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Trend Analysis

How I used Volume Spread Analysis to avoid FOMO trading!As a trader, I often battle with the fear of missing out (FOMO), a common pitfall among traders that can lead to impulsive, unprofitable trades. After reviewing my journal, I determined that chasing breakouts was costing me a significant portion of my account, so I studied Volume Spread Analysis (VSA) to help me reduce my urges. Here is how is used VSA to avoid FOMOing a trade. Before we get started, let's clarify two definitions: Volume: Measures the number of times buyers and sellers exchange 1 unit of an asset at an agreed-upon price. It doesn't inherently indicate whether a trend is bullish or bearish, but rather that a trade has occurred. Low volume suggests that few transactions have taken place because buyers and sellers couldn't agree on price. High volume suggests that buyers OR sellers felt they were getting a bargain at the current price, leading to many transactions. Spread/Range: The difference between the high and low of a candlestick. A narrow spread indicates little variance between what someone is willing to buy for and what someone is willing to sell for. A wide spread suggests that buyers and sellers have significantly different ideas of what the fair price is. In short, Volume Spread Analysis (VSA) interprets the relationship between trading volume and candle spread. When volume and spread agree, they are considered harmonious, and the trend will probably continue. If volume and spread disagree, there is a divergence, and the trend may be weak or could even reverse. In general, there are three main harmonious conditions: Narrowing spread should have narrowing volume. Average spread should have average volume. Widening spread should have widening volume. I spotted a bear flag consolidation on QQQ and decided I would trade the breakout to the downside. I took a break and came back to the chart just after the breakdown had occurred, missing my ideal entry. The candle spread was widening and my first thought was "I have to get in! This thing is free falling!" PAUSE! I reminded myself that I cant make every dollar in the market. If I miss this trade, there will always be another. "Be patient and wait for the market to come back to you." This is the chart after the initial break. What can we observe? QQQ broke the low of day with high volume and a widening red candle. Based on our definitions from earlier, we know that high volume means that buyers or sellers think they are getting a bargain so they are willing to transact as much as they can at current price. Given that price is falling, we can assume that the volume is due to aggressive selling. We remain patient and continue to watch for something to trade against. Next, we see a narrower range candle with a long lower shadow and above average volume. By definition, strong volume with a narrow range is a possible divergence. We know that narrow range candles mean that buyers and sellers generally agree on current price, but why would it close near the highs if the selling was so aggressive? Given that there is a long lower shadow and then a bullish candle close, we can infer that sellers were not willing to sell below $467.89. The buyers absorbed the selling at those prices. Fast forwarding, we notice that the volume and candle size has shrunk back to the average meaning buyers and sellers are in agreeance. The number of people willing to transact is decreasing. We also notice that a small range has formed. Buyers have not stepped in to buy above the previous low of day at $469.35 and the sellers have shown no effort to get back below $467.89. Now we have something to trade against instead of FOMOing in! We will look for a break of this range with increased volume. On the next candle we see bulls break out of the range with aggressive volume and a wide spread candle. Something of note is that the volume on this bull candle is less that the volume of our initial sell candle. If those sellers were still present, wouldn't they be selling at these higher prices and forcing the candle range to be narrow? This shows us that bulls are now in control and the selling from earlier was just a hoax. As we can see, the rest is history. If I FOMOed into the short as I had planned, this trade would have resulted in a loss. Being patient allowed me to realize that there was nothing to miss out on and actually allowed me to find a better trade. Key Notes Always journal your trades and review them Never FOMO into a trade. Be patient and wait for the trade to come to you! You dont need to take every trade to make money in the market. It is okay to miss a trade if it means protecting your account. Volume spread analysis is not 100%, but it can be useful in determining the strength of a trend.
NASDAQ:QQQEducation
by Decam9
31
Bitcoin’s Rounded Top [Wyckoff Distribution]: 5 Phases to KnowHello, Trading Community! Today, we dive into the fascinating world of the Wyckoff Distribution model as it applies to Bitcoin's current market structure. Please remember that this article is purely for educational purposes and is not intended as trading advice. While we explore potential scenarios, including the possibility of Bitcoin heading down to $30,000 or even $25,000, these claims are speculative and should be considered hypothetical. The Wyckoff Distribution Model: A Roadmap for Market Tops The Wyckoff Distribution model offers a comprehensive framework for understanding how major market players distribute their holdings before a significant downturn. It is divided into several phases: Phase A: The market begins to show preliminary signs of selling pressure after an extended uptrend. This is the first hint that the balance of power is shifting from buyers to sellers. Phase B: The market enters a consolidation phase, moving sideways as large investors gradually distribute their positions. Phase C: A deceptive breakout, known as the Upthrust After Distribution (UTAD), occurs here, often trapping unsuspecting retail traders. Phase D: The onset of a decline, marked by clear Signs of Weakness (SOW), indicates that the distribution phase is nearing its end. Phase E: The final phase, where the market confirms the distribution and continues to fall, marking the completion of the process. Breaking Down Bitcoin's Key Price Points Let's take a closer look at the crucial price points that have defined Bitcoin's current structure within the Wyckoff Distribution model: Buying Climax (BC) - $73,660 This is the pinnacle of buying activity, where demand reaches its peak before supply starts to dominate. For Bitcoin, this level marked the highest point in the current cycle before a significant sell-off began. Automatic Reaction (AR) - $60,795 Following the Buying Climax, the market experienced an Automatic Reaction—a sharp drop as sellers stepped in. This level is critical as it signifies the start of the distribution process. Upthrust (UT) - $71,180 The Upthrust represents a rally that tests the resistance near the Buying Climax. However, it fails to sustain those levels, hinting that the market's upward momentum is weakening. Upthrust After Distribution (UTAD) - $71,680 The UTAD often serves as a bull trap, where the price makes a final push above the resistance only to quickly reverse. This move confirms that distribution is taking place. Sign of Weakness (SOW) - $54,344 After the UTAD, the market drops significantly, signaling a clear Sign of Weakness. This level demonstrates that sellers are gaining control, pushing the price to new lows. Last Point of Supply 1 (LPSY 1) - $70,040 The first Last Point of Supply (LPSY 1) is a weaker rally that fails to reach previous highs. This is a key indicator that the market's bullish momentum is fading, and distribution is nearing completion. Last Point of Supply 2 (LPSY 2) - $65,105 Currently, Bitcoin is in Phase E, at the LPSY 2 point. This level is crucial as it typically marks the final confirmation of distribution before a sustained downtrend. Navigating Phase E: The Final Act of Distribution As Bitcoin navigates through Phase E, the LPSY 2 level becomes a focal point. This phase is characterized by further price declines as the market confirms the distribution. Here’s what to watch for: Lower Highs and Lower Lows: Expect the price to continue forming lower highs and lower lows, reinforcing the bearish trend. Volume Patterns: During this phase, volume analysis becomes critical. Look for decreasing volume on upswings and increasing volume on downswings, which confirms the presence of distribution. Final Thoughts The Wyckoff Distribution model provides a structured way to understand how markets transition from bullish to bearish trends. With Bitcoin currently exhibiting a Rounded Top structure and sitting at LPSY 2 in Phase E, the evidence suggests that we may be on the cusp of further declines. By staying vigilant and analyzing key price levels and volume patterns, traders can better position themselves to navigate this challenging market environment. In this complex market phase, understanding the underlying forces at play can be the difference between protecting your capital and being caught off guard by the next big move. Stay tuned for more!
