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+4R Tricky NZDUSD BreakdownAnother trade breakdown ☝️Do not act based on my analysis, do your own research!! The main purpose of my resources is free, actionable education for anyone who wants to learn trading and improve mental and technical trading skills. Learn from hundreds of videos and the real story of a particular trader, with all the mistakes and pain on the way to consistency. I'm always glad to discuss and answer questions. 🙌 ☝️ALL ideas and videos here are for sharing my experience purposes only, not financial advice, NOT A SIGNAL. YOUR TRADES ARE YOUR COMPLETE RESPONSIBILITY. Everything here should be treated as a simulated, educational environment. Important disclaimer - this idea is just a possibility and my extremely subjective opinion. Do not act based on my analysis, do your own research!!
Education
by Yelli_trades
3
Options Blueprint Series: Swap Strategies for High VolatilityIntroduction CME Group Gold Futures have always been a cornerstone in the commodities market, offering investors and traders a way to hedge against economic uncertainties and inflation. With the current market environment exhibiting heightened volatility, traders are looking for strategies to capitalize on these fluctuations. One such strategy is the Straddle Swap, which is particularly effective in high volatility scenarios. By utilizing the Straddle Swap strategy on Gold Futures, traders can potentially benefit from price swings driven by news events, economic data releases, and other market-moving occurrences. Strategy Explanation The Straddle Swap strategy is designed to capitalize on high volatility by leveraging options with different expirations. Here’s a detailed breakdown of how this strategy works: Components of the Straddle Swap: 1. Buy one call option (longer expiration) This long call option benefits from upward price movements in Gold Futures. 2. Sell one call option (shorter expiration) This short call option generates premium income, which offsets the cost of the long call option. As it has a shorter expiration, it benefits from faster time decay. 3. Buy one put option (longer expiration) This long put option benefits from downward price movements in Gold Futures. 4. Sell one put option (shorter expiration) This short put option generates premium income, which offsets the cost of the long put option. It also benefits from faster time decay due to its shorter expiration. Rationale for Different Expirations: Longer Expirations: The options with more days to expiration provide a longer timeframe to capture significant price movements, whether upward or downward. Shorter Expirations: The options with less days to expiration decay more quickly, providing premium income that reduces the overall cost of the strategy. This helps mitigate the effects of time decay on the longer-dated options. Market Analysis Using TradingView Charts: To effectively implement the Straddle Swap strategy, it’s crucial to analyze the current market conditions of Gold Futures using TradingView charts. This analysis will help identify optimal entry and exit points based on volatility and price trends. The current price action of Gold Futures along with key volatility indicators. Recent data shows that the 1-month, 2-month, and 3-month Historical Volatilities have all been on the rise, confirming a high volatility scenario. Application to Gold Futures Let’s apply the Straddle Swap strategy to Gold Futures given the current market conditions. Identifying Optimal Entry Points: Call Options: Buy one call option with a 100-day expiration (Sep-25 2024) at a strike price of 2370 @ 64.5. Sell one call option with a 71-day expiration (Aug-27 2024) at the same strike price of 2370 @ 53.4. Put Options: Buy one put option with a 100-day expiration (Sep-25 2024) at a strike price of 2350 @ 63.4. Sell one put option with a 71-day expiration (Aug-27 2024) at the same strike price of $2350 @ 52.5. Target Prices: Based on the relevant UFO support and resistance levels, set target prices for potential profit scenarios: Upper side, target price: 2455. For put options, target price: 2260. Potential Profit and Loss Scenarios: Scenario 1: Significant Upward Movement If Gold Futures rise sharply above 2370 within 100 days, the long call option will generate a potentially substantial profit. The short call option will expire in 71 days, limiting potential losses. Scenario 2: Significant Downward Movement If Gold Futures fall sharply below 2350 within 100 days, the long put option will generate a potentially substantial profit. The short put option will expire in 71 days, limiting potential losses. Scenario 3: Minimal Movement If Gold Futures remain relatively stable, the premiums collected from the short options (71-day expiration) will offset some of the cost of the long options (100-day expiration), minimizing overall losses. Further options could be sold against the long 2350 call and long 2350 put once the shorter expiration options have expired. Specific Action Plan: 1. Initiate the Straddle Swap Strategy: Enter the positions as outlined above following your trading plan, ensuring to buy and sell the options at the desired strike prices and expirations. 2. Monitor Market Conditions: Continuously monitor Gold Futures prices and volatility indicators. Adjust or close the strategy if necessary based on significant market changes. 3. Manage Positions: Use stop-loss orders to limit potential losses. If the market moves favorably, consider exiting the positions at the target prices to lock in profits. 4. Reevaluate Periodically: Periodically reevaluate the positions as the options approach their expiration dates. Make any necessary adjustments to the strategy based on updated market conditions and volatility. By following this type of trade plan, traders can effectively implement the Straddle Swap strategy, taking advantage of high volatility in Gold Futures while managing risk through careful monitoring and the use of stop-loss orders. Risk Management Effective risk management is crucial for success in options trading, particularly when employing strategies like the Straddle Swap. Here, we will discuss the importance of risk management, key techniques, and best practices to ensure that traders can mitigate potential losses and protect their capital. Importance of Risk Management: Minimizing Losses: Trading inherently involves risk. Effective risk management helps minimize potential losses, ensuring that a single adverse move does not significantly impact the trader’s overall portfolio. Preserving Capital: By managing risk, traders can preserve their capital, allowing them to stay in the market longer and capitalize on future opportunities. Enhancing Profitability: Proper risk management allows traders to optimize their strategies, potentially increasing profitability by avoiding unnecessary losses. Key Risk Management Techniques: 1. Stop-Loss Orders: Implementing stop-loss orders helps limit potential losses by automatically closing a position if the market moves against it. For the Straddle Swap strategy, set stop-loss orders for the long call and put options to exit positions if prices reach predetermined levels where losses would exceed the desired trade risk set by the trader. 