hand, gives the holder the right to sell an asset at a fixed price. However, the lowest a stock can go is zero, which means the maximum intrinsic value of a put option is limited to its strike price. For example, if a put has a strike price of $100 and the stock price drops to $0, the put would be worth at most $100 per share. Unlike a call option, a put option has a finite maximum gain. Thus, while a call option has unlimited upside, a put option is constrained by the fact that an asset’s price can only fall to zero. The final Verdict: Do not short PLTR or other bubbles, if you want to do so, at least buy Put options to limit your risk!
NASDAQ:PLTREducation
by Moshkelgosha
Mastering Candlestick Patterns: Visual Guide for Traders 🔵 Introduction Candlestick charts are among the most popular tools used by traders to analyze price movements. Each candlestick represents price action over a specific time period and provides valuable insights into market sentiment. By recognizing and understanding candlestick patterns, traders can anticipate potential price reversals or continuations, improving their trading decisions. This article explains the most common candlestick patterns with visual examples and practical Pine Script code for detection. 🔵 Anatomy of a Candlestick Before diving into patterns, it's essential to understand the components of a candlestick: Body: The area between the open and close prices. Upper Wick (Shadow): The line above the body showing the highest price. Lower Wick (Shadow): The line below the body showing the lowest price. Color: Indicates whether the price closed higher (bullish) or lower (bearish) than it opened. An illustrative image showing the anatomy of a candlestick. 🔵 Types of Candlestick Patterns 1. Reversal Patterns Hammer and Hanging Man: These single-candle patterns signal potential reversals. A Hammer appears at the bottom of a downtrend, while a Hanging Man appears at the top of an uptrend. Engulfing Patterns: - Bullish Engulfing: A small bearish candle followed by a larger bullish candle engulfing the previous one. - Bearish Engulfing: A small bullish candle followed by a larger bearish candle engulfing it. Morning Star and Evening Star: These are three-candle reversal patterns that signal a shift in market direction. Morning Star: Occurs at the bottom of a downtrend, indicating a potential bullish reversal. It consists of: - A long bearish (red) candlestick showing strong selling pressure. - A small-bodied candlestick (bullish or bearish) indicating indecision or a pause in selling. This candle often gaps down from the previous close. - A long bullish (green) candlestick that closes well into the body of the first candle, confirming the reversal. Evening Star: Appears at the top of an uptrend, signaling a potential bearish reversal. It consists of: - A long bullish (green) candlestick showing strong buying pressure. - A small-bodied candlestick (bullish or bearish) indicating indecision, often gapping up from the previous candle. - A long bearish (red) candlestick that closes well into the body of the first candle, confirming the reversal. 2. Continuation Patterns Doji Patterns: Candles with very small bodies, indicating market indecision. Variations include Long-Legged Doji, Dragonfly Doji, and Gravestone Doji. Rising and Falling Three Methods: These are five-candle continuation patterns indicating the resumption of the prevailing trend after a brief consolidation. Rising Three Methods: Occurs during an uptrend, signaling a continuation of bullish momentum. It consists of: - A long bullish (green) candlestick showing strong buying pressure. - Three (or more) small-bodied bearish (red) candlesticks that stay within the range of the first bullish candle, indicating a temporary pullback without breaking the overall uptrend. - A final long bullish (green) candlestick that closes above the high of the first candle, confirming the continuation of the uptrend. Falling Three Methods: Appears during a downtrend, indicating a continuation of bearish momentum. It consists of: - A long bearish (red) candlestick showing strong selling pressure. - Three (or more) small-bodied bullish (green) candlesticks contained within the range of the first bearish candle, reflecting a weak upward retracement. - A final long bearish (red) candlestick that closes below the low of the first candle, confirming the continuation of the downtrend. 🔵 Coding Candlestick Pattern Detection in Pine Script Detecting patterns programmatically can improve trading strategies. Below are Pine Script examples for detecting common patterns. Hammer Detection Code //@version=6 indicator("Hammer Pattern Detector", overlay=true) body = abs(close - open) upper_wick = high - math.max(close, open) lower_wick = math.min(close, open) - low is_hammer = lower_wick > 2 * body and upper_wick < body plotshape(is_hammer, title="Hammer", style=shape.triangleup, location=location.belowbar, color=color.green, size=size.small) Bullish Engulfing Detection Code //@version=6 indicator("Bullish Engulfing Detector", overlay=true) bullish_engulfing = close < open and close > open and close > open and open < close plotshape(bullish_engulfing, title="Bullish Engulfing", style=shape.arrowup, location=location.belowbar, color=color.blue, size=size.small) 🔵 Practical Applications Trend Reversal Identification: Use reversal patterns to anticipate changes in market direction. Confirmation Signals: Combine candlestick patterns with indicators like RSI or Moving Averages for stronger signals. Risk Management: Employ patterns to set stop-loss and take-profit levels. 🔵 Conclusion Candlestick patterns are powerful tools that provide insights into market sentiment and potential price movements. By combining visual recognition with automated detection using Pine Script, traders can enhance their decision-making process. Practice spotting these patterns in real-time charts and backtest their effectiveness to build confidence in your trading strategy.