INDEX:BTCUSDEducation
by ArShevelev
2
Theories of Technical AnalysisTheories of Technical Analysis Dive deep into the intricacies of technical analysis with a close examination of five pivotal theories of technical analysis — Dow, Wyckoff, Gann, Elliott, and Merrill. Unravel their foundational concepts, applications, and histories to gain a comprehensive grasp of market dynamics with this article. Dow Theory The Dow Theory, attributed to Charles Dow, lays out foundational concepts that many traders consider the basic principles of technical analysis. It postulates that stock market activities unfold in specific, non-random patterns influenced by human psychology. These patterns manifest in three primary movements: long-term trends, counter-trends, and daily fluctuations. Dow emphasised that market prices integrate all existing and foreseeable data. Consequently, established trends tend to endure until clear signs indicate their reversal. How It's Used Traders utilise the Dow Theory to recognise and confirm market trends. By distinguishing between primary and secondary movements, they can identify the overarching trend and any counter-trends or corrections within it. This distinction aids in making informed trading decisions, such as entering or exiting trades at optimal points. By watching for definitive signals that indicate trend reversals, traders can position themselves advantageously for potential upcoming market shifts. How It Was Developed The genesis of the Dow Theory rests in the series of editorials penned by Charles Dow for The Wall Street Journal. Through his keen observations of market movements and trends, he devised certain principles that eventually coalesced into the Dow Theory. Though Dow himself never consolidated his ideas into a singular "theory," his successors refined his observations into the framework recognised today. Wyckoff Method The Wyckoff Method delves deep into the interplay between supply and demand in the market, underpinned by the assertion that assets move in cycles propelled by institutional investors or "smart money." The method suggests that by grasping the motives and behaviours of these major institutional actors, traders gain an edge, given that these entities notably shape market trends. How It's Used The Wyckoff Method prioritises the relationship between price and volume. Traders, armed with this method, keenly observe price movements in relation to volume surges or declines, seeking clues to the actions of institutional players. By recognising accumulation (where "smart money" accumulates assets) and distribution (where assets are offloaded) phases, traders can discern potential future price directions. The method employs a systematic approach: defining current market trends, anticipating future movements by tracking institutional behaviour, and finally, establishing positions in harmony with these insights. Specific chart patterns, like springs or upthrusts, are signals used to validate the ongoing phase. How It Was Developed Richard D. Wyckoff, recognising the disadvantage at which retail traders often found themselves, embarked on a journey to level the playing field. He rigorously studied the strategies employed by the most successful traders of his time. Merging these findings with his own market observations, Wyckoff birthed a method that sought to illuminate the operations of the market's most influential players. Gann Theory The Gann Theory is an intricate system of technical analysis developed by W.D. Gann. It’s grounded in the belief that price and time are intrinsically interwoven, and this relationship can be harnessed to predict future price movements. Gann maintained that markets move in consistent patterns and rhythms, and by understanding these, traders can foretell potential price changes. How It's Used Traders employing the Gann Theory use a set of bespoke tools to decipher market behaviour. Among the most notable are the Gann angles, which are drawn between a significant bottom and top (or vice versa) at various predetermined angles. The Square of Nine, another Gann tool, is a root square that offers a horizontal and vertical axis, assisting traders in identifying price movements and potential turning points. Lastly, the Gann Fan is used to foresee areas of support and resistance by marking out angles that depict possible future price movements. By using these tools, traders attempt to pinpoint where the price might change direction, offering them strategic entry and exit points. You can find all of these tools and more in FXOpen’s free TickTrader platform. Head over there to get started in minutes. How It Was Developed W.D. Gann integrated ancient mathematics, geometry, and astrology to decode market movements. This synthesis resulted in the Gann Theory, a set of tools and techniques. His innovative approach significantly influenced technical analysis. His meticulous research and unique approach have rendered his contributions both legendary and influential in the realm of technical analysis. Elliott Wave Theory The Elliott Wave Theory, introduced by Ralph Nelson Elliott, posits that market movements manifest in specific, predictable wave patterns. Central to this framework is the belief that markets progress in a five-wave sequence and retract in a three-wave sequence, totalling an eight-wave cycle. This sequence is driven by collective investor psychology, oscillating between optimism and pessimism. How It's Used In application, traders deploy the Elliott Wave Theory to both decipher and forecast market trajectories. By discerning where they are within a particular wave sequence, they can anticipate the likely next move of the market. For instance, recognising the commencement of a third wave — typically the most robust and longest — can signal a strong trading opportunity. Conversely, identifying the start of a corrective wave can guide traders to defensive positions. How It Was Developed In the 1930s, Ralph Nelson Elliott identified recurring stock market patterns, suggesting predictability rather than randomness. He believed these patterns were fractal—repetitive at different scales. His research led to the Elliott Wave Principle, which provides a lens to understand and forecast market behaviour based on these wave patterns. Merrill Patterns Merrill Patterns, formulated by Arthur A. Merrill, are a collection of geometric formations discerned within stock market charts. These patterns reflect the collective psyche of market participants and underscore the principle that markets evolve in discernible trends. Merrill meticulously identified 32 W- and M-shape patterns, such as wedges, triangles, and head-and-shoulders formations, each harbouring unique predictive capacities about future price movements. How It's Used Traders leverage Merrill Patterns to gain insights into potential market shifts. By recognising the formation of a specific pattern, a trader can anticipate possible trend reversals or continuations. For instance, the emergence of a head-and-shoulders pattern can often indicate a forthcoming downward market reversal. On the other hand, a triangle formation typically signals the continuation of a prevailing trend. These patterns serve as visual cues, guiding traders in establishing their market positions. How It Was Developed Arthur Merrill extensively studied stock charts for decades, identifying recurring predictive patterns. He consolidated these findings into a compilation of patterns with defined rules. His work, "Behavior of Prices on Wall Street," systematically presents these insights, marking a significant contribution to technical analysis. Final Thoughts In understanding what technical analysis is in the stock market, these five theories are an ideal place to start. Each offers powerful, time-tested insights that provide a much deeper understanding of market dynamics than mere indicators or candlestick patterns. However, these theories are also used in other markets, including forex and commodities. To harness the power of these insights practically, consider opening an FXOpen account for a seamless trading experience. 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
EWJ - How to identify a plausible targetThis idea is for investors as I'm analyzing the chart in weekly and trying to identify fair targets for a long position. First you need a donchian line which is basically the middle between the highest high and the lowest low during the last 52 weeks. Using this donchian line (nb. which is part of Ichimoku system as SSB line), you then identify the last "cycle" which is a clear half-wave with well-defined bottoms/tops. Applying the Fibo retracement tool using the top-bottom-top (or bottom-top-bottom) points of the identified wave, you'll end up with a set of Fibonacci levels. The different levels above 1.0 can be used as price targets as shown here.
AMEX:EWJEducation
by albert.callisto
Best Swing Trading Strategies For Beginners (FOREX, GOLD) I am going to reveal 3 profitable swing trading strategies for beginners. These strategies are tailored for trading Gold, Forex or any other financial market. I will explain entry signal, stop loss and take profit placement for every strategy and share a lot of examples based on real trades that we took with my students. First, let's discuss key elements that unite these strategies. 1. All the strategies will be trend-following. It means that the trades will be taken strictly in the direction of the market trend. 2. All the strategies will be daily time frame based. Daily time frame will be the main time frame for the market analysis. 3. All the strategies are technical analysis strategies. The decision-making and market analysis will be strictly based on technical analysis: price action, support and resistance. Strategy 1: Break of Structure Strategy Break of Structure is a classic swing trading trend following strategy that is based on: 1. Bullish breakout of the level of the last higher high in a bullish trend 2. Bearish breakout of the levels of the last lower low in a bearish trend In a bullish trend, a bullish violation of the level of the last higher high and a candle close above that is a very strong bullish signal. It signifies the strength of the buyers and indicates a highly probable bullish continuation. A perfect entry point after a confirmed Break of Structure is the retest of the level of the last higher high. Stop loss is 1 ATR. Take Profit - the next key resistance. Look at EURCAD pair on a daily time frame. The market is trading in a bullish trend and we see a confirmed break of structure - a daily candle close above the level of the last higher high. Here is how the trading position should look. Take profit is the closest resistance based on a historic price action. Look how perfectly this trade played out. In a bearish trend, a bearish violation of the level of the last lower low and a candle close below that is a strong bearish signal. It signifies the strength of the sellers and indicates a highly probable bearish continuation. A perfect entry point after a confirmed Break of Structure is the retest of the level of the last lower low. Stop loss is 1 ATR. Take Profit - the next key support. Above, EURNZD is trading in a bearish trend on a daily and we see a confirmed break of structure - a daily candle close below the level of the last lower low. Here is how a short position looks - entry is on a retest of a broken structure, stop loss is 1 ATR and take profit the closest key support. 