Trend Analysis
DON’T Look at a screen all day! - Here's whyStop Watching Your Trades All Day
Have you ever found yourself glued to your screens, watching every tick of the market, and feeling the stress levels rise?
If so, you’re not alone.
You might find it productive and what is essential but it’s actually a more dangerous habit than you might think.
Watching every tick will rise your cortisol (stress) levels.
It might cause you to take impusive trades.
And you might adjust your trading levels when you shouldn’t.
And so in this piece of writing I’m going to show you why you should stop watching the screens all day.
The Cortisol Rush
Every time you check the market and see a fluctuation in your trades, your body responds by releasing cortisol, the stress hormone.
While cortisol is useful in fight-or-flight situations, in trading, it can lead to quick and unnecessary decisions.
And you’ll end up taking more lower probability trades than you should.
It’s time you lead a more balanced, stress free and calmer trading life.
Distraction from Higher Priorities
Trading should be a part of your life, not the entirety of it.
You shouldn’t obsess over every market movement.
Your job is to wait for high probability trades to line up, take them and then let the market take over.
Also, you the trick is to focus on other vital aspects of your life like: family, health, and even your full-time job if you have one.
Balance is key to sustain success in both your personal and professional life.
Now there are a number of benefits when NOT looking at a screen all day.
Benefit #1: Beter Decision-Making
When you’re not constantly reacting to market volatility, you have more time to analyze your strategies and make more informed decisions.
This way you can priortise in what is absolutely needed to act on when you do trade.
Benefit #2: Improved Quality of Life
Life is NOT just about trading.
So once you’ve taken a trade and reduced your screen time, you will be able to free up time for other activities that enhance your well-being.
I’m talking about things like exercise, hobbies, and time with loved ones.
A well-rounded life supports better mental health, which in turn can improve your trading performance.
Benefit #3: Increased Productivity
Believe it or not, spending less time watching your trades can actually make you more productive.
You will also have the right amount of energy and focus to set specific times to check the market and stick to a trading plan.
Time management is everything.
This disciplined approach can lead to better outcomes than erratic, all-day monitoring.
So how do you use your time for when you trade?
ACTION #1: Use Alerts Wisely:
Analyse and set up your trading alerts for specific price levels, when your strategy lines up or wait for my trading ideas where I do all the work for you.
Let technology or a mentor help you t so you don’t have to watch the markets to do the monitoring for you.
ACTION #2: Create a Balanced Schedule:
You should also take the time to Incorporate other important activities into your daily schedule.
This could include exercise, reading, or spending time on a hobby.
It’s all about creating a healthy work-life balance.
ACTION #3: Check and review your Trading Plan Regularly:
When you review and check your trading track record and journal, this will tell you whether you’re on the right path to growing your portfolio.
You need to base this time on looking at the stats, metrics, seeing the mistakes you made.
And where you are with your trading in total.
This only requires you to do this once a week or so.
And it will reduce the time you think you need to constantly check the markets.
FINAL WORDS:
As I always like to say sometimes less is more.
Drop the screen time and focus on what is important.
Lower your stress and keep to a well-balanced trading life.
This way you’ll be able to integrate trading in a more effective and profitable way.
Trade well, build wealth.
Charting the Future: An Elliott Wave ApproachTechnical Analysis of Rajesh Exports Using Elliott Wave Theory
Monthly Time Frame Analysis
Elliott Wave Count and Structure:
- The monthly chart of Rajesh Exports shows a clear Elliott Wave pattern, suggesting the completion of a corrective wave (C) of a larger degree wave ((2)) in Black, implying that a new bullish impulse is likely to begin wave ((3)) in Black.
- The recent price action indicates the end of Wave (C), part of a larger correction that followed a significant impulse wave (5) earlier of wave ((1)) in Black.
- This suggests that the stock is about to start a new bullish cycle, labeled as Wave (1) in Blue of a new impulse higher Primary degree wave ((3)) in Black.
Bullish Divergence:
MACD: The price shows hidden bullish divergence with the MACD, as the MACD line forms higher lows while the price makes lower lows on Monthly time frame.
RSI: Similar hidden bullish divergence is observed with the RSI too on monthly time frame, reinforcing the bullish outlook.
Daily Time Frame Analysis
Bullish Divergence:
MACD: The price shows bullish divergence with the MACD, with the MACD line forming higher lows while the price forms lower lows.
RSI: The RSI also shows bullish divergence, adding further weight to the bullish scenario.
Trigger Point:
Trendline Breakout:
The daily chart indicates a trendline breakout accompanied by a significant increase in volume. This breakout suggests a strong bullish sentiment and confirms the start of a new upward trend.
Invalidation Level:
The invalidation level for this bullish scenario is set at 261. If the price falls below this level, the bullish wave count would be invalidated.
Targets:
According to Elliott Wave Theory, the third wave (3) is typically the most powerful. Using the Fibonacci extension, the 161.8% target of Wave (1) places the possible price target near or above 1800.
Summary
Elliott Wave Count: Indicates a potential start of a new bullish impulse wave.
Bullish Divergence: Both MACD and RSI on the daily and monthly charts show bullish divergence.
Trendline Breakout: Confirmed with high volume, suggesting strong upward momentum.
Invalidation Level: 261
Target: 161.8% Fibonacci extension of Wave (1) projects a target near or above 1800.
The overall analysis suggests that Rajesh Exports is poised for a significant upward movement, with strong bullish indications from both the Elliott Wave counts and technical indicators.
I am not Sebi registered analyst.
My studies are for educational purpose only.
Please Consult your financial advisor before trading or investing.