2. Hedging: Use hedging techniques to protect positions from adverse market movements. This can involve purchasing protective options or futures contracts. Hedging provides an additional layer of security, ensuring that losses in one position are offset by gains in another. 3. Avoiding Undefined Risk Exposure: Ensure that all positions have defined risk parameters. Avoid strategies that can result in unlimited losses. The Straddle Swap strategy inherently has limited risk due to the offsetting nature of the long and short options. 4. Precision in Entries and Exits: Timing is crucial in options trading. Ensure precise entry and exit points to maximize potential gains and minimize losses. Use technical analysis key price levels such as UFO support and resistance prices, and volatility indicators to identify optimal entry and exit points. 5. Regular Monitoring and Adjustment: Continuously monitor market conditions and the performance of open positions. Be prepared to adjust the strategy based on changing market dynamics, such as shifts in volatility or unexpected news events. Additional Risk Management Practices: Diversification: Spread risk across multiple positions and asset classes to reduce the impact of any single trade. Other liquid options markets could be WTI Crude Oil Futures; Agricultural products such as Wheat Futures, Corn Futures, or Soybean Futures; Index Futures such as the E-mini S&P 500 Futures; and even Bond and Treasury Futures such as the 10-Year Note or the 30-Year Bond Futures. Position Sizing: Carefully determine the size of each position based on the trader’s overall portfolio and risk tolerance. Education and Research: Stay informed about market conditions, economic indicators, and trading strategies to make well-informed decisions. By incorporating these risk management techniques, traders can effectively navigate the complexities of options trading and protect their investments. Ensuring more precision with entries and exits, using stop-loss orders, and implementing hedging strategies are essential practices that contribute to long-term trading success. 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.
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COMEX:GCV2024Education
by traddictiv
10
Compound Trading Strategy: Definition and UseCompound Trading Strategy: Definition and Use Compounding is a powerful strategy that includes reinvesting returns from trades to achieve exponential growth over time. According to theory, by consistently reinvesting returns, traders can potentially increase their capital base. This article explores the mechanics, benefits, risks, and practical steps to effectively implement a compound trading strategy, providing valuable insights for traders aiming for long-term growth in the financial markets. Understanding Compound Trading Compound trading is a strategy that involves reinvesting returns from trades to increase the volume of future trades, aiming for exponential growth over time. Unlike simple trading, where traders might withdraw returns after each effective trade, compounding leverages these returns to progressively build a larger trading capital. The concept is rooted in the principle of compound interest, where the returns generated are reinvested to generate additional gains. In trading, this means each effective trade adds to the capital base, which then potentially earns more in subsequent trades. This snowball effect can potentially amplify the growth of the account balance. To illustrate, consider a trader starting with $1,000 and achieving a 5% return each month. Instead of withdrawing the $50 profit, the trader reinvests it, increasing the capital to $1,050. The next month, a 5% return on $1,050 yields $52.50, and so on. Over time, the capital grows at an accelerating rate, thanks to the reinvestment of returns. However, the power of compounding also comes with increased risk. As the capital grows, so does the amount at stake in each trade. This requires careful risk management and discipline to avoid significant losses that can also compound. Traders need a solid strategy, consistency, and a clear understanding of market conditions to take full advantage of compound trading. To access real-time charts and develop your own strategy with more than 1,200+ trading tools, head over to FXOpen’s free TickTrader platform. Compound Trading: Calculation To understand the mechanics, let’s delve into the mathematical foundation. The core formula for calculating compound returns is: E = P * (1 + r)^n Where: - E is the ending balance, - P is the initial principal (starting capital), - r is the monthly return rate, - n is the number of intervals compounded over (months) Note that percentages are expressed as decimals. For instance, if a trader starts with $1,000 and achieves a monthly gain of 5%, the formula calculates how the capital grows over time. After one month, the capital would be: E = 1000 * (1 + 0.05)^1 = 1050 After two months: E = 1000 * (1 + 0.05)^2 = 1102.50 This compounding effect accelerates as time progresses. By the end of 12 months, the capital grows to approximately $1,795.86—a 79.586% return compared to a 60% return if returns aren’t reinvested (5% of $1,000 each month). After 24 months, the compounded capital is now worth $3,225.10 vs $2,200. It’s also possible to estimate the power of compounding if a trader knows their win rate and average risk-to-reward ratio. The formula for calculating the long-term effects of compounding with this information is: E = P * ((1 + %win) * (1 − %loss))^(N * WR) Where: - E is the ending balance, - P is the initial capital - %win is the percentage of profit gained per winning trade - %loss is the percentage of loss per losing trade - N is the total number of trades - WR is the total win rate For instance, consider a scenario where the same trader has a win rate of 60%, with a risk-to-reward ratio of 1:2, meaning the trader risks 3% per trade to gain 6%. Using the formula above, we can calculate the total return after 100 trades: E = 1000 * ((1 + 0.06) * (1 - 0.03))^(100 * 0.6) The effect can be substantial, with the trader’s capital potentially growing to $5,304.64 after 100 trades. After 200 trades, the capital may grow to $28,139.21. Benefits and Risks of a Compound Trading Strategy Compounding offers a unique approach to growing trading capital by reinvesting returns. While it holds significant potential, it's crucial to understand both its benefits and risks to make informed decisions. Benefits of Compound Trading - Exponential Growth: Reinvesting returns allows traders to take advantage of compound interest, leading to accelerated capital growth over time. - Enhanced Returns: As the trading capital increases, the absolute gain on each trade becomes larger. - Disciplined Trading: Compounding encourages a long-term perspective and disciplined trading practices, as traders focus on consistent returns rather than short-term gains. - Increased Capital Base: By reinvesting gains, traders continuously increase their capital base, providing a cushion to absorb market volatility and potential losses. Risks of Compound Trading - Increased Risk Exposure: As the capital grows, the amount at risk in each trade also increases, which can lead to significant losses if not managed properly. - Market Volatility: Financial markets are inherently volatile, and sudden market changes can adversely affect compounded investments, leading to substantial capital erosion. - Emotional Pressure: Larger positions can increase emotional pressure on traders, potentially leading to impulsive decisions that deviate from the trading strategy. - Overconfidence: Continuous success can breed overconfidence, causing traders to take undue risks or abandon their disciplined approach, which can result in significant losses. Practical Steps to Start Compound Trading Using compounding in trading requires a blend of strategic planning, discipline, and consistent tracking. Here are the practical steps traders can follow for an effective compounding journey: 1. Setting Clear Goals and Expectations Before getting started, it's crucial to establish clear financial goals and realistic expectations. Traders typically determine what they aim to achieve—whether it's a certain percentage of growth per month or a specific financial milestone. Understanding that compounding is a long-term strategy helps set the right mindset and manage expectations. 