163 pips of pure profit were made. Strategy 2: Trend Line Strategy Trend Line is a classic swing trading trend following strategy that is based on: 1. Rising trend line based on higher lows in a bullish trend 2. Falling trend line based on lower high in a bearish trend In a bullish trend, higher lows may respect a rising trend line. Such a trend line will be a strong vertical support. It will provide a safe point for buying the market. Entry will be based on a test of a trend line. Take profit will be at least the level of the current higher high. Stop loss will be 1 ATR. When you are looking for a trend line in a bullish trend, remember a simple rule. A valid trend line should be confirmed by at least 3 touches and 3 consequent bullish reactions to that. For example, a rising trend line on a GBPUSD above will be invalid trend line because it is confirmed by just 2 touches. While the trend line that I spotted on USDCAD is valid, because it was already respected 3 times in a row in the past. Above is the valid rising trend line based on higher lows in a bullish trend. Here is how a swing long trend from that trend line should look. Stop loss is based on 1 ATR. Entry from a trend line. Take profit is based on the current higher high. Almost 300 pips were made. In a bearish trend, lower highs may respect a falling trend line. Such a trend line will be a strong vertical resistance. It will provide a safe point for selling the market. Entry will be based on a test of a trend line. Take profit will be at least the level of the current lower low. Stop loss is 1 ATR. When you are looking for a trend line in a bearish, remember a simple rule. A valid trend line should be confirmed by at least 3 touches and 3 consequent bearish reactions to that. The trend line on EURGBP above is invalid because 2 touches confirm it. While that trend line is valid and confirmed by 3 strong bearish reactions. In the example above, EURCHF is trading in a long term bearish trend. Lowers highs perfectly respect a falling trend line. It can provide a safe entry for swing short trade. Following the rules of our trading strategy, here is a swing short trade from that trend line. Stop loss is 1 ATR. Take profit is based on the current lower low. 250 pips of pure profit were made. Strategy 3: Higher Low / Lower High Strategy Higher Low / Lower High is a classic swing trading trend following strategy that is based on: 1. The last higher low in a bullish trend 2. The last lower high in a bearish trend In a bullish trend, the level of the last higher low composes an important horizontal support from where, with a high probability, a bullish wave may initiate. This level will provide a perfect entry for swing long trade. Stop loss will be 1 ATR. Take profit will be the resistance based on current higher high. USDCHF is trading in a bullish trend on a daily. The levels of the last higher low is a perfect point to buy the market . According to the rules, stop loss is based on 1 ATR. Take profit is based on the current higher high. Great winner and nice trade! In a bearish trend, the level of the last lower high composes a key horizontal resistance from where, with a high probability, a bearish wave will initiate. This level will provide a perfect entry for swing short trade. Stop loss will be 1 ATR. Take profit will be the support based on current lower low. Look at EURUSD on a daily. The pair is trading in a bearish trend. The level of the last lower high provides a safe point to sell the market from. That's how a short position should look based on the rules of the trading strategy. Stop loss is 1 ATR. Take profit is based on the last lower low. Entry is the level of the last lower high. Target was quickly reached. All these strategies are very accurate. It provides good reward to risk ratio and is very easy to understand and apply properly. Try one of these swing trading strategies and find the one that suites your trading style. ❤️Please, support my work with like, thank you!❤️
Education
by VasilyTrader
1
How I Nailed a Perfect Breakout Trade Using a Simple Strategy*The following Analysis is made by my Trading BOT* Analysis of Your Trade: Descending Channel: Formation and Breakout: The descending channel is well-defined, indicating a corrective phase following an impulsive move. The breakout above the channel suggests a potential reversal or continuation of the prior trend, which appears bullish. Entry Timing: You entered the trade after the breakout from the descending channel. This entry aligns with a strategy to buy at the break of a corrective pattern, capitalizing on the resumption of bullish momentum. Resistance Zone (Blue Area): Initial Resistance Encounter: The blue horizontal line represents a resistance zone where price consolidated and failed to break higher on the first attempt. This is a good spot to watch for confirmation of a breakout or reversal. False Breakouts: There are some upper wicks visible in this resistance zone, indicating possible false breakouts or liquidity grabs. This suggests that many traders might have been stopped out before the true breakout occurred. Price Action Post-Breakout: Sharp Move Down: After the breakout, price made a sharp move down to retest the previous resistance (now turned support), which aligns with the principles of market structure where old resistance becomes new support. Correction and Continuation: The downward move appears corrective in nature, forming a series of lower highs and lower lows within a descending channel, after which the price breaks out and moves upwards sharply. Risk and Reward Considerations: Stop Placement: If your stop loss was placed below the previous swing low or the bottom of the descending channel, this would be a strategic placement to avoid being stopped out by market noise. Take Profit: Your target seems to be well-placed, considering the previous highs or a key Fibonacci level. The green area likely represents the take-profit zone. Volume Analysis: Confirmation with Volume: The volume spike during the breakout from the descending channel and the subsequent move up indicates strong buying interest, which is a good confirmation signal. Key Takeaways for Future Trades: Pattern Recognition: Identifying descending channels and their breakouts is a strong skill that can be leveraged in various time frames. Risk Management: Your trade shows a good understanding of risk management, especially if stops were placed beyond significant levels to avoid market noise. Confirmation Signals: Waiting for volume confirmation during breakouts is an excellent strategy to avoid false moves. Suggestions: Multiple Time Frame Analysis: Ensure that your lower-time-frame trades are aligned with the higher-time-frame trends or setups to increase the probability of success. Post-Trade Analysis: Continue reviewing your trades like this to refine your entry and exit strategies, especially around key zones like support and resistance.
OANDA:XAUUSDEducation
by Adlercon333
How to Overcome Trading Psychology ChallengesHow to Overcome Trading Psychology Challenges Dealing with common trading psychology challenges involves identifying and addressing the emotional and psychological factors that impact performance. This means you need to know how to manage fear, greed, hope, and regret carefully. In this post, we’ll talk about forex trading psychology and proper emotional control. What Is the Psychology of Trading? Trading psychology focuses on the mental state of a trader and the emotions that could predetermine trading decisions. It represents the various aspects of an individual’s character and behaviours that influence their trading actions. The psychology of trading is just as crucial as knowledge about assets (currencies, stocks, and commodities), your previous experience, and your skill in determining price movements. Understanding Trading Emotions and Psychology Trading is all about psychology and actions that are based on what you feel. That’s why it’s paramount to learn as much as you can about this topic. This list may help you better understand common traders' problems and your personal feelings. You should know that you are not alone, and many people face similar cases. Identify your emotions. Recognise the emotions that you experience while trading, such as greed, hope, and regret. Let’s break down these concepts: - Greed is the desire to make more money than is reasonable or realistic. - Fear is the feeling of anxiety or panic when faced with market volatility/uncertainty. - Hope is the belief that a trade will turn around and become profitable. - Regret is the feeling of disappointment or remorse after making a losing trade. By clearly differentiating between these emotions, you will understand exactly what you are experiencing right now and how it could potentially affect your trading decisions. Create a plan. It’s a great idea to develop a trading plan that matches your trading style and includes a strategy you want to follow, with entry and exit points and risk management techniques. A good plan could help you stay focused on your goals. Practise risk management. Consider managing risk by using stop-loss orders and position sizing. This way, you may avoid large losses. Losses often trigger emotional reactions and lead to more irrational decisions, so keep this in mind and don't fall for the tricks your brain is playing on you. You can practise various strategies on our free TickTrader platform. For example, we have a strategy back tester, a detailed charting system, and advanced technical analysis tools. And to make it even more convenient for you, we have created a highly customisable, user-friendly interface where you can personalise each element of the settings panel. Test these instruments in various markets with FXOpen. Keep a trading journal. Experts believe that when you record your trades and the emotions you experienced during each of them, you will identify patterns in your behaviour and make adjustments to your initial plan. How to Have Emotional Control There are a lot of techniques on how to remain calm during trading, and we’ve chosen the most popular ones. Here’s what you could consider doing: 1. Practise mindfulness — mindfulness techniques, such as meditation and deep breathing, can help you stay calm and focused. 2. Take breaks — regular breaks during trading are wonderful tools to clear your mind and reduce stress. They help you avoid making impulsive decisions. 3. Stay disciplined — stick to your plan and avoid any decisions based on emotions. 4. Seek support — talk to other traders or a mental health professional if you are struggling with emotional control. Another important thing to talk about is confidence and awareness. If you make trades “blindly”, anxiety increases. And conversely, the more you know, the calmer you feel. Explore our blog to learn more about trading. Once you feel confident, you can open an FXOpen account to put your knowledge into practice. 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
2
Volatility in Focus: A Trader's Perspective on S&P 500 Futures1. Introduction Volatility is a critical concept for traders in any market, and the E-mini S&P 500 Futures are no exception. Traditionally, traders have relied on tools such as the Average True Range (ATR) and Historic Volatility (HV) to measure and understand market volatility. These tools provide a snapshot of how much an asset's price fluctuates over a given period, helping traders to gauge potential risk and reward. ATR measures market volatility by analyzing the range of price movement, often over a 14-day period. It reflects the degree of price movement but doesn’t differentiate between upward or downward volatility. Historic Volatility looks at past price movements to calculate how much the price has deviated from its average. It’s a statistical measure that gives traders a sense of how volatile the market has been in the past. While these traditional tools are invaluable, they offer a generalized view of volatility. For traders seeking a more nuanced and actionable understanding, it's essential to distinguish between upside and downside volatility—how much and how fast the market moves up or down. This article introduces a pragmatic, trader-focused approach to measuring volatility in the E-mini S&P 500 Futures. By analyzing daily, weekly, and monthly volatility from both the upside and downside perspectives, we aim to provide insights that can better prepare traders for the real-world dynamics of the market. 2. Methodology: Volatility Calculation from a Trader’s Perspective In this analysis, we take a more nuanced approach by separating volatility into two distinct categories: upside volatility and downside volatility. The idea is to focus on how much the market tends to move up versus how much it moves down, providing a clearer picture of potential risks and rewards. Volatility Calculation Method: o Daily Volatility: Daily upside volatility is calculated as the percentage change from the prior day's close to the next day’s high, assuming the next day’s high is higher than the prior day’s close. Daily downside volatility is the percentage change from the prior day's close to the next day’s low, assuming the next day’s low is lower than the prior day’s close. o Weekly Volatility: Weekly upside volatility is determined by comparing the previous Friday’s close to the highest point during the following week, assuming the market went higher than the prior Friday’s close. Weekly downside volatility is calculated by comparing the previous Friday’s close to the lowest point during the following week, assuming the market went lower than the prior Friday’s close. o Monthly Volatility: Monthly upside volatility is measured by taking the percentage change from the prior month’s close to the next month’s high, assuming prices moved higher than the prior monthly close. Monthly downside volatility is calculated by comparing the prior month’s close to the lowest point of the following month, assuming prices moved lower than the prior monthly close. 