I am not responsible for any kinds of your profits and your losses.
Most investors treat trading as a hobby because they have a full-time job doing something else.
However, If you treat trading like a business, it will pay you like a business.
If you treat like a hobby, hobbies don't pay, they cost you...!
Hope this post is helpful to community
Thanks
RK💕
Disclaimer and Risk Warning.
The analysis and discussion provided on in.tradingview.com is intended for educational purposes only and should not be relied upon for trading decisions. RK_Charts is not an investment adviser and the information provided here should not be taken as professional investment advice. Before buying or selling any investments, securities, or precious metals, it is recommended that you conduct your own due diligence. RK_Charts does not share in your profits and will not take responsibility for any losses you may incur. So Please Consult your financial advisor before trading or investing.
Charting with Elliott Waves & Technical AnalysisUnderstanding how to do Technical Analysis of any chart based on Elliott Waves
This analysis is for educational purposes only and should not be considered as trading advice. Multiple scenarios are possible in the real market, and there is a risk of being wrong. It is essential to consult with a financial advisor before making any trading or investment decisions. We are not responsible for any profits or losses incurred based on this analysis.
Wave Rules:
Wave 2 cannot retrace more than 100% of Wave 1.
Wave 3 is never the shortest wave.
Wave 4 should not overlap with Wave 1's price territory, except in diagonal triangles.
Applying Elliott Wave Theory
Elliott Wave Theory is a powerful tool for traders, but it requires practice and a deep understanding of market psychology. By analyzing wave patterns, degrees, and Fibonacci relationships, traders can gain insights into potential market trends and make informed trading decisions. It is important to combine Elliott Wave analysis with other technical indicators and risk management strategies to enhance the accuracy and reliability of market forecasts.
Elliott Wave Theory provides a comprehensive framework for understanding market cycles and predicting price movements. By mastering its principles and applying them with discipline, traders can enhance their ability to navigate the financial markets and capitalize on emerging trends.
Let's understand study of this chart
Elliott Wave Analysis:
The chart represents the Possible Elliott Wave counts for TATA STEEL, currently indicating the completion and projection of waves within an impulsive structure.
Wave Count Overview:
The chart demonstrates a five-wave impulsive structure labeled as:
Wave (i), Wave (ii), Wave (iii), Wave (iv), Wave (v)
The blue zone highlights a previous resistance area, which is now acting as a potential support zone.
The current wave structure projects wave (v) of ((v)).
Invalidation Level:
The nearest invalidation level for this wave count is at 155.00. A drop below this level would invalidate the current wave count.
Potential Targets:
The projected target for wave (v) of ((v)) is around level of 184.60 & more.
This target is derived from typical characteristics of the fifth wave in Elliott Wave Theory, often extending to new highs before the completion of the impulse wave.
Elliott Wave Principles and Characteristics of Wave (v):
Elliott Wave Theory posits that market prices move in repetitive cycles, consisting of five waves in the direction of the main trend (impulse waves) and three corrective waves.
Wave (v) in an impulse sequence is typically the final wave of the trend and often displays characteristics such as:
Completing the overall five-wave pattern.
Extending beyond the previous high of wave (iii).
Exhibiting momentum divergences (where price makes a new high but momentum indicators do not).
Sometimes driven by fundamental news or events, leading to sharp price movements.
Key Levels to Watch:
Current Price: 160.31
Nearest Invalidation Level: 155.00
Potential Target for Wave (v) of ((v)): 184.60
Educational Note:
Students of Elliott Wave Theory are encouraged to practice drawing their own wave counts and verifying whether all subdivisions align with higher-degree wave principles. This practice will enhance your study, making it more accurate and practical. Always remember, in real markets, multiple possibilities exist, and this analysis focuses on one potential scenario. There is a risk of being completely wrong.
I am not Sebi registered analyst.
My studies are for educational purpose only.
Please Consult your financial advisor before trading or investing.
I am not responsible for any kinds of your profits and your losses.
Most investors treat trading as a hobby because they have a full-time job doing something else.
However, If you treat trading like a business, it will pay you like a business.
If you treat like a hobby, hobbies don't pay, they cost you...!
Hope this post is helpful to community
Thanks
RK💕
Disclaimer and Risk Warning.
The analysis and discussion provided on in.tradingview.com is intended for educational purposes only and should not be relied upon for trading decisions. RK_Charts is not an investment adviser and the information provided here should not be taken as professional investment advice. Before buying or selling any investments, securities, or precious metals, it is recommended that you conduct your own due diligence. RK_Charts does not share in your profits and will not take responsibility for any losses you may incur. So Please Consult your financial advisor before trading or investing.
Insider Knowledge: Exploiting the House Money EffectIntroduction
In trading and investing, psychological biases significantly influence decision-making. One such bias is the "House Money Effect." Understanding this effect can help traders avoid common pitfalls and take advantage of this phenomenon.
What is the House Money Effect?
The House Money Effect is a psychological phenomenon where individuals are more likely to take risks with money they have won rather than their initial capital. In trading, this means traders become more risk-tolerant after experiencing gains, treating profits as "house money" and taking on higher risks than they would with their own capital.
Why Does It Happen?
The House Money Effect occurs due to several psychological factors:
Mental Accounting : People tend to treat money differently based on its source. Profits are often seen as less valuable than initial capital.
Overconfidence : After a winning streak, traders may become overconfident in their abilities, leading to riskier trades.
Loss Aversion : Gains are perceived as a buffer, reducing the fear of losses and encouraging riskier behavior.