2. Creating a Detailed Trading Plan A well-defined trading plan is essential. This plan should outline the trading strategies to be employed, including entry and exit points, risk-to-reward ratios, and criteria for reinvesting returns. Consistency in following the plan is key to leveraging the advantages of compounding. 3. Tracking Profits and Losses Maintaining a detailed record of all trades is vital. Using a spreadsheet to log profits and losses allows traders to monitor their progress and analyse the effects of compounding on their capital. It can be useful to review this weekly and monthly to check how aligned a trader is with their goals and potentially reassess their approach. 4. Establishing Withdrawal Strategies For those trading full-time, it's important to establish how much can feasibly be withdrawn while still allowing the capital to grow. This involves balancing personal financial needs with the goal of compounding returns. Deciding on a fixed percentage or amount to withdraw periodically can help maintain this balance. 5. Maintaining Discipline and Emotional Control Holding on to large amounts of money and coping with potential losses requires significant discipline. Traders must remain calm and stick to their plan, especially during volatile market periods. Emotional decision-making can derail the strategy, so it's crucial to maintain a level-headed approach. 6. Treating Trading Like a Business Effective compound trading requires treating it as a business. This means reinvesting returns back into the trading account to fuel growth, just as a business would reinvest earnings to expand. Viewing trading through this lens encourages a professional and strategic approach. 7. Protecting Compounded Capital During trading slumps or periods of high market volatility, it's essential to protect the compounded capital. This can be achieved by limiting risk exposure, most often by adjusting position sizes. Preserving capital during downturns ensures that there is still a solid base to build on when the market—or the trader's own mindset—stabilises. 8. Using Technology and Tools Leveraging platforms and tools that offer automated tracking, analysis, and risk management features can streamline the process. These tools can help maintain consistency, make data-driven decisions, and stay disciplined. Compounding Trades Compounding trades, also known as pyramiding, involves increasing the size of a position as it becomes profitable. While compounding capital focuses on reinvesting returns to grow the trading account, compounding trades means adding to an existing position during a trade to potentially maximise returns. Pyramiding is typically employed when traders have strong confidence in their position or are engaged in long-term trades. For example, if a trade is performing well and moving in the anticipated direction, traders might add more capital to that position. This approach can significantly amplify returns from a trade since the increased position size benefits from the continuing favourable price movement. However, pyramiding trades carry substantial risks. Adding to a position increases the overall exposure, and if the market turns, losses can be magnified. This risk underscores the importance of only adding to winning trades. Adding to losing trades in an attempt to lower the original entry price can be detrimental. This practice, often called averaging down, significantly increases risk and is generally not recommended. Some strategies incorporate pyramiding as a core component. These strategies usually involve strict criteria for adding to positions, such as specific price levels or confirmation signals to ensure the trade is still valid, and are usually considered advanced. The Bottom Line Compounding offers traders a powerful strategy to grow their capital over time through disciplined reinvestment of returns. By understanding its mechanics, advantages, and risks, traders can harness the potential for significant long-term growth. Ready to start your compounding journey? Open an FXOpen account today and leverage our tools and resources to improve your trading journey. FAQs What Is Compound Trading? Compound trading involves reinvesting returns from trades to grow capital exponentially. By adding the returns back into the account, traders can potentially achieve significant long-term growth as the capital base increases. How to Start Compound Trading? To start compounding, traders set clear financial goals, develop a detailed trading plan, and maintain a record of all trades. Consistency and discipline are also key to reinvesting returns while managing risks effectively. How Do You Compound a Trade? Compounding a trade, or pyramiding, involves increasing the size of a position as it becomes effective. Traders typically add to winning trades to maximise returns and avoid adding to losing trades to manage risk. How to Compound a Trading Account? To compound a trading account, traders reinvest returns rather than withdraw them. Using a strategy that consistently generates positive returns, maintaining detailed records, and adapting your trading plan based on performance and market conditions is key. Effective risk management can help protect and grow your capital over time. 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
Trade Like A Sniper - Episode 46 - USDPLN - (17th June 2024)This video is part of a video series where I backtest a specific asset using the TradingView Replay function, and perform a top-down analysis using ICT's Concepts in order to frame ONE high-probability setup. I choose a random point of time to replay, and begin to work my way down the timeframes. Trading like a sniper is not about entries with no drawdown. It is about careful planning, discipline, and taking your shot at the right time in the best of conditions. A couple of things to note: - I cannot see news events. - I cannot change timeframes without affecting my bias due to higher-timeframe candles revealing its entire range. - I cannot go to a very low timeframe due to the limit in amount of replayed candlesticks In this session I will be analyzing USDPLN, starting from the 3-Month chart. If you want to learn more, check out my TradingView profile.