3. Volatility Analysis The E-mini S&P 500 Futures exhibit distinct patterns when analyzed from the perspective of upside and downside volatility. By measuring the daily/weekly/monthly fluctuations using the trader-focused approach discussed earlier, we gain valuable insights into how the market behaves on a day-to-day basis. Key Insights: Trend Observation: The data reveals that during periods of market distress, such as financial crises or sudden economic downturns, downside volatility tends to spike significantly. This indicates a greater propensity for the market to fall rapidly compared to its upward movements. Implication for Traders: Understanding these patterns allows traders to anticipate the potential risks and adjust their strategies accordingly. For instance, in highly volatile environments, traders might consider tightening their stop losses or hedging their positions to protect against sudden downturns. 4. Comparative Analysis: Rolling Volatility Differences To gain deeper insights into the behavior of the E-mini S&P 500 Futures, it’s useful to compare the rolling differences between upside and downside volatility over time. Rolling Volatility Differences Explained: Rolling Analysis: A rolling analysis calculates the difference between upside and downside volatility over a set period, such as 252 days for daily data (approximately one trading year), 52 weeks for weekly data, or 12 months for monthly data. This method smooths out short-term fluctuations, allowing us to see more persistent trends in how the market behaves. Volatility Difference: The volatility difference is simply the upside volatility minus the downside volatility. A positive value suggests that upside movements were more significant during the period, while a negative value indicates stronger downside movements. Key Insights: Trend Observation: The rolling difference analysis reveals that downside volatility generally dominates, particularly during periods of economic uncertainty or financial crises. This confirms the common belief that markets tend to fall faster than they rise. Implication for Traders: Traders could use rolling volatility differences to anticipate changes in market conditions. A widening gap in favor of downside volatility may signal increasing risk and the potential for further declines. Conversely, a narrowing or positive rolling difference could suggest improving market sentiment and potential opportunities for long positions. 5. Volatility Trends Over Time Understanding the frequency and conditions under which upside or downside volatility dominates can provide traders with valuable insights into market behavior. By analyzing the percentage of days, weeks, and months where upside volatility exceeds downside volatility, we can better grasp the nature of market trends over time. Volatility Trends Explained: Percentage of Days with Greater Upside Volatility: This metric shows the percentage of trading days within a given year where the upside volatility was higher than the downside volatility. It highlights the frequency with which the market experienced more significant upward movements compared to downward ones on a daily basis. Percentage of Weeks with Greater Upside Volatility: Similarly, this metric calculates the percentage of weeks in a year where the upside volatility was greater than the downside. It provides a broader perspective on market trends, capturing sustained movements within weekly timeframes. Percentage of Months with Greater Upside Volatility: This metric reflects the percentage of months in a year where upside volatility exceeded downside volatility. It is particularly useful for identifying longer-term trends and understanding the market’s behavior over extended periods. Key Insights: Trend Observation: Historically, again, we can see the data shows that downside volatility tends to dominate, especially during periods of market stress. However, there are years where upside volatility has been more frequent. Implication for Traders: Traders can use these insights to adjust their strategies based on the prevailing market conditions. In years where downside volatility is more frequent, defensive strategies or hedging might be more appropriate. Conversely, in years where upside volatility dominates, traders might consider more aggressive or trend-following strategies. 6. Key Takeaways for Traders The analysis of the E-mini S&P 500 Futures’ volatility, broken down by daily, weekly, and monthly intervals, provides crucial insights for traders. Understanding the distinct patterns of upside and downside volatility is essential for making informed trading decisions, particularly in a market that often behaves asymmetrically. Practical Conclusions for Traders: Risk Management: Given the dominance of downside volatility, traders should prioritize risk management strategies. This includes using stop-loss orders, protective options, and other hedging techniques to mitigate potential losses during volatile periods. Strategic Positioning: Traders might consider adjusting their position sizes or employing defensive strategies during periods of heightened downside volatility. Conversely, when upside volatility shows signs of strengthening, more aggressive positioning or trend-following strategies could be beneficial. Timing Entries and Exits: Understanding the patterns of volatility can help traders better time their entries and exits. For instance, entering the market during periods of lower downside volatility or after a significant downside spike can offer better risk-reward opportunities. Adaptability: The key to successful trading in volatile markets is adaptability. Traders should remain flexible and adjust their strategies based on the prevailing market conditions, as indicated by the volatility analysis. By incorporating these insights into their trading approach, traders can better navigate the E-mini S&P 500 Futures market, enhancing their ability to capitalize on opportunities while managing risks effectively. 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.
Editors' picks
CME_MINI:ES1!Education
by traddictiv
6
Identifying Key Support and Resistance Levels: Beginner’s GuideWelcome to the market’s game of zig-zag. On the one side, we’ve got the bulls pulling prices up (doing the zigging), and on the other, the bears dragging them down (doing the zagging). Somewhere in there lies a delicate balance—where prices pause, reverse, or break through. These are support and resistance levels, and if you want to play in the big league and run shoulders with big sho(r)ts, you need to know how to spot them. Let’s dive in. Support and Resistance: The Basics Imagine the market as a ping-pong ball bouncing between two invisible walls. These invisible walls are called support and resistance . The floor is support—where buyers step in to catch the fall. The ceiling? That’s resistance, where sellers say, “Not so fast,” and push the price back down. Your job? Figure out where these walls are and use them to your advantage. Support is the price level where a downtrend could pause due to strong enough demand, or buying momentum. Think of it as a safety net—a level where the price stops its freefall, cushioned by determined buyers. Resistance is the opposite. It’s the price level where an uptrend might stall because sellers step in, seeing the price as overbought. It’s the market’s ceiling, and breaking through it can be tough. How to Spot Support and Resistance Here’s the good news: spotting these levels is easier than you think. Start by zooming out on your chart and identifying where price reversals have occurred. Where has the market consistently bounced up from? That’s your support. Where has it been smacked down? That’s your resistance. That’s also when everyone becomes a chartist and technical analyst—draw horizontal lines at these levels. And boom, you’ve just identified key support and resistance zones. But there’s more to it than just connecting the dots. Horizontal Levels: The Classics The classic way to identify support and resistance is to look for horizontal levels. These are price levels where the market has historically reversed multiple times. If the price has bounced off $50 three times, you’ve got yourself a solid support level. Likewise, if $75 has been a brick wall for the price, it’s a clear resistance level. Trendlines: The Dynamic Duo Horizontal lines are great, but what if the market’s trending? That’s where trendlines come in. Draw a line connecting the higher lows in an uptrend or the lower highs in a downtrend. These lines can act as moving support or resistance levels. They’re not just lines—they’re the market’s roadmap. Want to get things even more heated up? Look for channels by identifying the higher lows in the uptrend coupled with the higher highs. Apply the same but in reverse for downtrending markets—lower highs and lower lows is what makes up a channel. The Role of Volume Here’s where it gets a little spicy. You have to add volume in the mix. When you see a support or resistance level holding up with high volume, it’s like getting a thumbs-up from the market. If the price breaks through a level with high volume, it’s more likely to keep moving in that direction. Low volume? Don’t get too excited—it could be a fake-out. Psychological Levels: The Round Numbers Game Ever noticed how prices tend to stall at round numbers? That’s no accident. Humans love round numbers and the market is no different. Levels like $100, $1,000, or even $100,000 (did someone say Bitcoin BTC/USD ?) often act as psychological support or resistance. It’s not science—it’s market psychology. How to Trade Support and Resistance Now that you know where the walls are, or inflection points, let’s talk strategy. Trading support and resistance isn’t about guessing where the market will go—it’s about stacking the odds in your favor. Buying at Support (DYOR, tho) : When the price pulls back to a support level, it’s a prime buying opportunity. Just remember, you’re not the only one watching this level—fellow retail traders, professional money spinners and lots of algorithms are trained to chase trends. Use additional confirmation, like a bunch of indicators stacked together , before you pull the trigger. Selling at Resistance (DYOR, tho) : If the price rallies to a known resistance level, it’s time to think about selling. Again, wait for some confirmation—a rejection, bearish pattern, or a volume spike—to avoid getting caught in a breakout. Breakout Trades (DYOR, tho) : If a price breaks through support or resistance with conviction (read: strong volume), it often leads to significant moves. You can trade these breakouts, but be cautious of false breakouts. Nobody likes getting trapped. Final Thoughts Support and resistance levels are like the market’s heartbeat. They reveal where the big players are making their moves and where the action is likely to heat up. Whether you’re looking to jump in or bail out, these levels are your go-to guide. So, the next time you’re analyzing a chart, remember—those lines aren’t just random. They’re the market’s battle lines, and now, you’ve got the intel to trade them. Let’s wrap this up with some inspiration from legendary trend follower Paul Tudor Jones: “I believe the very best money is made at the market turns. Everyone says you get killed trying to pick tops and bottoms and you make all your money by playing the trend in the middle. Well for twelve years I have been missing the meat in the middle but I have made a lot of money at tops and bottoms.” Do you trade with support and resistance levels? Let us know your thoughts in the comment section!