Example of the House Money Effect on Crypto
In the 2021 Crypto Bull Market, we saw Bitcoin soar to all time highs. This subsequently caused many altcoins to rally really hard resulting in some 100-500x and numerous 2-3x tokens. If you observed at what point in the timeline this happened, this happened towards the end of the bull run, when everyone already knew about crypto and everybody was seemingly getting rich by buying cryptocurrencies. This was the peak of retail activity, which includes newcomers as well as those who got rich from holding tokens earlier.
This is a perfect example of the phenomenon with several key characteristics
Was after a period of extreme gains
Was causing risk assets to outperform, suggesting a higher risk tolerance in the market
Immediately after the markets tanked, clearly indicating this was a massive retail loss
By understanding and spotting the House Money Effect, traders can better manage their emotions and make more rational trading decisions. Recognizing this bias is the first step toward mitigating its impact and maintaining a disciplined trading strategy. We hope you enjoyed reading this idea.
Tips and Tricks on How to Trade the Inside Bar Candlestick Tips and Tricks on How to Trade the Inside Bar Candlestick Formation
What is an Inside Bar?
An Inside Bar is a two-bar price action pattern where the second bar (the inside bar) is completely contained within the high and low range of the first bar (the mother bar). This often signifies a period of consolidation or indecision.
Trading the Inside Bar:
Breakout Strategy: Look for a strong breakout above the mother bar's high for a long position, or below the mother bar's low for a short position.
Volume Confirmation: Increased volume on the breakout candle can strengthen the signal.
Stop-Loss Placement: Consider placing your stop-loss at the opposite end of the mother bar.
Risk-Reward Ratio: Ensure a favorable risk-reward ratio before entering a trade.
False Breakouts: Be aware of false breakouts, especially in ranging markets.
Combine with Other Indicators: Use the inside bar in conjunction with other technical analysis tools for improved accuracy.
Remember, the inside bar is a powerful tool, but it's not a foolproof strategy. Always practice risk management and consider using it as part of a broader trading plan.
#tradingview #insidebar #priceaction #forex #stocks #tradingtips
Understanding the Power of Trend Lines in TradingHi! Today, I want to talk about trend lines and how useful they can be in your trading.
1. Valid Trend Lines
• For a trend line to be valid, it must connect at least three points.
• In the case of the US dollar versus Japanese yen, we are currently in an uptrend. Therefore, you should aim to connect three low points.
• Once you have a valid trend line, drawing it provides a visual aid, entry points, and stop levels. Each subsequent test of the trend line can indicate a place to add to your stops.
2. Importance of Trend Lines Over Time
• The older a trend line, the more significant it becomes.
• For example, a three-year trend line is more important than a three-month trend line, which is more significant than a weekly trend line.
3. Breaks in Trend Lines
• When a trend line breaks, it does not necessarily indicate a reversal. Sometimes, it means the market is just correcting lower and will resume its overall uptrend at a slower pace.
• For example, in the dollar-yen pair, a break might indicate a temporary correction rather than a complete reversal.
4. Long-term Trend Lines
• Long-term trend lines are crucial in trading.
• For instance, on the monthly US dollar versus Japanese yen chart, a significant breach in 2022 proved to be extremely dynamic.
5. Trend Lines as a Disciplinary Tool
• The most important aspect of trend lines is their role as a visual aid and their ability to enforce discipline.
• If a trend line breaks and you are still holding your position, you must question why you are holding it despite the trend line break.
In summary, trend lines are invaluable tools in trading, providing clear visual aids, guiding entry and stop points, and helping maintain trading discipline.
Disclaimer:
The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
why you should avoid trading after a trending marketHello traders,
I saw This learning post today in the London session(24-7-24).
you can go for 5 minutes to understand this concept better, you can see a clear pattern on the chart, trending -> sideways/choppy -> trending -> sideways/choppy.
in the trending market, you see fast movement; in the choppy market, you see lots of SL hunting and wicks.
try to avoid such a market so you can make money in trending.
Note : not a finance advice
Best Parabolic SAR Indicator SettingsBest Parabolic SAR Indicator Settings
Parabolic SAR is a key component of technical trading, or technical analysis, which involves assessing financial markets and guiding trading decisions through analysing historical price and volume data, along with utilising diverse technical indicators and chart patterns. This article aims to explore the significance of the Parabolic SAR indicator, finding out which settings make it an effective tool for market analysis.
What Is the Parabolic SAR Indicator?
The Parabolic SAR (Stop and Reverse), or simply PSAR, is a technical analysis indicator designed by J. Welles Wilder to assist traders in identifying potential trend reversals in financial markets. Calculated based on an acceleration factor and an initial SAR value, the indicator trails the price movement, moving towards the trend.
When the Parabolic SAR crosses the price, it signifies a potential trend reversal, serving as a signal for traders to buy or sell depending on the crossover direction. Widely used to identify trend direction and adjust to market volatility, it is often employed in conjunction with other technical tools to make more informed trading decisions, although traders should be cautious and consider risk management strategies. Also, traders widely use the indicator as a trailing stop mechanism.
The daily chart of EURUSD on the TickTrader platform by FXOpen shows the parabolic SAR.
Understanding Parabolic SAR Settings
The PSAR has default settings that determine its initial behaviour:
- Step: The default step value is 0.02. This parameter controls the acceleration factor of the indicator as it moves in the direction of the trend.
- Maximum: The default maximum value is 0.2. This is the maximum acceleration factor that the indicator can reach, regardless of the strength of the trend.