Education
by Road_2_Funded
2
Trade Like A Sniper - Episode 44 - EURNOK - (17th June 2024)This video is part of a video series where I backtest a specific asset using the TradingView Replay function, and perform a top-down analysis using ICT's Concepts in order to frame ONE high-probability setup. I choose a random point of time to replay, and begin to work my way down the timeframes. Trading like a sniper is not about entries with no drawdown. It is about careful planning, discipline, and taking your shot at the right time in the best of conditions. A couple of things to note: - I cannot see news events. - I cannot change timeframes without affecting my bias due to higher-timeframe candles revealing its entire range. - I cannot go to a very low timeframe due to the limit in amount of replayed candlesticks In this session I will be analyzing EURNOK, starting from the 3-Month chart. If you want to learn more, check out my TradingView profile.
Education
by Road_2_Funded
COGNITIVE DISSONANCE IN TRADING: GAP BETWEEN FANTASY AND REALITYToday we are going to tackle one of the bad habits - illusions in trading. It will be painful, not everyone will be able to face reality, but it is necessary to go through it if you want to be profitable in the markets steadily, not from time to time. Cognitive dissonance is a psychological term used to describe the discomfort a person experiences when two contradictory beliefs are present at the same time. The theory states that people like to keep all their beliefs and experiences in harmony and avoid disharmony (dissonance). When we experience this conflict and discomfort, our thoughts will immediately attempt to restore balance by changing our beliefs and attitudes and, justifying our actions and behaviors. Ultimately, we all want our expectations to match reality in such a way that we can experience a sense of control. We all experience cognitive dissonance on an almost daily basis. In everyday life, it can be quite harmless and even fun to recognize its presence, but for traders it can be disastrous. 💡 HOW DOES THIS RELATE TO TRADERS? The vast majority of ambitious amateur traders approach their profession with deeply unrealistic expectations such as: ➡️ You can learn to trade the market fairly quickly. ➡️ One can quickly and regularly recoup the lost money in large quantities. ➡️ Rapid attainment of abundance and wealth. ➡️ Daily, steady, reliable results. ➡️ One can quickly quit a job and work from home. Anyone who has ever tried trading has quickly learned through experience that none of the above statements are true. This instantly creates a conflict between what you believed and what you experienced, and thus your thoughts quickly try to erase the discomfort and restore harmony. The reasonable and logical thing to do in this case is to recognize and accept that your original beliefs were incorrect, and then revise your beliefs so that they can accurately reflect reality. However, admitting that you were wrong and that you made a mistake is in itself emotionally painful, although it must be done. No one likes to admit they were wrong; it is much easier and quicker to just try to rationalize and justify your original beliefs. People generally try to justify their own mistakes because, by doing so, they feel better about themselves. And it doesn't matter that your beliefs are false, and they will continue to be false for as long as you continue to believe that everything that happens is normal. It goes without saying that this is completely irrational and can be extremely destructive to traders. 💡 WHO IS TO BLAME FOR FOREX FAILURES? A typical situation with the belief that trading can be learned quickly, and that one can earn X amount of money daily and quit their job within a month or two. When reality conflicts with this belief or expectation, the trader will make excuses, trying to find justification for their actions, why they were right, telling themselves something like "I just haven't found the right system yet". Instead of accepting their mistakes from their faulty judgments and then taking action to align their behavior with reality, which will ultimately lead to success, they prefer to find excuses for their beliefs. The situation described above leads to so many traders constantly switching from one forex system to another. One of the truly destructive characteristics in this situation is that as a result of cognitive dissonance, the original false belief is actually further reinforced, the exact opposite of what would be most beneficial. In order to restore emotional harmony in such a situation, something needs to change. Either we need to change our beliefs or reduce the importance of one of the conflicting issues. Very often the broker or trading platform is blamed for trader's failures. After all, it is so easy to shift the blame onto someone else. Most people do is maintain an existing belief (rather than admit error), introduce new beliefs to justify the first, and then diminish the importance of real events (disregarding the facts). The end result is that they continue even more passionately down the false path. 💡 CHASING ELUSIVE PROFITS This, however, easily leads to unrealistic expectations and beliefs of traders, viz: They expect to get big returns quickly. When reality shows them that their expectation is false, they ignore the facts and look for something to help prove that their belief is correct. It is common to see traders switching from one trading system to another every few months. They add forex indicators, add rules, change timeframes, test different methods, learn different theories, trade on different instruments, change their money management system, change risk profiles, buy different software, etc. They may even find a profitable strategy, but discard it because, in their opinion, it doesn't give them the 100% return. These people will spend the rest of their lives in a futile search to find something that in reality does not exist. This is quite obvious not only from their own experience, but also from the documented experience of any other trader who has previously traveled this path. And yet they ignore this evidence. They ignore reality. Their beliefs collide with harsh reality, which causes emotional discomfort. Instead of admitting they are wrong, which would cause even more discomfort, they simply ignore reality, find excuses for their original belief (e.g. the strategy is bad, or the trading platform is slow, or the market is wrong, etc.), and find harmony again, convincing themselves that they were right, but just haven't found a solution yet. And they think it's better to keep looking for them next! 💡 THE CHOICE: IGNORING REALITY OR ADAPTING TO ACHIEVE SUCCESS Traders are faced with tough choices that they need to make. We all at some point face the discomfort of cognitive dissonance when our beliefs go against reality. We can either restore our mental harmony by ignoring the evidence of reality and continue to make excuses. Or we can accept that our beliefs were false, and then realign them and change our actions and behavior in a way that works in parallel with reality. The former path is the easiest and most convenient, but it certainly represents an option that leads to guaranteed and lasting delusion. The latter path is more difficult and less comfortable, but it naturally represents the option that will eventually lead the trader to success. Here is the question that all traders should ask themselves and answer honestly: What is more important to me? Being right or being successful? Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment 📣
Education
by Lingrid
5
A Very Short Course On Action/ReactionThe concept of Action and Reaction Lines is not frequently used by traders. If you browse through the Technical Analysis literature you can see that this topic has seldom been addressed. The first person to mention it was Roger Babson, followed by Dr Alan Andrews. Both of them made use of this particular technique with huge success, making profits of millions of dollars. In this short video i tried to show some examples on recent OANDA:EURUSD price action. thanks for watching.