Editors' picks
Education
by TradingView
5
How To Pick Top Pharma Stocks like a ProAnalyzing the pharmaceutical industry, whose products play a key role in improving the quality of life of people around the world, is quite challenging sometimes also it requires deep knowledge and a careful approach, as I believe that investors should consider many factors, starting with evaluating the efficacy of the analyzed company's medications, including in relation to its competitors and the "gold standards," and ending with an analysis of its financial indicators In this article you will learn how to pick Top Pharma stocks like a pro trader and which factors you should consider, so buckle up 1/ Recognizing the risks At the very beginning, an investor you must recognize that the pharmaceutical industry is highly competitive, where a company's investment attractiveness depends not only on the rate of expansion of its portfolio of product candidates, revenue growth, margins, the amount of total debt and cash on the balance sheet but is also heavily influenced by the expiration of patents on medications and vaccines. Moreover, in recent months, the healthcare sector has increasingly felt the impact of the upcoming 2024 US presidential elections, as some politicians are aiming to further tighten regulation of drug prices despite the existing Inflation Reduction Act. 2/ Leveraging data to your advantage The second step use data wisely, you should check all kinda data including stock screener, transcripts of earnings calls, financial results for the last quarters, analyst expectations, options data... The goal is to filter companies in poor financial condition, as well as those that trade at a significant premium to the sector and/or competitors I would also like to point out that in the current market environment, with Fed interest rates remaining at multi year highs, I do not recommend investing in companies with market caps below $500 million, as they typically have limited cash reserves and weaker institutional backing Also, I'd recommend investors read 10-Ks and 10-Qs, especially the section related to debt and sources of financing of the company's operations, to reduce the likelihood of an "unexpected" drop in the share price. A striking example is Invitae Corporation aka NVTAQ which declared bankruptcy in mid February 2024! Was there a prerequisite for this? The answer is yes since the company continued to generate negative cash flow and also had convertible senior notes maturing in 2028. Convertible notes can involve significant financial risks if the company cannot effectively use the cash to grow the business and break even. In this case, management will not be able to pay off the bonds with cash reserves and will have to resort to significant dilution of investors. In my opinion, Pacific Biosciences of California, Inc. NASDAQ:PACB may face this problem because it has convertible senior notes maturing in 2028 and 2030. Factors that concern me include the company's declining revenue and total cash and short-term investments in recent quarters, while its operating expenses remain extremely high at around $80 million per quarter. Let's return to the second step in my approach to selecting the most promising assets in the healthcare sector. When selecting companies with market caps between $4 billion and $40 billion, I use more parameters since most of them already have FDA approved drugs and/or vaccines. As a result, it is also necessary to consider the rate of growth of operating income, net debt/EBITDA ratio, and how management copes with increased marketing and production costs. Finally, let's move on to the last basket, which contains pharmaceutical companies with market capitalizations exceeding $40 billion. I think, this group is best suited for more conservative investors looking for assets offering attractive dividend yields and growing net income, supported by a rich portfolio of FDA approved and experimental drugs. So, from Big Pharma, I like Pfizer Inc NYSE:PFE , AbbVie Inc NYSE:ABBV , Merck & Co NYSE:MRK and AstraZeneca PLC NASDAQ:AZN . I also want to include Novartis AG NYSE:NVS and Roche Holding AG OTC:RHHBY in this group sometimes investors need to make exceptions, namely if one larger company buys out a smaller player and/or when a major partnership agreement is concluded, as was the case between Merck and Daiichi Sankyo Company, Limited OTC:DSKYF in 2023. Also, in the event of a major acquisition or merger, the company's debt may temporarily increase sharply. If its management has previously implemented effective R&D and financial policies, the "net debt/EBITDA ratio" A remarkable example of a company falling into the "value trap" is Takeda Pharmaceutical Company Limited NYSE:TAK , which overpaid for Shire. This deal did not significantly strengthen or rejuvenate the Japanese company's portfolio of drugs. As a result, it had to sell off billions of dollars in assets to pay off its debt partially. However, despite all the efforts of Takeda's management, its net debt/EBITDA ratio, although it fell below 5x, remains high, namely about 4.7x at the end of March 2024. 3/ Identifying promising therapeutic areas In general, the more prevalent a disease is, the larger the total addressable market for a drug and, as a result, the higher the chances that it will become a commercially successful product. Global spending on cancer medications will reach $377 billion by 2027, followed by immunology, and diabetes will come in third with an estimated spending of about $169 billion What challenges arise when choosing pharmaceutical companies? you should also keep in mind that the larger the market, the higher the competition between medicines, as companies strive to grab as big a piece of the pie as possible. As a result, for drug sales to take off, they need to have significant competitive advantages over the "gold standard." These competitive advantages may include greater efficacy in treating a particular disease, less frequent administration, a more favorable safety profile, and a more convenient route of administration. So, in recent years, competition in the global spinal muscular atrophy treatment market has intensified. Spinal muscular atrophy is a genetic condition. Currently, three drugs have been approved to combat the disorder, including Biogen Inc.'s (BIIB) Spinraza, Roche/PTC Therapeutics, Inc.'s (PTCT) Evrysdi, and Novartis AG's (NVS) gene therapy Zolgensma. All three products have similar efficacy, but Evrysdi has a more favorable safety profile and is the more convenient route of administration, namely the oral route, which is reflected in its sales growth rate from year to year. The second pitfall is the company's pipeline of experimental drugs. I believe that financial market participants opening an investor presentation that presents a company's pipeline, especially if its market cap is below $5 billion, should also pay close attention to what stage of clinical trial activity its experimental drugs are in. if a pharmaceutical company has most of its product candidates in the early stages of development, this represents a significant risk because, in this case, institutional and retail investors are often overly optimistic about the prospects for the drugs' mechanisms of action and/or clinical data obtained in a small group of patients. Simultaneously, as is often the case, the higher the optimism, the less favorable the risk/reward profile. In most cases, the larger and more diverse the patient population, the weaker the efficacy of a drug relative to what was seen in Phase 1/2 clinical trials. This ultimately leads to a downward valuation of its likelihood of approval and casts doubt on its ability to take significant market share from approved medications. This may subsequently reduce the company's investment attractiveness, making it more difficult to attract financing for its operating activities. As a result, I recommend excluding any company that, instead of focusing its financial resources on the most promising product candidates, conducts multiple early-stage clinical trials to evaluate the efficacy of its experimental drugs. In my experience, the most successful pharmaceutical companies focus their efforts on bringing up to three product candidates to market and then reinvesting the revenue from their commercialization into developing the rest of the pipeline. The table below highlights the following parameters that I use to screen out the least promising companies. A third factor that investors, especially those new to the investment world, should consider is that large pharmaceutical companies are leaders in certain therapeutic areas, with a rich portfolio of patents covering various mechanisms of action and delivery methods of drugs, making it more difficult and more prolonged for smaller players to find product candidates that could potentially have the competitive advantages. So, Novo Nordisk A/S NYSE:NVO and Eli Lilly and Company NYSE:LLY have long been leaders in the global diabetes and weight loss drugs markets, and only very recently, they may be joined by Amgen Inc. NASDAQ:AMGN , Roche Holding, and several other companies 4/ Assessing a company's drug portfolio in comparison to competitors Evaluating the effectiveness, safety profile, and mechanism of action of a medication, as well as comparing clinical data with its competitors, takes a lot of time and effort. I provided examples of drugs and the most promising mechanisms of action in the obesity treatment market. Their manufacturers are Eli Lilly, Novo Nordisk, Roche Holding, Viking Therapeutics, Inc, Amgen, Pfizer, Altimmune, Inc, OPKO Health, Inc, Boehringer Ingelheim, and Zealand Pharma A/S 5/ When market exclusivity for a company's key medications ends Every financial market participant who is considering investing in pharmaceutical companies should consider the expiration time of key patents of medicines. Marketing exclusivity represents protection against the entry of a generic version and/or biosimilar of a branded drug into the market, thereby allowing the company to recoup the resources spent on its development and, in the event of its commercial success, also reinvest the money received to accelerate the development of the remaining product candidates. Where can you find information about patent expiration dates? All the necessary information is either in 20-Fs/10-Ks or on the FDA website, namely in the "Orange Book" section. let's take Eli Lilly as an example. Open the latest 10-K. Then, the CTRL + F combination opens the ability to find specific words in the document. I usually enter "Expiry Date" or "compound patent" to find the patent section.nvestors can also find information about patents on the FDA website. As an example, I enter "Mounjaro" in the top line, and a list of patents opens that protect Eli Lilly's blockbuster from the introduction of its generic versions onto the market.hen, clicking on "Appl. No." will open information about the submission date of the patent and when it will expire. 6/ Evaluating the impact of insider share transactions The next step in selecting the most interesting assets in the healthcare sector is to analyze Form-4s. The CEO, CFO, and other key members of the company's management buy or sell shares from time to time.I am only interested in analyzing purchases since, most often, sales by management are option exercises carried out to pay taxes. When management starts making large outright purchases of a company's shares, it can signal that it believes in its long-term growth potential.if more than two top managers buy a large block of shares within two weeks of each other, it significantly increases the likelihood of the company's stock price rising in the next two months from the moment of their transactions But as with everything, there are exceptions, such as in the case of OPKO Health, which is developing a long-acting oxyntomodulin analog for the treatment of obesity together with LeaderMed Group.Over the past 12 months, OPKO's management, especially CEO Phillip Frost, has purchased over 12 million shares. However, despite this, its stock price has fallen by 27% over the same period. I believe that the key reasons for the divergence between these two facts are investors' lack of confidence in Phillip Frost's ability to make the company profitable again, as well as its low cash reserves. Therefore, companies like OPKO Health have already been eliminated at the second step of selection using Seeking Alpha's screener. 7/ CEO Performance in Business Development The CEO plays a crucial role in the success of a pharmaceutical company since the pharmaceutical industry is highly dynamic, and the competition between Big Pharma is especially high, I advise readers to pay attention to the track record of the CEO, especially how he copes with force majeure situations, as well as how effective the R&D policy is carried out under his leadership. 8/ Identifying Entry and Exit Points for Long-Term Investments The eighth step is in addition to the information that was obtained in the previous steps, as well as the analysis of financial risks and various financial metrics of the company, including its net debt, maturity dates of bonds, historical revenue growth rates, EBIT, gross margin, I build a DCF model with the ultimate goal of determining the price target. it is necessary to conduct a technical analysis of them, as well as the main ETFs that include them. In my opinion, the key ETFs are the SPDR® S&P Biotech ETF AMEX:XBI , Fidelity Blue Chip Growth ETF AMEX:FBCG , iShares Biotechnology ETF NASDAQ:IBB , and VanEck Pharmaceutical ETF $PPH. The purpose of technical analysis is to determine the stop-loss level and entry points at which the risk/reward profile is most favorable. taking profit is not that easy cuz you must master your emotions and greed which damn hard 9/ Creating a Watchlist Based on Risk/Reward Ratio The purpose of which is to create a watchlist of the companies I have selected based on the previous steps. I make several lists of companies based on their market caps and also rank them according to risk/reward profile, that is, in the first place is the stock that I think has minimal risks and at the same time can bring the greatest potential profit. I also advise creating small notes on each company, which can include information about risks, support/resistance zones, dates of publication of clinical data, and any thoughts you have that will make your decision more conscious when opening a position “What’s your secret sauce for choosing pharma stocks?”