Parameters and Their Effects
Adjusting the step and maximum parameters can significantly impact the Stop and Reverse’s sensitivity and signals:
- Step: Increasing the step value accelerates the SAR, making it more sensitive to price changes. On the other hand, a smaller step value results in a slower acceleration, making the SAR less sensitive.
- Maximum: A higher maximum value allows the SAR to accelerate more before reaching its maximum value. This can prevent the PSAR from flipping too quickly, meaning it follows the trend more smoothly. Conversely, a lower maximum value makes the SAR more responsive but increases the chances of premature reversals.
Traders can customise the PSAR based on their trading style:
- Aggressive Traders: A smaller step and lower maximum value can be used for quicker reversals, suitable for short-term and more aggressive trading.
- Conservative Traders: A larger step and higher maximum value might be preferred for a smoother indicator that reacts less to short-term price fluctuations, which is suitable for long-term and conservative trading.
Choosing the Right Settings
To avoid false signals, traders need to choose the correct Parabolic SAR settings. Here are some points to consider:
- Market Conditions: In trending markets, default settings or smaller step values may work well. In choppy or ranging markets, adjusting the parameters for sensitivity might be necessary.
- Timeframes: Shorter timeframes may require more sensitive Parabolic SAR settings for scalping, while trading in longer timeframes might be more effective with less sensitive inputs to filter out noise.
- Volatility: Significant market movements may need you to make a few adjustments to the indicator. Higher volatility may require adjustments to lower sensitivity to avoid false signals. Lower volatility might call for more sensitivity.
- Risk Tolerance: Traders with higher risk tolerance might prefer lower settings for potentially earlier signals, while conservative traders may opt for less sensitive settings for confirmation.
Examples of Setting Combinations
Here are a few settings that market participants generally use while trading, including Parabolic SAR settings for intraday strategy:
Trending Market: Step = 0.02, Maximum = 0.2
Choppy Market: Step = 0.01, Maximum = 0.1
Short-Term Trading: Step = 0.01, Maximum = 0.1
Long-Term Trading: Step = 0.02, Maximum = 0.2
The 2 parabolic SAR, or double parabolic SAR, strategy is an example that involves employing two distinct timeframes rather than tweaking indicator inputs. Initially, a lengthier timeframe is utilised to ascertain the trend direction by assessing the movement of the indicator. Subsequently, trades are executed on a shorter timeframe, focusing exclusively on the direction aligned with the longer-term trend. This approach aims to synchronise shorter-term trading activities with the broader trend determined by the extended timeframe, providing a comprehensive strategy that integrates short- and long-term market perspectives.
Final Thoughts
A thorough understanding of technical tools is indispensable for making informed decisions in forex and CFD trading. While indicators like the Parabolic SAR, with their ability to identify potential trend reversals, provide valuable insights into market dynamics, it is crucial to integrate them into a broader technical analysis toolkit for signal confirmation.
Traders should remain vigilant about market shifts and consistently refine their skills to thrive in the dynamic trading landscape. Remember that there are no best parabolic SAR settings; the best parameters will depend on your trading approach. If you want to test various Parabolic SAR settings on over 600 markets, open an FXOpen account to trade with spreads from 0.0 pips and commissions from $1.50.
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.
Divergence: RSI vs. PriceHey everyone!
In my years of trading, I've really come to love Reversal Strategies and my favorite is in the form of a DIVERGENCE!
Today, I took some time to put together an Educational Video on:
1) What a Divergence Is?
2) How to Spot them!
&
3) How to Trade them!
I hope you find this helpful!
**Tips
- Divergence is never good enough to trade alone, YOU NEED CONFIRMATION!
- The longer the Divergence takes, the more reliable it is
- Change in Momentum is KEY!
Why Using Charts Can Help You with Your TradingImagine you've decided to buy a particular stock. Your position starts to make money, and you're thrilled. But what do you do now? Should you hold onto your position or cash it in? Has it made enough profit, or will it go further? It's painful to lose money, but it's also frustrating to take profits only to see your original investment quadruple in price after you've cashed out too early.
Is there something that can help you make these decisions? Yes, there is! It's called technical analysis. But what if you're a complete novice to technical analysis? It may look complicated and difficult, but don't worry.
The beauty of technical analysis is that it can help with your decision-making, and once you learn the rules, it's easy to apply.
I have attached a short video explaining the steps I go through when I first look at a chart. Do you know how to determine a trend? Do you know how to apply trend lines? Do you know what a momentum indicator is? Do you know why and how to use moving averages? Do you understand continuation and reversal signals?
Options Blueprint Series: Tailoring Yen Futures Delta ExposureIntroduction
In options trading, a Bull Call Spread is a popular strategy used to capitalize on price increases in the underlying asset. This strategy involves buying a call option at a lower strike price while simultaneously selling another call option at a higher strike price. The net effect is a debit trade, meaning the trader pays for the spread, but the risk is limited to this initial cost, and the profit potential is capped by the sold call option's strike price.
For traders interested in Japanese Yen Futures, the Bull Call Spread offers a way to potentially profit from expected upward movements while managing risk effectively. Delta exposure, which measures the sensitivity of an option's price to changes in the price of the underlying asset, is a crucial aspect of this strategy. By carefully selecting the strike prices of the options involved, traders can tailor their delta exposure to match their market outlook and risk tolerance.
In this article, we will delve into the mechanics of Bull Call Spreads, explore how varying the sold unit's strike price impacts delta exposure, and present a practical case study using Japanese Yen Futures to illustrate these concepts.
Mechanics of Bull Call Spreads
A Bull Call Spread is typically constructed by purchasing an at-the-money (ATM) call option and selling an out-of-the-money (OTM) call option. This strategy is designed to take advantage of a moderate rise in the price of the underlying asset, in this case, Japanese Yen Futures.