Education
by Palambir
The Wisdom of Pro Traders vs. Newbie Naivety Hey traders, In this article, we will discuss the perception of trading by individuals . We will compare the vision of a professional trader and a beginner - trading vs gambling. Most of the people perceive trading performance incorrectly. There is a common fallacy among them that win rate is the only true indicator of the efficiency of a trading strategy. Moreover, newbies are searching for a strategy producing close to 100% accuracy. Such a mindset determines their expectations. Especially it feels, when I share a wrong forecast in my telegram channel. It immediately triggers resentment and negative reactions. Talking to these people personally and asking them about the reasons of their indignation, the common answer is: "If you are a pro, you can not be wrong". The truth is that the reality is absolutely different. Opening any position or making a forecast, a pro trader always realizes that there is no guarantee that the market will act as predicted. Pro trader admits that he deals with probabilities , and he is ready to take losses . He realizes that he may have negative trading days, even weeks and months, but at the end of the day his overall performance will be positive. Remember, that your success in trading is determined by your expectations and perception. Admit the reality of trading, set correct goals, and you will take losses more easily. I wish you luck and courage on a battlefield.
OANDA:XAUUSDEducation
by VasilyTrader
3
How to Get into an Entry after the setup is passedIn the world of investing, it is not uncommon to come across a missed trade setup that tempts investors to make impulsive decisions. However, it is important to remain disciplined and avoid falling into the trap of #FOMO (Fear Of Missing Out). For instance, if an investor misses a trade setup on Ethereum ( CRYPTOCAP:ETH ), instead of rushing in with a full position, a more prudent approach would be to enter with half the intended position. This allows the investor to participate in the trade while minimizing the risk of committing too much capital at once. Once the initial entry is made, it is crucial to implement a strategy known as Dollar Cost Averaging (#DCA). This involves gradually increasing the position size by buying more ETH over time. By using DCA, investors can mitigate the impact of short-term market volatility and avoid making rash decisions based solely on emotions. To effectively implement DCA, it is important to maintain the original stop loss level. This means that even if the price of ETH decreases after the initial entry, the stop loss order should remain at the predetermined level. By sticking to this plan, investors can ensure that their risk management strategy remains intact and that they do not expose themselves to unnecessary losses. In summary, when faced with a missed trade setup on ETH, it is crucial to resist the urge to FOMO in with a full position. Instead, entering with half the intended position and utilizing Dollar Cost Averaging can provide a more measured and disciplined approach. By maintaining the original stop loss level throughout the process, investors can enhance their risk management and increase their chances of success in the long run.
Education
by XTradeSetup
Swing Trading - Using Market Side and Opening Range FiltersSwing trading is a short-term strategy where traders aim to capitalise on small price movements within a financial instrument over a specific period. The goal is to capture gains from these "swings" in the market rather than focusing on long-term trends. In this example, I am trading the GBP/JPY using the market side and the session opening range as filters to determine high probability trading direction: Market Side: This helps to identify the overall trend or sentiment in the market. Session Opening Range: This is the price range between the high and low during the initial period after the market opens. It is used to set reference points for potential entry and exit levels. Here's a simple breakdown: Below the Market Side and Opening Range: If the price is below both the market side indicator and the opening range, this signals a bearish sentiment, and you look for selling opportunities. Above the Market Side and Opening Range: If the price is above both the market side indicator and the opening range, this indicates a bullish sentiment, and you look for buying opportunities. I use the Charts247_WT Custom Indicator Candles for entries and exits, which provide specific signals to enter trades and exit existing positions. This combination of trend filters and entry signals helps improve your trades' accuracy and timing, aligning your actions with the broader market context.
Education
by Charts247TradingAcademy
## Catching Spikes on Boom 300 and Crash 300 with Trendlines## How to Catch Spikes on Boom 300 and Crash 300 Indices on Deriv Using Trendlines in TradingView Catching spikes on the Boom 300 and Crash 300 indices on Deriv using TradingView involves leveraging trendlines to spot potential breakout points. Here's a brief guide on how to do this effectively: ### 1. Setting Up Your Chart - Open TradingView and select the Boom 300 or Crash 300 index. ### 2. Drawing Trendlines - **Identify Highs and Lows**: Locate significant highs and lows on your chart. - **Draw the Trendline**: Connect at least two significant highs for a downtrend line or two significant lows for an uptrend line. ### 3. Spotting Spikes - **Boom 300 Index**: - Look for points where the price breaks above the downtrend line. - This breakout can signal an upcoming upward spike. - **Crash 300 Index**: - Look for points where the price breaks below the uptrend line. - This breakout can indicate an impending downward spike. ### 4. Confirming the Breakout - **Volume**: Ensure there is an increase in volume during the breakout. - **Candlestick Patterns**: Look for bullish reversal patterns for Boom 300 and bearish reversal patterns for Crash 300 near the trendline. ### 5. Risk Management - **Stop-Loss**: Place a stop-loss slightly below the breakout point for Boom 300 and slightly above for Crash 300. - **Take-Profit**: Set your target based on previous highs/lows or use a risk-reward ratio. By using trendlines to identify and confirm breakouts, you can effectively catch spikes on the Boom 300 and Crash 300 indices on Deriv with TradingView.