NYSE:NVOEducation
by moonypto
YOU ONLY NEED 3 TIMEFRAME TO BE PROFITABLE !!!most of the time people on the internet bombard us with so many information when it comes to trading. like use this use that you have to use 5 or 6 timeframes, but in fact using this much could make you even more confused . so in this post I will share the easiest way for you you can to capitalize on timeframe analysis. THE HIGHER TIMEFRAME - for bias which tells us in what way the price is going. ( up, down, range) THE MIDDLE TIMEFRAME - to identify our zone for example if your trading system uses FVG you can locate your zone their. i personally use supply and demand so at this time i zone out my i will draw my supply or demand. THE LOW TIMEFRAME - in this stage use it for entry confirmation. this multi timeframe analysis can work on every time which means you can scalp , day trade or swing trade . for example you can use 1 HOUR FOR BIAS 15 MIN ZONE IDENTIFICATION 5 CONFIRMATION thanks for taking your time and read this post. tell us your thought in the comment.
Education
by ammarzmind
Enhancing Trading Proficiency: Top Educational ResourcesEnhancing Trading Proficiency: Top Educational Resources Staying abreast of the ever-evolving market trends and honing trading techniques are critical aspects of becoming a successful trader. Luckily, a plethora of educational resources are readily available to aid traders in enhancing their skills and decision-making abilities. In this FXOpen article, we will discuss the best websites, books, online trading classes, and other information sources that can help traders succeed. The Best Educational Resources for Traders We recognise the importance of having a readily accessible knowledge base to find prompt answers to your trading queries. Below, we have curated a list of the most sought-after educational resources for traders, covering a diverse range of topics, from technical analysis to risk management. 1. Investopedia: A highly popular website that offers comprehensive learning materials suitable for traders at any experience level. Alongside trading, Investopedia delves into investing and personal finance, presenting a vast array of articles, tutorials, and videos. 2. TradingView: This social platform is a haven for traders, providing access to various trading tools, including charts of a wide range of financial instruments from different trading platforms, as well as technical analysis tools. Additionally, it hosts a vibrant community where traders can engage in discussions and share educational ideas. 3. ChartSchool: Specialising in technical analysis and charting, ChartSchool presents articles covering essential topics such as chart patterns, indicators, and other technical tools. If you harbour an interest in technical analysis, this resource furnishes all the necessary information to deepen your understanding of various instruments. At FXOpen, we regularly update our blog with market analysis and educational articles for traders with any level of experience. Top Trading Courses to Be Aware Of Corporate Finance Institute: an online education platform that offers courses on finance, accounting, and investment banking. It provides in-depth knowledge and practical skills for traders. CFI’s courses cover topics like financial modelling, valuation, risk management, and portfolio management. Babypips: a platform that provides one of the best stock trading courses for traders. Any online trading course from this platform for forex trading education will be of great help. Babypips offers a structured curriculum and interactive quizzes. Coursera: an education platform that offers great trading courses. The courses taught by industry experts focus on financial markets, trading strategies, and risk management. Coursera trading courses are flexible, and there’s the possibility of self-study. Udemy: an e-learning platform that allows instructors to create and publish online courses. With Udemy’s course development tools, instructors can upload various materials — videos, audio files, source code, and PDF files — to enhance their students’ learning experience. Websites That Publish Economic News In this section, we’ll explore the top websites that publish economic news and highlight their key features. Here is a list of them: - Financial Times: a renowned news outlet. With a team of journalists, the Financial Times provides analysis and commentary on the latest economic events and trends. In addition to informative articles, the site offers market data. - Fortune Magazine: a platform that publishes articles on business news and technology. The website features interviews with top executives and entrepreneurs and lists of top companies such as the Fortune 500. It’s a must-read for anyone looking to stay ahead in the world of business. - Forbes Economy Market News: a well-known business and finance publication. The website has a special economic news section with articles about global financial markets. The site also provides tools like market data, stock quotes, and investment information. - SEC Website: a website of the U.S. Securities and Exchange Commission. The SEC is dedicated to protecting investors, ensuring fair and efficient markets, and promoting capital formation. The SEC seeks to create a marketplace environment that is credible to the public. - Yahoo Finance: a resource that helps traders effectively manage their investments and stay abreast of the latest market trends and news. The site provides current news, portfolio management tools, international market data, and social interaction — all designed to help readers manage their financial lives with ease. Books by Famous Traders In addition to articles and courses, we decided to gather a list of books that will be interesting to traders: - The Market Wizards – Conversations with America’s Top Traders by Jack D. Schwager - The Intelligent Investor by Benjamin Graham - Technical Analysis of the Financial Markets by John J. Murphy - The Psychology of Trading by Brett N. Steenbarger - How to Trade In Stocks by Jesse Livermore If you are ready to try your hand at the real market, you can open an FXOpen account and check out our TickTrader trading platform. Our blog will also help you make rational decisions when trading. 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:AMZNEducation
by FXOpen
1
Chart Patterns Within Patterns: A Guide to Nested Setups Daily Chart Analysis: Pattern Overview: The daily chart shows an Ascending Channel formation, which generally indicates a bullish trend but can also signal a potential reversal if the upper trendline acts as strong resistance. Within the ascending channel, there are continuation patterns such as smaller bull flags, which suggest bullish momentum continuation. Key Resistance and Liquidity Zone (LQZ): The upper trendline of the ascending channel aligns closely with the recent highs around the $2,530 - $2,540 region, creating a significant resistance area. The 1-Hour Liquidity Zone (LQZ) at $2,486.793 is marked below the current price, indicating potential areas where price might retest before any significant upward or downward move. Potential Reversal Signal: The upper boundary of the ascending channel has recently been tested multiple times, and each time, there has been a slight pullback, indicating selling pressure. This could be a precursor to a possible reversal if this level is not broken with conviction. 4-Hour Chart Analysis: Nesting Patterns: The 4-hour chart also reveals several nested patterns within the broader ascending channel, including smaller bull flags and a potential double-top pattern forming at the resistance zone. The price action is consolidating below the resistance line at $2,530.750, creating a possible Double Top scenario, which could indicate a bearish reversal if confirmed by a breakdown below the neckline support. Impulse and Correction Phases: The recent impulsive moves upwards have been followed by corrective pullbacks, which have been forming higher lows, reinforcing the bullish bias in the medium term. However, the proximity to the resistance and the potential double-top formation might signal caution for long positions. 1-Hour and 15-Minute Chart Analysis: Short-Term Structure: The 1-hour chart shows a more detailed view of the recent consolidation phase near the key resistance level. There are signs of weakening momentum as prices approach the upper trendline. The 15-minute chart further shows a tightening range and potential bear flag or a descending channel, which could indicate a short-term bearish continuation if the lower trendline of this smaller pattern breaks. Critical Levels: The support level around $2,486.793 (1HR LQZ) is critical for intraday trading. A break below this could lead to a sharper correction towards the lower boundary of the ascending channel on the daily chart. For bullish continuation, a clear break above the $2,530 - $2,540 resistance with strong volume would be needed to confirm further upside potential. Trading Strategy and Recommendations: Bullish Scenario: Look for a strong breakout above the $2,530 - $2,540 resistance on the daily chart, accompanied by increased volume and a break above the smaller continuation patterns (flags) on the lower timeframes. Enter on a reduced risk entry after a pullback to the breakout level, with stops placed below the recent consolidation range or the 1-Hour LQZ. Bearish Scenario: Watch for a confirmed Double Top breakdown on the 4-hour chart, with a clear break below the neckline support around $2,486.793. Consider short positions on the break of the neckline or after a retest of the breakdown level, with stops placed above the recent highs or the upper boundary of the descending channel on the 15-minute chart. Risk Management: Given the proximity to a key resistance level and the potential for a reversal, it is crucial to manage risk carefully. Use tight stops and consider reducing position size until a clear directional move is confirmed.