Components of a Bull Call Spread:
Buying the ATM Call Option: This option is purchased at a strike price close to the current price of the underlying asset. The ATM call option has a higher delta, meaning its price is more sensitive to changes in the price of the underlying asset.
Selling the OTM Call Option: This option is sold at a higher strike price. The OTM call option has a lower delta, reducing the overall cost of the spread but also capping the profit potential.
Delta in Options Trading:
Delta represents the rate of change in an option's price concerning a one-unit change in the price of the underlying asset. For call options, delta ranges from 0 to 1:
ATM Call Option: Typically has a delta around 0.5, meaning if the underlying asset's price increases by one unit, the call option's price is expected to increase by 0.5 units.
OTM Call Option: Has a lower delta, typically less than 0.5, indicating less sensitivity to changes in the price of the underlying asset.
By combining these two options, traders can create a position with a desired delta exposure, managing both risk and potential reward. The selection of strike prices is crucial as it determines the overall delta exposure of the Bull Call Spread.
Impact of Strike Price on Delta Exposure
Delta exposure in a Bull Call Spread is a crucial factor in determining the overall sensitivity of the position to changes in the price of the underlying asset. By adjusting the strike price of the sold call option, traders can fine-tune their delta exposure to align with their market expectations and risk management preferences.
How Delta Exposure Works:
Higher Strike Price for the Sold Call Option: When the strike price of the sold call option is higher, the overall delta exposure of the Bull Call Spread increases. This is because the sold option has a lower delta, contributing less to offsetting the delta of the purchased call option.
Lower Strike Price for the Sold Call Option: Conversely, a lower strike price for the sold call option decreases the overall delta exposure. The sold option's higher delta offsets more of the delta from the purchased option, resulting in a lower net delta for the spread.
Examples of Delta Exposure:
Example 1: Buying a call option with a strike price of 0.0064 and selling a call option with a strike price of 0.0065.
Purchased call option delta: 0.51
Sold call option delta: 0.34
Net delta: 0.51 - 0.34 = 0.17
Example 2: Buying a call option with a strike price of 0.0064 and selling a call option with a strike price of 0.0066.
Purchased call option delta: 0.51
Sold call option delta: 0.21
Net delta: 0.51 - 0.21 = 0.29
As illustrated, the higher the strike price of the sold call option, the greater the net delta exposure. This increased delta indicates that the position is more sensitive to changes in the price of Japanese Yen Futures, allowing traders to capitalize on more significant price movements. Conversely, a lower strike price reduces delta exposure, making the position less sensitive to price changes but also limiting potential gains.
Case Study: Japanese Yen Futures
Market Scenario: Recently, a downtrend in Japanese Yen Futures appears to have potentially reversed, presenting an opportunity to capitalize on a new potential upward movement. To take advantage of this potential uptrend, we will construct a Bull Call Spread with specific entry, stop loss, and target prices based on Yen Futures prices (underlying).
Underlying Trade Setup
Entry Price: 0.0064
Stop Loss Price: 0.00633
Target Price: 0.00674
Point Values and Margin Requirements
Point Values: For Japanese Yen Futures, each tick (0.0000005) equals $6.25. Therefore, a movement from 0.0064 to 0.0065 represents a 200-tick change, which equals $1,250 per contract.
Margin Requirements: Margin requirements for Japanese Yen Futures vary but are currently set at $2,800 per contract on the CME Group website. This amount represents the minimum amount of funds required to maintain the futures position.
Valid Bull Call Spread Setup
Given the current market scenario, the following setup is selected:
1. Purchased Call Option
Strike Price: 0.0064 (ATM)
Delta: 0.51
2. Sold Call Option Variations
Strike Price 0.0068:
Delta: 0.08
3. Net Delta: 0.42
Reward-to-Risk Ratio Calculation
Due to the limited risk profile of Debit Spreads, where the maximum potential loss is confined to the initial debit paid, stop loss orders will not be factored into this reward-to-risk ratio calculation.
Debit Paid: 0.000085 (call purchased) - 0.000015 (call sold) = 0.00007
Potential Gain: Sold Strike - Strike Bought - Debit Paid = 0.0068 - 0.0064 - 0.00007 = 0.00033
Potential Loss: Debit Paid = 0.00007
Reward-to-Risk Ratio: 0.00033 / 0.00007 ≈ 4.71
This ratio indicates a favorable risk-reward setup, as the potential reward is significantly higher than the risk.
Conclusion
In this article, we have explored the intricacies of using Bull Call Spreads to tailor delta exposure in Japanese Yen Futures trading. By strategically selecting the strike prices for the options involved, traders can effectively manage their delta exposure, aligning their positions with their market outlook and risk tolerance.
Key Points Recapped:
Bull Call Spreads: This strategy involves buying an at-the-money (ATM) call option and selling an out-of-the-money (OTM) call option to capitalize on moderate upward price movements.
Delta Exposure: The delta of the options involved plays a crucial role in determining the overall sensitivity of the spread to price changes in the underlying asset.
Strike Price Variations: Adjusting the strike price of the sold call option can significantly impact the net delta exposure, offering traders the flexibility to fine-tune their positions.
Case Study: A practical example using Japanese Yen Futures illustrated how varying the sold unit's strike price changes the delta exposure, providing concrete insights into the strategy.
Risk Management: We always emphasize the importance of stop loss orders, hedging techniques, avoiding undefined risk exposure, and precise entries and exits ensures that trades are structured with proper risk controls.