OANDA:XAUUSDEducation
by FrankFx14
Catching Boom and Crashe on Deriv Tradingview using TrendlinesCatching booms and crashes on Deriv using TradingView involves utilizing trendlines to identify potential reversal points and breakouts. Here’s a short guide on how to do this: ### 1. Understanding Boom and Crash Indices - **Boom Index**: Represents a market where prices tend to spike upwards occasionally. - **Crash Index**: Represents a market where prices tend to spike downwards occasionally. ### 2. Setting Up TradingView - Open TradingView and ensure you have the Boom or Crash index loaded on your chart. ### 3. Drawing Trendlines - **Identify Highs and Lows**: Start by identifying significant highs and lows on the chart. - **Draw the Trendline**: Connect at least two significant highs for a downtrend line and at least two significant lows for an uptrend line. ### 4. Analyzing Trendline Breaks - **Downtrend Breakout (Boom Index)**: Look for points where the price breaks above a downtrend line. This can indicate a potential upward boom. - **Uptrend Breakout (Crash Index)**: Look for points where the price breaks below an uptrend line. This can indicate a potential downward crash. ### 5. Confirming the Breakout - **Volume**: Higher volume during the breakout can confirm the validity of the trendline break. - **Candlestick Patterns**: Look for reversal candlestick patterns near the trendline to increase the accuracy of your prediction. ### 6. Risk Management - **Stop-Loss**: Set a stop-loss slightly below the breakout point for booms and slightly above for crashes. - **Take-Profit**: Determine your target based on previous highs/lows or use a risk-reward ratio. ### Example: 1. **Boom Index**: - Identify recent highs and draw a downtrend line. - Wait for a candlestick to close above the trendline. - Confirm with volume and possibly a bullish candlestick pattern. - Enter a buy trade with a stop-loss below the trendline and a take-profit at a previous resistance level. 2. **Crash Index**: - Identify recent lows and draw an uptrend line. - Wait for a candlestick to close below the trendline. - Confirm with volume and possibly a bearish candlestick pattern. - Enter a sell trade with a stop-loss above the trendline and a take-profit at a previous support level. By carefully analyzing trendlines and confirming breakouts with additional indicators, you can effectively catch booms and crashes on Deriv's Boom and Crash indices using TradingView.
OANDA:XAUUSDEducation
by FrankFx14
Forex Market Liquidity: Analysis and Implications for TradersForex Market Liquidity: Analysis and Implications for Traders The foreign exchange market is renowned for its dynamic and fast-paced nature. As traders navigate this landscape, understanding the concept of liquidity becomes crucial. In this article, we analyse its components, explore factors that influence it, measure and analyse its impact, discuss potential risks for traders, and present real-life examples to illustrate its implications. What Is Liquidity in the Forex Market? Liquidity in the forex market refers to the ease with which a currency pair can be bought or sold without causing a significant change in its price. Highly liquid assets are usually easily tradable, while less liquid assets may experience more considerable price fluctuations during transactions and bear higher spreads. Liquidity Components The liquidity of a currency pair is influenced by several factors, which traders need to consider when constructing a liquidity-proof trading strategy. These include the market depth, the bid-ask spread, and the trading volume. - Market depth represents the number of buy and sell orders at different price levels in the order book. A deep market with many orders at different price levels typically suggests higher liquidity. - The bid-ask spread is the difference between the highest price a buyer agrees to pay and the lowest price a seller agrees to accept. A narrower spread typically indicates higher liquidity, while a wider spread reflects lower liquidity. Traders often monitor the spread to gauge current conditions. - Trading volume refers to the total number of currency units traded within a specified period. Higher trading volume generally indicates greater liquidity, signalling a robust trend. Low trading volume could indicate liquidity issues. Risks for Traders Arising From Liquidity Levels in Forex Liquidity is a crucial consideration for traders as it directly affects transaction costs and the ease of entering or exiting positions. High levels generally result in lower transaction costs and less slippage, providing traders with potentially more exciting conditions. Additionally, liquidity may contribute to price stability, reducing the impact of large trades on prices. Low levels, on the other hand, can pose certain risks that traders must be aware of. In illiquid markets, larger trades can have a more pronounced impact on prices, potentially resulting in random price movements and unfavourable execution prices. Forex market liquidity implications suggest that low liquidity can lead to increased volatility, making it challenging to analyse price movements accurately. In low liquidity conditions, traders may also experience slippage and delays in order execution, impacting the efficiency of trades. Factors Influencing Liquidity in Forex Trading Various factors influence current market liquidity in the forex market, and understanding these dynamics is essential for traders: - Market Participants: The presence of a diverse range of participants, including retail traders, institutional investors, and central banks, contributes to liquidity. A balanced mix of participants often leads to a more liquid market. - Economic Indicators: Economic releases, such as employment data, GDP figures, and interest rate decisions, can significantly impact a currency’s trading activity. Traders often witness increased volatility before and after such data is released, affecting market liquidity. - Time of Day: Forex operates 24 hours a day, five days a week. Volume varies depending on the time of day, with peak liquidity during the overlap of major trading sessions. Forex Market Liquidity Indicators and Measures Assessing quantitative metrics is a fundamental initial step in a profound forex market liquidity analysis. Let’s discuss some popular indicators which can help evaluate the liquidity level using the trading volume: - On-Balance Volume (OBV): OBV assesses the strength of a price trend by evaluating the relationship between volume flow and price movements. Higher liquidity often accompanies stronger and more sustained price trends. - Volume Oscillator: When the volume oscillator is positive or above a specific threshold, it indicates that the recent trading volume has been relatively high. This may suggest that there is more liquidity in the asset. - Money Flow Index (MFI): The MFI considers trading volume as a