BINANCE:BTCUSDEducation
by BigBeluga
19
Trading with multiple VAMAsI want to show you how to analyse multiple timeframe VAMAs for trading opportunities. This is an interesting approach that can reveal valuable market structure information. For this example I am using a 15m, 1h and. 4h VAMA, but you can use this on lower or higher timeframes as well. First, let's understand what each timeframe VAMA represent in this case: The 15-minute VAMA indicates short-term trends and momentum The 1-hour VAMA reveals intermediate trend direction The 4-hour VAMA represents the broader market structure When these VAMAs overlap on your lower timeframe chart (15m in this case), they create what we might call "zones of interest." Think of it like layers of support and resistance that have different degrees of significance based on their timeframe. Here's how we can interpret and use this information: Convergence Zones When multiple VAMAs cluster in a tight price range, this creates a significant zone of interest. For example, if your 15-minute, 1-hour, and 4-hour VAMAs are all within a narrow price band, this often indicates a strong support or resistance level. These zones typically exhibit one of two behaviors: Price Bounces: When price approaches a convergence zone from above or below, it often respects these levels. The more timeframes that have converged, the stronger the zone becomes. A bounce from such a zone with corresponding volume can present a high-probability trade opportunity. Zone Breaks: If price successfully breaks through a convergence zone, especially with increased volume, this often signals a strong trend continuation or reversal, depending on the direction of the break. Hierarchical Trending You can identify the strength and maturity of trends by examining how the different timeframe VAMAs are arranged: Strong Uptrend Structure: 4H VAMA lowest 1H VAMA above 4H 15min VAMA above 1H This "stacking" of VAMAs shows a healthy trend structure. The higher timeframe VAMAs act as dynamic support levels in an uptrend (or resistance in a downtrend). Trade Entry Opportunities Alignment Trades: Look for moments when all VAMAs are pointing in the same direction and properly stacked. These situations often present high probability setups. For example: In an uptrend Price pulls back to test the 15-minute VAMA while the 1H and 4H VAMAs continue trending up.This creates a "buy the dip" opportunity with multiple timeframe confirmation. Divergent Zone Trades: When the faster VAMAs (1min, 15min) show divergence from the slower ones (1H, 4H), this can indicate potential reversal points: If the 1min and 15min VAMAs start curling up while price is testing the 1H VAMA as support. This divergence in shorter timeframes while respecting longer timeframe support can signal a reversal opportunity. Breakout Confirmation: Use the multiple timeframes to confirm breakout trades: When price breaks above a convergence zone Look for the faster VAMAs (1min, 15min) to cross above the slower ones Volume should increase during the break The previous resistance zone (marked by the VAMAs) should become support
Education
by jpkxyz
Adverse excursion: a key concept for risk managementAs a professional trader, I can tell you about the adverse excursion and its crucial importance in the world of trading. Adverse excursion: a key concept for risk management Adverse excursion refers to the unfavorable movement of the price of an asset after a position is opened. More precisely, it is the difference between the entry price and the worst point the price reaches before the position becomes profitable again or is closed. Maximum Adverse Excursion (MAE) The concept of Maximum Adverse Excursion (MAE), developed by John Sweeney, is particularly useful. It measures the maximum floating loss suffered by a position before it turns in your favor or is closed. The MAE is a powerful statistical tool for analyzing drawdowns in an open position. Trading Efficiency Using MAE has several benefits for traders: Optimizing Stop-Loss: By analyzing MAE over a series of trades, the optimal level for placing stop-loss orders can be statistically determined. Evaluating Trading Systems: MAE helps evaluate the performance of trading systems and identify areas for improvement. Refining Risk Management Strategies: By understanding the maximum adverse moves, traders can refine their strategies to better preserve their capital. Improving Trading Efficiency: MAE analysis can help improve decision-making and execute trades with greater accuracy and confidence. Practical Application To effectively use the concept of adverse excursion, it is crucial to collect data on a large number of trades. For example, if you observe a series of MAEs like this: 15, 23, 18, 16, 0, 11, 31, 17, 8, 0, 19, 26, 0, 38, 22, you can deduce valuable information about the behavior of your trades and adjust your stop-loss levels accordingly. In conclusion, the adverse excursion and especially the MAE are powerful tools for any serious trader. They allow to optimize risk management, improve the performance of strategies and make more informed decisions. As they say in the trade, "who controls his risks, controls his profits". _______ Using the Maximum Adverse Excursion (MAE) has several significant advantages over traditional stop-loss placement methods: Data-driven optimization The MAE allows for a more precise and data-driven approach to stop-loss placement: Statistical analysis: By examining the distribution of the MAE over a large number of trades, the optimal level for placing stop-loss orders can be statistically determined. Performance visualization: The graphical representation of the MAE provides a clear overview of trade performance, allowing the most effective stop-loss levels to be visually identified. Balancing protection and performance The MAE helps to find an optimal balance between capital protection and trading performance: Retention of winning trades: The stop-loss can be placed to retain 75-85% of winning trades, thus avoiding prematurely cutting potentially profitable positions. Elimination of large losses: At the same time, this approach eliminates trades that suffer large losses, thus protecting capital. Adaptation to the specific strategy The MAE adapts to the unique characteristics of each trading strategy: Customization: Unlike generic methods, the MAE takes into account the specific behavior of the trades of a given strategy. Flexibility: This approach can be applied to a variety of strategies, whether short-term trading, swing trading, or long-term positions3. Improved risk management Using the MAE contributes to better overall risk management: Deep understanding: The MAE provides a more nuanced understanding of how trades evolve, allowing for better risk assessment. Reduced stress: By having a solid basis for placing stop-losses, traders can reduce the stress associated with real-time decision-making. Complementarity with other tools The MAE can be used in conjunction with other techniques: Combination with the MFE: The analysis of the Maximum Favorable Excursion (MFE) in parallel can help to optimize not only the stop-losses, but also the profit-taking. Cross-validation: The results obtained by the MAE analysis can be compared with those of traditional parameter optimization methods for greater confidence in the strategy.
BITSTAMP:BTCUSDEducation
by Le-Loup-de-Zurich