By understanding and applying these principles, traders can enhance their ability to navigate the complexities of options trading, making informed decisions that align with their trading objectives.
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.
Top 7 Books to Learn Advanced Technical Analysis for StocksTop 7 Books to Learn Advanced Technical Analysis for Stocks
Mastery of advanced technical analysis is one of the factors that separates casual traders from experienced ones. Financial markets are not simple, so it’s important to understand the subtleties of price movements and chart patterns.
This FXOpen article is best suited for experienced traders who already have basic trading knowledge but are looking to delve into advanced technical analysis. We’ve compiled a list of the 7 best books to learn stock trading that explain its complexities and offer invaluable insights and strategies to potentially enhance your trading.
What Are the Best Books to Learn Stock Trading?
Typically, sketchy knowledge from blogs or YouTube videos won’t be enough to allow someone to understand and improve technical analysis. Then, people turn to reading, trying to find the best books to learn the stock market that are available.
The best stock market books are characterised by their practicality, expertise, and ability to provide valuable insights for investors and traders. They often cover a range of topics and are authored by experienced professionals in the field. Below, you’ll see a list of 7 books and their descriptions.
1. The Art and Science of Technical Analysis: Market Structure, Price Action, and Trading Strategies
Author: Adam H. Grimes
This book is a pioneering work that connects an academic view of markets, technical analysis, and effective trading. It explores why randomness dominates markets most of the time but not always. The author focuses on how technical analysis can be used to identify statistically validated patterns in certain market conditions.
In reviews of the work, readers state that the book demolishes TA misconceptions and provides insight into the psychology of market players. The book is supported by extensive research and helps readers recognise technical patterns.
2. The Definitive Guide to Point and Figure
Author: Jeremy Du Plessis
One of the top books on stock trading is the work of Jeremy Du Plessis. This book is dedicated to technical analysis and Point and Figure charting. It includes a detailed explanation of the history and development of the technique from its invention to the present day and covers the construction of graphic patterns, the reasons for their creation, and ways of interpreting them. According to reviewers, the book provides knowledge that gives you an edge. After reading it, you will no longer look at price targets and risk-reward ratios like you used to.
3. Elliott Wave Principle: Key to Market Behavior
Authors: Robert R. Prechter Jr., A.J. Frost, Charles J. Collins
This book is a worthy reference for technical traders. It gives a good understanding of the Elliott wave principle, a form of technical analysis that traders use to analyse financial market cycles and trends. It’s not for amateurs, but experienced traders love it.
The book is rather specialised as it contains material on one narrow topic, so it’s not a complete guidebook to mastering trading. Nevertheless, it’s very informative and concentrated. Reviewers note that the book teaches readers how to apply Elliott wave theory not only on stocks but also on commodities and forex markets.
4. Encyclopedia of Chart Patterns
Author: Thomas N. Bulkowski
This book is dedicated to trading on news and significant events, including quarterly earnings announcements, retail sales, and stock upgrades and downgrades. It offers empirical data illustrating the effectiveness and ineffectiveness of the patterns.
The Bulkowski Encyclopedia has been a bestseller for a long time, and now the author has released an updated, improved version and added many new patterns and strategies, as well as updated market statistics. Everything you will read in the theoretical part is backed up with figures and calculations and validated.
5. Technical Analysis Using Multiple Timeframes
Author: Brian Shannon
This is one of the books for the stock market dedicated to many aspects of trading at once. You will learn how you may enter established trends with low risk, recognise and take advantage of cyclical capital movements in all markets, evaluate the potential of a trade using technical analysis, and much more.
Reviewers mention that it provides powerful insights into how to use different timeframes to determine trends, confirm signals, and manage risk. The book is not complicated, but it is suitable for experienced traders, as it collects and systematises a huge block of information about the market.
6. Beyond Candlesticks: New Japanese Charting Techniques Revealed
Author: Steve Nison
This book provides a detailed analysis of Japanese candlestick charting techniques and how to use them in technical analysis. It discusses how to use candlestick patterns to identify trends, confirm signals, and manage risk.
Readers value its step-by-step instructions, detailed charts and graphs, and clear guidance on tracking results. Moreover, the book helps readers understand the psychology of traders in the stock market and the logic behind their decisions.
7. Effective Trading In Financial Markets Using Technical Analysis
Authors: Ashish Kyal, Smita Roy Trivedi
Along with other books in this list, the work of Ashish Kyal and Smita Roy Trivedi explains how to use technical analysis in financial markets. It covers technical analysis tools, backtesting, and algorithmic trading in detail. It teaches readers how to use technical indicators and chart patterns, confirm signals, and manage risk.
Readers say that it’s written in simple language, and there are multiple examples, case studies, comparisons, and figures for different assets and markets. Unlike many classic trading books, this work focuses a lot on the Indian market. It will be useful to those who are interested in that region.
Final Thoughts
It’s not an easy task to list the best books for trading in the stock market. If everything is clear in terms of materials for those who are just entering the world of trading, advanced books are harder to choose.
Experts say that if you already have background knowledge, you can select books that either combine and systematise information about trading or deal with one specific area in detail. The more you read, the more experience and skills you will gain. And if you want to put your knowledge into practice, you can open an FXOpen account. Log in to the TickTrader trading platform to see real-time asset charts and try out your strategies.
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.
Power of 3 - ICT Concept ExplainedIn this video I cover the topic of Power of 3 or otherwise known was PO3. This concept is also the same as AMD, which is Accumulation, Manipulation, Distribution.