component of its calculation. A high trading volume, when combined with significant price movements, can result in a higher MFI reading, indicating strong market participation and potentially higher liquidity. A low trading volume during price movements may result in a lower MFI reading, suggesting reduced liquidity and potentially less market interest. Price Gaps: In illiquid markets, there are fewer participants and lower trading volumes. In such conditions, price gaps are more likely to happen and can be more substantial. With fewer participants, it becomes challenging to match buyers and sellers efficiently. As a result, a significant order or news event can lead to a notable price gap when the market reopens. You can visit FXOpen and explore new trading opportunities for some of the most liquid currency pairs through the free TickTrader trading platform. Real-Life Examples of FX Liquidity To illustrate the importance of considering liquidity in a forex strategy and how it can impact trader behaviour, let’s consider some real-life examples: The 2015 Swiss Franc Depegging In 2015, the sudden decision by the Swiss National Bank (SNB) to remove the Swiss Franc (CHF) peg against the euro had a profound impact on the forex. The depegging in January 2015 led to a sudden drop in value, causing not only an unprecedented shift in trading dynamics but also triggering a significant price gap. The market experienced a reduction in trading volume, highlighting the challenges of liquidity in the face of unexpected events. High Volumes During Trading Session Overlaps The EUR/USD currency pair experiences varying trading volumes throughout different global sessions, primarily influenced by the overlap of major trading hours. The chart below depicts the significant volume spikes occurring during the overlap between the European (UTC 08:00 - 17:00) and North American (UTC 13:00 - 22:00) sessions, commonly known as the "London-New York overlap." This period witnesses peak trading volumes, providing traders with optimal conditions for executing trades. Takeaway Understanding liquidity is paramount for traders navigating the complexities of the financial markets. By comprehending the components of trading activity and analysing influencing factors and their impact on real-life trading, traders may make more informed decisions to potentially reduce risks and optimise their trading strategies. You trade forex and commodity, stock, and index CFDs today by opening an FXOpen account! 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.
Editors' picks
Education
by FXOpen
8
Trading Volatility 75 Index Using Trendlines Deriv TradingViewThe Volatility 75 Index, also known as VIX, represents the market's expectation of 30-day forward-looking volatility and is a popular instrument for traders looking to capitalize on market turbulence. Trading the Volatility 75 Index using trendlines on Deriv TradingView can be an effective strategy for identifying and acting on market trends. Here's a step-by-step guide to help you get started. #### 1. Understanding Trendlines Trendlines are straight lines drawn on a chart that connect two or more price points, usually to indicate a trend direction. An upward trendline connects the lows in an uptrend, while a downward trendline connects the highs in a downtrend. These lines act as support and resistance levels, providing traders with visual cues for potential trade opportunities. #### 2. Setting Up Your Trading Environment **Step 1: Access Deriv TradingView** Log in to your Deriv account and navigate to the TradingView platform. Ensure that you have selected the Volatility 75 Index chart for analysis. **Step 2: Choose the Right Timeframe** Select an appropriate timeframe for your trading style. Short-term traders might prefer 1-minute or 5-minute charts, while swing traders may opt for 1-hour or daily charts. #### 3. Drawing Trendlines **Step 1: Identify Key Points** Identify significant highs and lows on the chart. In an uptrend, look for a series of higher lows. In a downtrend, look for a series of lower highs. **Step 2: Draw the Trendline** - **Uptrend:** Click on the trendline tool and connect at least two significant higher lows. - **Downtrend:** Click on the trendline tool and connect at least two significant lower highs. Ensure that your trendline is not cutting through the candlesticks and that it aligns well with the price movement. #### 4. Analyzing Trendline Breaks Trendline breaks can signal potential trading opportunities. When the price breaks above a downward trendline, it might indicate a bullish reversal. Conversely, when the price breaks below an upward trendline, it might indicate a bearish reversal. **Step 1: Confirm the Break** Wait for a candlestick to close above or below the trendline to confirm the break. This reduces the risk of false signals. **Step 2: Use Volume for Confirmation** Increased trading volume can validate the trendline break, suggesting stronger market conviction behind the move. #### 5. Placing Trades **Step 1: Set Entry Points** - **Long Trade:** Enter a buy position when the price breaks above a downward trendline and the breakout is confirmed. - **Short Trade:** Enter a sell position when the price breaks below an upward trendline and the breakout is confirmed. **Step 2: Set Stop-Loss Levels** - Place a stop-loss below the most recent swing low for long trades. - Place a stop-loss above the most recent swing high for short trades. **Step 3: Set Take-Profit Levels** Use previous support and resistance levels or employ a risk-reward ratio (e.g., 1:2 or 1:3) to determine your take-profit points. #### 6. Managing the Trade - **Monitor the Trade:** Keep an eye on the trade and adjust your stop-loss to lock in profits as the price moves in your favor. - **Be Prepared for Reversals:** Market conditions can change rapidly, especially with an instrument as volatile as the Volatility 75 Index. Stay alert and be ready to exit the trade if the market reverses. #### 7. Additional Tips - **Combine with Other Indicators:** Enhance your trendline analysis by using other technical indicators like RSI, MACD, or moving averages for additional confirmation. - **Stay Informed:** Keep an eye on market news and events that could impact volatility. - **Practice Risk Management:** Never risk more than a small percentage of your trading capital on a single trade. This helps in managing potential losses and staying in the game longer. #### Conclusion Trading the Volatility 75 Index using trendlines on Deriv TradingView can be a powerful strategy when executed with precision and discipline. By identifying and drawing accurate trendlines, confirming trendline breaks, and managing trades effectively, traders can navigate the volatile nature of the VIX and capitalize on market movements. Always remember to practice good risk management and continuously improve your trading skills through education and experience.