OANDA:XAUUSDEducation
by Adlercon333
2
Understanding Volume Oscillator and Its RoleUnderstanding Volume Oscillator and Its Role in Technical Analysis Navigating the complex terrain of trading requires a grasp of various technical analysis tools. One such tool is the Volume Oscillator, a potent indicator that offers insight into market trends and their strength. This article provides a comprehensive look at this tool, its interpretation, principles, and limitations. What Is the Volume Oscillator? The Volume Oscillator is a vital tool in technical analysis, utilising two moving averages of trading volume to generate signals about the strength and weaknesses of trends. Unlike price oscillators which focus primarily on the direction and momentum of price movements, this tool delves into the undercurrents of the market. Volume, in the context of financial markets, is the number of asset units traded during a given period. As such, it is a measure of market activity. So what does a Volume Oscillator do? This indicator goes a step further by comparing short-term and long-term buying and selling activity flow to help traders identify potential reversals, breakouts, and other market events. However, it's important to note that this tool doesn't signify bullish or bearish behaviour but rather indicates whether a move has supporting volume. Calculating the Volume Oscillator Technical Indicator The calculation of the Volume Oscillator is straightforward. It begins with selecting two lengths of moving averages, often referred to as the short and long periods. The default Volume Oscillator settings used are 5 and 20, but these can be adjusted as per your trading needs. The indicator is then calculated using the formula: * 100. This calculation produces a percentage that oscillates above and below zero. If you’d like to practise your Volume Oscillator skills, you can use FXOpen’s free TickTrader platform to get started within minutes. Principles of Volume Analysis The principles of volume analysis are integral to understanding and interpreting this indicator. These principles encompass two primary signals: signs of strength and signs of weakness in the prevailing trend. A sign of strength is identified when the price of an asset moves concurrently with a rise in buying or selling activity. This suggests that the prevailing price movement – whether upwards or downwards – has solid support from traders, leading to a stronger confirmation. Hence, when the fast volume moving average is above the slow volume moving average, the indicator is above the zero line, indicating a stronger market direction. Conversely, a sign of weakness is indicated when the price movement is not supported by strong activity. This means that the price is increasing or decreasing while trading activity is declining. In such a case, the Volume Oscillator is below the zero line, implying a potential lack of conviction in the current price direction, thereby signalling a potential reversal or slowdown. Volume Oscillator Interpretation This tool’s interpretation is primarily based on its trend direction in relation to the zero line. When trending upward and above the zero line, it indicates growing conviction in the current price movement, whatever its direction. Conversely, a downward trend above the zero line suggests diminishing confidence in the ongoing price action. Below the zero line, an upward trend in the oscillator points to a potential shift in momentum, indicating that the conviction in the current price direction might be returning, while a downward trend implies that the uncertainty in the market's direction is intensifying. It can also provide divergence signals, which occur when its direction deviates from the price movement direction. For instance, if prices reach new highs while the indicator fails to achieve new highs, it may suggest a weakening upward price trend, potentially heralding a downturn. Conversely, if prices hit new lows and the tool does not follow suit, it could be a sign of an impending upward reversal. Limitations Despite its usefulness, this indicator is not infallible and has certain limitations. Primarily, it may produce false signals in periods of low trading activity or in thinly traded assets where the market participation data can be sporadic. Moreover, while it is excellent at confirming price movements, it may be less effective at predicting reversals, particularly in highly volatile markets. The Bottom Line By gauging the intensity behind trends, the Volume Oscillator adds a depth dimension to market analysis. While it has its limitations, its ability to identify the strength of price movements and potential reversals makes it a beneficial part of any trader's toolkit. If you would like to put your Volume Oscillator knowledge into action, you can open an FXOpen account. Once you do, you will access lightning-fast execution speed and competitive trading costs. Happy trading! 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
Identifying Market Correction EndpointsCorrection or trend? How deep is the correction if it exists? When can we expect a reversal? These are common questions among traders who utilize trend strategies. The foundation of trend trading systems rests on the understanding that a trend can become 'exhausted.' Prices cannot rise indefinitely nor plummet to zero. Unlike stocks, currency pairs operate within ranges established by central banks, leading to frequent reversals and corrections. Corrections differ from trends in both depth and duration. If the price retraces more than one-third of the previous trend's length after a reversal, it is often considered the beginning of a new trend rather than a mere correction, which is the basis for counter-trend strategies. However, local corrections can occur, enabling the trend to continue. Entering the market at the end of a correction allows traders to secure positions at optimal prices, which is the essence of swing trading. 📍 METHODS FOR DETERMINING THE END OF A CORRECTION 1. BY PATTERNS. This straightforward and logical approach relies on market psychology. As a trend ascends, more buyers enter the market. When news prompts some to sell, a correction occurs, causing temporary price declines. However, buyers often see this as a chance to purchase at lower prices. A key indicator of the end of this correction is a candle with a small body and a long downward wick, suggesting that selling pressure has subsided and buyers are stepping back in. 2. BY CANDLE BODY SIZE. The size of candle bodies reflects price movement. When candle bodies decrease in size during a correction, it indicates waning interest in the asset. In an upward trend that turns bearish, if the correction shows small candle bodies, it likely signals a recovery of the trend. Conversely, during a downtrend, large downward candlesticks signify strong selling, while small bodies during corrections suggest minimal price movement. 3. CHANGE IN TRADING VOLUMES. Similar to the analysis of candle bodies, observing changes in trading volumes can signal the end of a correction. A decline in volume may indicate that the correction is over. However, a limitation of this method in Forex trading is the absence of aggregated volume data, necessitating reliance on indicators that may show tick volumes or specific broker volumes. 4. FIBONACCI LEVELS. Based on mathematical concepts, Fibonacci levels help identify potential retracement points. The end of a correction is most likely to occur at the first or second Fibonacci level after a reversal. If the price retraces to the 50% level, it often indicates the potential continuation of the initial trend. 5. TECHNICAL INDICATORS. Technical indicators, particularly oscillators like the Stochastic and Relative Strength Index (RSI), can be valuable tools for identifying the end of a correction. When these oscillators reach overbought or oversold territories and subsequently reverse their direction, it often signals that the correction has concluded, indicating a potential resumption of the original trend. 6. FUNDAMENTAL FACTORS. Local reversals frequently occur in response to news events. For instance, a cryptocurrency might be on the rise, but negative news—such as a significant fund dumping its holdings or regulatory actions by the SEC—can lead to a temporary price pullback. However, if positive news later arises, it can trigger renewed buying interest, signaling the end of the correction and a potential return to upward momentum. 📍 CONCLUSION In trading, there are no infallible tools for pinpointing trends, corrections, or their respective beginnings and endings. A correction can seamlessly shift into a new trend, while a reversal following a correction may lead to a false breakout. Given these uncertainties, it is prudent to combine multiple analytical tools into a cohesive signal system. By doing so, we can enhance our decision-making process and improve ability to interpret market movements. Additionally, it is essential to test this system against historical price data to ensure its effectiveness and reliability in various market conditions. This comprehensive approach allows us to better navigate the complexities of the market and make more informed trading decisions. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment 📣
Education
by Lingrid
14
XAU/USD Strategy: Pattern Recognition and Trade ExecutionComprehensive Market Breakdown for XAU/USD (Gold Spot) Based on Multi-Time Frame Analysis Overview: The analysis of XAU/USD across multiple time frames (15-minute, 30-minute, 1-hour, and 4-hour) indicates a complex market structure with both bullish and bearish signals. This detailed breakdown will provide insights into the current market conditions, key patterns to watch, potential trading strategies, and risk management considerations. 1. 15-Minute Time Frame: Symmetrical Triangle Pattern Pattern Details: Symmetrical Triangle: This pattern is characterized by converging trend lines connecting lower highs and higher lows, indicating indecision in the market. Apex Proximity: The price is nearing the apex of the triangle, suggesting a potential breakout is imminent. Implications: Neutral Bias: The symmetrical triangle does not inherently suggest a bullish or bearish bias but indicates a potential breakout in either direction depending on market sentiment. Volume Confirmation: A breakout with a significant surge in volume will confirm the direction of the move. Trading Strategy: Bullish Breakout: If the price breaks above the upper trendline with strong volume, consider entering long positions targeting previous resistance levels. Bearish Breakout: Conversely, if the price breaks below the lower trendline with increased volume, consider short positions targeting previous support levels. Stop-Loss Placement: Place stops just outside the opposite side of the breakout point to mitigate risks from false breakouts. 2. 