PO3 is the basis in which Smart Money approaches the market. As we have covered before, liquidity is the lifeblood of the market. To maximize efficiency for Smart Money, liquidity is engineered for the purpose of trapping uninformed money on the wrong side of the market and assuming the counter-party to their trades.
At the open of a candle, Smart Money is accumulating positions, usually in some sort of range. The next stage is the manipulation, where price makes a fast run towards liquidity, usually in the opposite direction of where price is intended to go, and then reversing rapidly.
The final stage is distribution, where Smart Money is offloading their positions above or below the marketplace depending on whether it is a buy or sell program.
The whole purpose of understanding this concept is to be able to anticipate the future direction of price, and to ideally buy below or above the open of a candle, again depending on what type of candle it is. I show how I anticipate the PO3 in this video.
- R2F
What Is Yield Farming In Crypto? Yield farming can be likened to traditional bank deposits, where an investor puts in money and earns returns over time. However, in the world of cryptocurrencies, the concept takes on a more complex form. Yield farming is a broad term that encompasses various activities, including liquidity mining and staking. While these methods share similarities, they differ in their objectives, such as whether they involve issuing new tokens or not.
📍 HOW YIELD FARMING WORKS
Yield farming is a way for cryptocurrency holders to generate income by lending or providing liquidity to decentralized financial (DeFi) protocols. By contributing their assets, users can earn rewards in the form of additional tokens or interest income. This opportunity allows individuals to participate in the DeFi ecosystem and benefit from the growing demand for decentralized financial services.
📍 THE PROCESS:
1. Providing liquidity: Users deposit their cryptocurrency assets into liquidity pools on the DeFi platform, which facilitates various financial transactions such as token exchanges, lending, and borrowing.
2. Earning rewards: In return for providing liquidity, users receive rewards, including:
Commissions from transactions passing through the liquidity pool
Native tokens of the platform (e.g. management tokens)
Additional tokens through various incentive programs
📍 EXAMPLES OF DEFI PLATFORMS:
Uniswap: A decentralized exchange (DEX) where users deposit tokens into liquidity pools, earning commissions on each transaction made through these pools.
Compound: A lending platform where users can lend their cryptocurrencies and earn interest on their deposits. Borrowers pay interest on the use of these assets, providing a revenue stream for lenders.
Aave: A platform that allows users to earn interest on deposited assets and use them as collateral for loans, providing a dual income stream.
SushiSwap: A DEX similar to Uniswap, but with an additional twist - liquidity providers are rewarded with SUSHI tokens, providing an additional incentive to participate in the platform.
📍 MAKING PROFIT IN DEFI:
1. Analyze and Choose a Platform: Select a reputable platform with a stable income stream. Carefully review the terms and conditions of liquidity provision to ensure you understand the risks involved.
2. Diversify Your Assets: Spread your investments across multiple platforms and pools to minimize risks. This will help you ride out market fluctuations and potential platform-specific issues.
3. Optimize Your Strategy: Continuously compare different pools and platforms to find the best terms for your investments. Some platforms offer combination strategies that can help maximize returns.
4. Monitor and Adapt : Regularly review your investments and adjust your strategy as market conditions change. This will help you stay ahead of the game and mitigate potential losses.
📍 RISKS OF YIELD FARMING:
• Technical Risks: Smart contract vulnerabilities can lead to irreversible losses, compromising the security of your funds.
• Market Risks: Cryptocurrency price fluctuations can impact your income. In many cases, you're unable to withdraw your funds immediately, leaving you vulnerable to potential losses if token values decline.
• Liquidity Risks: Low liquidity in pools can result in significant spreads and reduced returns, limiting your earning potential.
• Platform Risks: The risk of platform hacking or closure can result in the loss of your invested funds, leaving you without access to your assets.
📍 CONCLUSION
While yield farming can be an attractive option for earning additional income, one of the most significant risks is the potential for a price drop and the inability to quickly withdraw your locked coins. However, for those who have a long-term perspective and plan to hold their cryptocurrency for at least a year or more, temporary drawdowns are unlikely to significantly impact their overall returns. On the other hand, yield farming offers the possibility of generating significant additional income, potentially exceeding 10-15% per year. By carefully weighing the risks and rewards, investors can make informed decisions about whether yield farming is a suitable strategy for their investment goals.
Optimizing Technical Analysis with Logarithmic Scales▮ Introduction
In the realm of technical analysis, making sense of market behavior is crucial for traders and investors. One foundational aspect is selecting the right scale to view price charts. This educational piece delves into the significance of logarithmic scaling and how it can enhance your technical analysis.
▮ Understanding Scales
- Linear Scale
This is a common graphing approach where each unit change on the vertical axis represents the same absolute value.
- Logarithmic Scale
Unlike the linear scale, the logarithmic scale adjusts intervals to represent percentage changes.
Here, each step up/down the axis signifies a constant percentage increase/decrease.
▮ Why Use the Logarithmic Scale?
The logarithmic scale offers a more insightful way to analyze price movements, especially when the price range varies significantly.
By focusing on percentage changes rather than absolute values, long-term trends and patterns become more apparent, making it easier to make informed trading decisions.
▮ Comparative Examples
Consider the Bitcoin price movement:
- On a linear scale, a 343% increase from $3,124 to $13,870 looks smaller compared to the same percentage increase from $13,870 to $61,769. This disparity occurs because the linear scale emphasizes absolute changes.
- On the logarithmic scale, both 343% increases appear proportional, giving a clearer representation.
Additionally, in a falling price scenario, a linear graph might show a smaller box for an 84% drop compared to a 77% drop, simply because of absolute values' significance. The logarithmic scale corrects this, showing the true extent of percentage declines.