OANDA:XAUUSDEducation
by FrankFx14
Will BTC repeat its history?When prices begin to range away from the mean when dealing with up trending movements, power is lost in many indicators. When this happens, it usually means that price is currently in a bubble. In contrast to a ticker like the SP:SPX price usually doesn't behave in this manner. It's actually quite easy to understand why this is the case. If one was to make Monte Carlo simulations using a geometric Brownian motion, you would see some processes behave in a manner of a bubble. But if we take the aggregate of all movements and average them, or calculate a present value, the value tends to be around the center. Well an index does quite the same but through different methods. By aggregating important tickers, they form an average based on different criteria, therefore are more susceptible to following the central limit theorem. Meanwhile, individual stocks, commodities or cryptocurrencies are more susceptible to violent movements which completely ignore technical indicators. This has led me to believe that the more a ticker is dependent on external factors the more it will follow traditional statistical and probabilistic methods. I have no proof for this claim, It's just what I believe based on experience. When looking at central metric indicators, it's important to conciser there are two point in which these become unreliable. When price action completely ignores your distribution, such as it does here. And when the price is consolidating in the mean. When prices consolidates in the mean, it can be seen as a reset or as a very serious sign something is wrong. However, when minimums become unreliable then that is when one should really be scared, because that means something is seriously wrong. I will look for examples of this for you in the future. When prices behave in this manner, I don't feel confident making predictions because when a ticker is more susceptible to speculation then price action behaves erratically and patterns become harder to find.
INDEX:BTCUSDEducation
by DarkMessiah777
Differences between paper trading & real money tradingMost people (including me sometimes) lack the right mindset, patience, and planning when it comes to trading. There is no magic technical indicators in trading, it all comes down to simple tools, just like my paper trading journey outlined in this BTCUSD chart. In the chart, I observed that: BTC was no longer trending as its price was ranging for nearly 50 days after the ATH; BTC momentum was weakening as it broke previous two horizontal support areas; Price came to the potential 120 EMA / trendline / downward channel support clusters. Since most of the time, asset price is ranging rather than trending, all we need to do is plot out the Fib levels in our chart and buy at support sell at resistance. You can see my major trades outlined in the chart. I did the same for other crypto symbols ETH & SOL at the same time. However, when it comes to real money trading, I would trade slightly differently. The mentality in paper trading is more aggressive. Usually in real money trading, when major support areas are broken, I would not fade a trend and try to catch the falling knife even you know there is potential support. What I'll most likely do is to wait for price breaks above the descending trendline (shows the strength) and look for opportunities in a potential 1-2-3 or 2B reversal pattern. In real money trading, I try to follow the trend most of the time (price stands above all the moving average) But in paper trading, you have to be the minority in the market to stand out from the competition, which usually means go against the market. Even though we know this looks like a fib range trading scenario, it's better to enter your fading trade after a lower high or higher low is created. In reality, make full use of the capital all the time is not recommended, especially when you about to trade against the current trend. Always try a small position first when doing so and build up your position along the way. However, in this competition, the forex pair EURUSD and SPX500 have low volatility, we have to trade maximum allowed quantity of each symbol in the hope of increasing account profits. Lastly, do not overtrade, which makes sense for both paper and real money trading. It's easier to do so in paper trading as people would worry much less about the profits/losses they have made. All in all, I'm just lucky enough to get the 2nd place in this competition, always respect the market and the market is always right.
Editors' picks
COINBASE:BTCUSDEducation
by Hakukuro
15
How to go through a LOSING STREAK better? 🍏1. Everything starts with preparation and true expectations. Losing streaks will happen from time to time, accept it if you want to be a good trader. Even the best traders on the planet have them. But it’s the reaction to them that separates good and bad traders. Know your probability of losing streak, based on your own backtesting and accept them before they even happen. Keep longterm focus! 🍋2. Make sure you’re practicing process based trading, not outcome based. Before every trade, ask yourself if anyone in the whole worlds can say the outcome of any individual trade? The answer is obvious - no one can do it. So is it rational to build expectation of a specific market moves in this individual trade, or nearest several trades - that they are completely uncertain and you are working with random distribution of your edge. 🥥3. Once in a streak, remind yourself about your testing. See that over the past 200 or more trades, you were profitable, at least RR wise. These 5-6 losing trades you’re having now are just a very small part of a huge data collection you did before, and they are part of random distribution. 🍈4. In a losing streak, there’s usually an urge to trade more to earn the lost $ amount back. It’s a mistake, as overtrading will lead to only one outcome - even more loss in short or longterm perspective. 🍎5. In the past, I wanted to reach some state of unbreakable consistency, "once and for all", and when I thought I did it, I started to expect things to be easy from now on and not to struggle or put effort, cause now I'm fully consistent. And that was exact moment when everything fell apart. The truth is, at least for me and for now, is that I need to make good decisions - mentally and technically - EVERY DAY and EVERY MOMENT, to actually prove I'm consistent. And consistency is dynamic, I'll continue to work on it, it's like gardening, when you need to put some effort everyday and it's never fixed or done, at least for me.
OANDA:XAUUSDEducation
by Yelli_trades
3