30-Minute Time Frame: Mixed Channels (Descending and Ascending) Patterns Observed: Descending Channels: Suggest bearish continuation if in a downtrend or a potential reversal if broken to the upside. Ascending Channels: Suggest bullish continuation if in an uptrend but signal a potential reversal if broken to the downside. Market Implications: Corrective Phase: The presence of both descending and ascending channels indicates the market is in a corrective phase, oscillating between support and resistance levels. Range-Bound Trading: Until a significant breakout occurs, the market is likely to remain range-bound. Trading Strategy: Range Trading: Consider buying at the lower boundaries of the channels and selling at the upper boundaries. Breakout Preparation: Prepare for a potential breakout by setting alerts around key levels (upper and lower boundaries of the channels). Stop-Loss Placement: Place stops just outside the channels to protect against unexpected breakouts. 3. 1-Hour Time Frame: Rising Wedge Pattern Pattern Details: Rising Wedge: This pattern is characterized by higher highs and higher lows within a narrowing upward slope, typically a bearish reversal pattern. Implications: Bearish Reversal: The rising wedge suggests that upward momentum is weakening, and a potential breakdown could follow. Reversal Zone: The price is near the upper boundary of the wedge, which may serve as a reversal zone, especially if a breakout to the downside occurs on high volume. Trading Strategy: Short Entry on Breakdown: Enter short positions if the price breaks below the lower trendline of the wedge with confirming volume. Target Levels: Target the lower boundary of the larger ascending channel or previous support levels as take-profit points. Stop-Loss Placement: Set stops above the most recent high within the wedge to protect against false breakouts. 4. 4-Hour Time Frame: Broader Rising Channel and Nested Patterns Patterns Observed: Broad Rising Channel: Indicates a larger uptrend is intact, providing a bullish bias. Nested Descending Channels: Smaller corrective patterns within the broader uptrend suggest temporary pauses or consolidation phases before potential continuation moves. Key Levels to Watch: Resistance at 2,540: A break above this level would suggest a bullish continuation and potential for new highs. Support at 2,470: A break below this level would indicate a significant shift in market sentiment towards bearishness. Market Implications: Potential Continuation or Reversal: The larger rising channel gives more weight to potential continuation moves, but the presence of smaller corrective patterns within suggests caution. Echo Phase: The nested descending channel could represent an echo phase, a corrective move within the larger uptrend. Trading Strategy: Long Positions on Break Above 2,540: Enter long positions if the price breaks above this resistance level with confirming volume. Short Positions on Break Below 2,470: Consider short positions if the price breaks below this support level with increased volume. Volume Confirmation: Ensure any breakout is confirmed with a surge in volume to avoid false signals. Risk Management: Use wider stops given the higher time frame context to avoid being stopped out by market noise. 5. Synthesis of Multi-Time Frame Analysis: Confluence of Patterns: The alignment of rising wedges, symmetrical triangles, and mixed channels across multiple time frames suggests a market at a critical juncture. The presence of both bullish and bearish signals indicates that the market is poised for a decisive move. Key Takeaways for Traders: Patience and Discipline: Wait for confirmed breakouts with volume before entering trades. Do not rush into trades without sufficient confirmation. Adaptability: Be prepared to adapt strategies based on the direction of the breakout or breakdown. Use alerts and monitor key levels closely. Focus on Higher Time Frame Signals: Higher time frame signals carry more weight and should be given priority when making trading decisions. Risk Management: Employ tight stops and carefully manage position sizes to limit exposure in case of adverse market movements. 6. Final Recommendations: Potential Bullish Scenario: Watch for a break above 2,540 on strong volume across multiple time frames. A confirmed breakout could lead to a bullish continuation towards new highs. Potential Bearish Scenario: Monitor for a breakdown below 2,470, especially if supported by a break of the rising wedge and descending channel patterns. A breakdown here would signal a shift to a bearish trend. By combining these insights with real-time monitoring of market conditions, traders can enhance their decision-making process and capitalize on high-probability trade setups in the XAU/USD market.
OANDA:XAUUSDEducation
by Adlercon333
3
Advanced Camarilla Concepts (1)Exploring Advanced Camarilla Concepts: The Strategic Role of Pivot Width In the realm of technical analysis, understanding the nuances of pivot points, particularly within the Camarilla framework, can significantly enhance a trader's ability to forecast and capitalize on market movements. A key aspect often overlooked is the analysis of pivot width, especially the width between the third layers, S3 and R3, which offers crucial insights into impending market dynamics. Pivot Width Analysis: Decoding Market Behavior Pivot width, the distance between significant Camarilla support (S3) and resistance (R3) levels, is a powerful indicator of potential market behavior. The interpretation of pivot width can be categorized into two distinct scenarios: Abnormally Wide Pivot Widths: When the distance between S3 and R3 is unusually large, it often indicates that the market might enter a period of trading range activity. In such scenarios, the market is less likely to exhibit strong directional momentum, and instead, traders might experience extended periods of consolidation. This setup requires strategies that capitalize on range-bound trading techniques, where buying at support and selling at resistance can be particularly effective. Abnormally Narrow Pivot Widths: Conversely, a tighter than usual gap between these pivot points typically signals the potential for breakout and trending activities. Narrow pivot widths suggest that the market is coiling, much like a spring, ready to release significant energy that could lead to strong directional moves. Traders should prepare for breakout strategies during these conditions, anticipating substantial moves away from the pivot line once a breakout occurs. Strategic Application in Trading Understanding and applying pivot width analysis within the Camarilla framework allows traders to adapt their strategies based on anticipated market conditions. By aligning trading approaches with pivot width signals, traders can enhance their tactical execution and improve the probability of success in varying market environments. For Wide Pivots: Implement range-bound strategies, focusing on capturing the oscillations between the defined support and resistance levels. For Narrow Pivots: Prepare for potential breakouts by setting entry points near the anticipated breakout levels, with appropriate stop-loss orders to manage risk effectively. Conclusion: Enhancing Trading Acumen with Pivot Width Analysis The study of pivot width in the context of Camarilla pivots offers a sophisticated tool for traders aiming to refine their market analysis and execution strategies. By paying close attention to these details, traders can better prepare for the market's next moves, whether they point to a continuation of the range or the start of a new trend. Stay tuned for further insights into the application of Camarilla pivots in trading, as we continue to explore deeper layers of this powerful analytical tool. This exploration not only enriches your trading toolkit but also enhances your ability to navigate through complex market landscapes.
CBOT:ZNZ2024Education
by msrozba
A simple long-term T/F Stochastic Trick You Will Only Learn Here Cast your minds back to the end of 2015 guys. I know you probably have no recall on the Gold-price. So let me tell you how the Gold price was behaving at the end of 2015. For several years prior (approximately) 2012-2015 the Gold Price was trending down to a support level around December 2015. Now, take a look at the 3 MONTH-Chart for XAU USD. What do you see when looking at the 2nd bottom of chart indicator the Stochastics. Scan from left to right from 2007 to 2024. How many times does it get over-sold under the crucial 20 level. Do you get my drift? Just prior to December 2015 the Stochastic on the 3M chart crossed-down below the 20 level. But it would've been pressing-down-hard at the floor so you would not be buying yet. But now, look what happens to price around December 2015 when the 3-MONTH-STOCHASTIC INDICATOR crosses up the Green-20 line. You are correct, price starts to rally-hard. Forget the so-called gurus selling the b.s. indicators guys. Stochastics and especially on the Higher-Time-Frame is the "KING" of all indicators. It's only let-down is that it does tend to give you a road-map of when to exit your trade. That road-map can be achieved tracking the MACD, which incidentally, the MACD got you into a trade here in Gold not long after the Stochastic crossed-up the 20, there was a Bullish cross-up of the MACD lines. The lower under the zero line this MACD cross occurs. Following the MACD and RSI can actually create a road-map like you are driving a car and trying to avoid an interest, I might explain this another time. But again, nobody will teach you this trading secret on the Highertimeframes, you will only learn it from the 100% free subscription service delivered by me here at easy_explosive_trades. Just imagine buying 1 lot in XAU USD and capitalising on that 138% move. I have not done the maths. These are the big trades I look for on the highertimeframes. I started investing and trading during the GFC in 2008 but in 2015 I did not know about this very insider high-time-frame trick using the number 1 indicator, the King-Stochastics, it get you into trades on HTF with needle point accuracy. Nobody showed me this trick. I work these things out myself. I wanted to share it with you. As I am proud to have you part of my channel. Cheers, Chris easy_explosive_trader * Trading is risky. Don't rely solely on my investment advice. Monday's trades: We are bidding up the Silver price & Palladium. Both of these and especially Palladium are bullish on the HTF. Hey..... forget these gurus with their 72 day moving averages & 171 day moving averages. You make money sticking to the basics in trading. Finally, I encourage you to, if you take my trades, to always risk no more than 0.25% to 0.50%. I endeavour always to give you fantastic RR not this 1:1 crap that the expensive subscriptions in Gold and Currency's charge. I make enough money trading, I don't need to make money out of you.
EIGHTCAP:XAUUSDEducation
by Easy_Explosive_Trading
1
How Spotting Liquidity Can Help Your Trading StrategyUnderstanding where liquidity exists in the market can help enhance your trading success in a few ways: 1. It can help you understand where potential blocks of liquidation could occur. The market is often attracted to these block and will liquidate there. 2. It can help you confirm patterns that exist on you charts 3. It can help you spot new patterns which you may not have spotted previously. Let's take a quick look at the "Liquidity Swings" indicator by LuxAlgo in this video.
INDEX:BTCUSDEducation
by stewdamus