▮ Advantages and Disadvantages
Advantages:
- Fairer comparison of price movements.
- Consistent representation of percentage changes.
- More reliable support and resistance lines.
Disadvantages:
- Potential misalignment of alerts (www.tradingview.com).
- Drawing inclined lines might create distortions when switching scales:
A possible solution is the use the "Object Tree" feature on TradingView to manage graphical elements distinctly for each scale.
▮ How to Apply Logarithmic Scale on TradingView
Enabling the logarithmic scale on TradingView is straightforward:
- Click on the letter "L" in the lower right corner of the graph (the column where prices are shown);
- Another option is use of the keyboard shortcut, pressing ALT + L .
▮ Conclusion
The logarithmic scale is an invaluable tool for technical analysis, providing a more accurate representation of percentage changes and simplifying long-term pattern recognition.
While it has its limitations, thoughtful application alongside other analytical tools can greatly enhance your market insights.
PART 4 67years back in timeWe have previously established the close relationship between the 1899-1929 period and the 1997-2028 market cycle. Various arithmetic sequences and planetary cycles that influenced the price movement during the 1899-1929 cycle are true to happen in the current cycle. As we saw in this video, the price movements already recorded obeyed the same laws as of the 1899-1929 period and would continue to do same..
Check back for PART 5 as we look at the small timeframe and possible ways we can trade the market.
4 Stages of Price Delivery (ICT Concepts)In this video I go through the 4 stages of price delivery as it pertains to ICT Concepts.
Generally, the market is going through either of the following:
Consolidation
Expansion
Retracement
Reversal
Price starts from a consolidation, where Smart Money accumulates their position, and then an expansion, where price is trending in a direction for the purpose of seeking liquidity and/or manipulating sentiment. From an expansionary phase, price will either retrace to re-accumulate orders and expand again, or have a complete reversal.
Now, it is important to note that price is fractal, meaning the signatures you see on a lower timeframe perspective could also be seen on a higher timeframe perspective. In a singular candlestick, there can be multiple phases of price delivery happening.
Once one can fit all these pieces together in regard to how market makers book price, one can have a clear insight into where price is likely going and where it likely won't go again, all with a high degree of accuracy.
Thanks for watching and reading!
- R2F
SPY/QQQ Plan Your Trade 7-20 - PineScript Project FeedbackI've been playing with this little project for about 7 hours now (off and on). Pinescript is fun once you get the hang of the syntax and how it expects objects/booleans for most of the conditionals.
Overall, I think this project is moving along nicely, but I wanted some feedback on the visuals.
I'm trying to create something that will help daytraders see and understand broad trends arising from shorter-term price swings.
I get a lot of questions related to how/when to identify key market price reversals - so I'm trying to develop a way to help traders understand and see where opportunities exist for better trades.
Watch this video and let me know if you see anything I can do to improve the visuals or color controls.
I want this to SHINE so people fall in love with it.
Thank you.
#trading #research #investing #tradingalgos #tradingsignals #cycles #fibonacci #elliotwave #modelingsystems #stocks #bitcoin #btcusd #cryptos #spy #es #nq #gold
Learn How to Apply Top-Down Multiple Time Frame Analysis
In this article, we will discuss how to apply Multiple Time Frame Analysis in trading .
I will teach you how to apply different time frames and will share with you some useful tips and example of a real trade that I take with Top-Down Analysis strategy.
Firstly, let's briefly define the classification of time frames that we will discuss:
There are 3 main categories of time frames:
1️⃣ Higher time frames
2️⃣ Trading time frames
3️⃣ Lower time frames
Higher Time Frames Analysis
1️⃣ Higher time frames are used for identification of the market trend and global picture. Weekly and daily time frames belong to this category.
The analysis of these time frames is the most important .
On these time frames, we make predictions and forecast the future direction of the market with trend analysis and we identify the levels , the areas from where we will trade our predictions with structure analysis .
Above is the example of a daily time frame analysis on NZDCAD.
We see that the market is trading in a strong bullish trend.
I underlined important support and resistance levels.
The supports will provide the safest zones to buy the market from anticipating a bullish trend continuation.
Trading Time Frames
2️⃣ Trading time frames are the time frames where the positions are opened . The analysis of these time frames initiates only after the market reaches the underlined trading levels, the areas on higher time frames.
My trading time frames are 4h/1h. There I am looking for a confirmation of the strength of the structures that I spotted on higher time frames. There are multiple ways to confirm that. My confirmations are the reversal price action patterns.
Once the confirmation is spotted, the position is opened.
Analyzing the reaction of the price to Support 1 on 1H time frame on NZDCAD pair, I spotted a strong bullish confirmation - a triple bottom formation.
A long position is opened on a retest of a broken neckline.
Lower Time Frames
3️⃣ Lower time frames are 30/15 minutes charts. Even though these time frames are NOT applied for trading, occasionally they provide some extra clues . Also, these time frames can be applied by riskier traders for opening trading positions before the confirmation is spotted on trading time frames.
Before the price broke a neckline of a triple bottom formation on an hourly time frame on NZDCAD, it broke a resistance line of a symmetrical triangle formation on 15 minutes time frame. It was an earlier and riskier confirmation to buy.
Learn to apply these 3 categories of time frames in a combination. Start your analysis with the highest time frame and steadily go lower, identifying more and more clues.
You will be impressed how efficient that strategy is.
PART 2: 67years back in timeContinuation of the cyclic Movement of the DJI market.
Make sure you watch the previous post and check back for PART 3
