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Options Blueprint Series: The Collar Strategy for Risk ReductionIntroduction to Nasdaq Futures Nasdaq Index Futures offer traders exposure to the Nasdaq-100 index, a benchmark for U.S. technology stocks, without directly investing in the index's component stocks. Trading on the Chicago Mercantile Exchange (CME), Nasdaq Futures provide a critical tool for managing market exposure on the future of technology and biotech sectors. Key Contract Specifications: Point Value: Each point of the index equates to $20 per contract. Margins: As determined by the CME, margins vary, reflecting the volatility and current market conditions. As of the time of this publication the CME website shows a maintenance margin of $17,700 per contract. Trading Hours: Nearly 24-hour trading capability, aligning with global market hours to provide continuous access for traders. It's important to note that similar strategies and benefits are available with Micro Nasdaq Futures , which are scaled down to a tenth of the standard Nasdaq Futures, making them accessible to a broader range of traders due to their lower margin requirements (Margin is 10 times less, point values are 10 times less, etc.) Basics of the Collar Strategy The Collar strategy is a risk management tool used by traders to protect against large losses in their investments while also capping potential gains. It is particularly useful in volatile markets or when significant price swings are expected but their direction is uncertain. Components of the Collar Strategy: Own the Asset: Typically involves owning the underlying asset, but in the case of futures, it involves holding a long position in the Nasdaq Futures contract. Buy a Protective Put: This put option gives the right to sell your futures contract at a predetermined strike price, serving as insurance against a significant drop in the market. Sell a Covered Call: This call option grants someone else the right to buy your futures contract at a set strike price, generating income that can offset the cost of the put option, but it limits the profit potential if the market rises sharply. This strategy forms a price collar around the current value of the futures contract, protecting against drastic movements in both directions. The use of this strategy in Nasdaq Futures trading can be especially effective given the index's exposure to high-growth, high-volatility sectors. Application to Nasdaq Futures Implementing the Collar strategy with Nasdaq Futures involves selecting the right put and call options to effectively hedge the position. Here's how you can set up this strategy: Choose the Underlying Contract: Decide whether to use standard E-mini Nasdaq-100 Futures or Micro mini Nasdaq-100 Futures based on your investment size and risk tolerance. Select the Put Option: Identify a put option with a strike price below the current market price of the Nasdaq Futures. This strike should represent the maximum loss you are willing to accept. The graphics of this article show UFO Support Price Levels below which accepting a larger loss could be seen as a form of hope. Using UFO Support Price Levels as a reference to select the Put strike could be an efficient manner to determine the desired risk. Choose the Call Option: Pick a call option with a strike price above the current market level, where you believe gains will be limited. The premium received from selling this call helps offset the cost of the put, reducing the overall expense of the setup. Selecting a call with its premium equal to the put price would allow for the Collar strategy to be cost-free (not risk-free). Risk Profile Visualization: A graphical representation of the risk profile will show a flat line of loss limited to the downside by the put and capped gains on the upper side by the call. This visualization helps traders understand the potential financial outcomes and their likelihood. Forward-Looking Trade Idea Considering the recent market dynamics, Nasdaq Futures have been experiencing a range-bound pattern after reaching all-time highs. With current geopolitical tensions such as the recent conflict between Iran and Israel, there's a potential for sudden market movements. Scenario Analysis: Continuation of Uptrend: If the market breaks above the range, selling the covered call may yield limited gains but will provide premium income. Significant Drop: If the market drops due to intensified conflicts, the protective put limits the potential loss, safeguarding the investment. That is knowing that if the market was to rebound after a significant drop, the strategy could end up as profitable as long such rebound would happen prior to the Options expiration date. Trade Setup: Entry Point: Current market price of Nasdaq Futures. Put Option: Select a put option below the current market price. The chart example uses the UFO Support Level located around 18,000. Premium paid for the 18,000 Put is estimated to be 511.79 points * $20 ($10,235.8). Call Option: Choose a call option above the current market price targeting the same level of premium as the premium paid for the put. The 18,300 Call is estimated to provide 522.65 points * $20 ($10,453). Expiration: Options with a 1-3 month expiration to balance cost and protection level. This trade example uses June Expiration which is 67 days away from expiration. As seen on the above screenshot, we are using the CME Options Calculator in order to generate fair value prices and Greeks for any options on futures contracts. This setup aims to utilize the Collar strategy to navigate through uncertain times with controlled risk, taking into account both the potential for continuation of the uptrend and a protective mechanism against a sharp decline. Risk Management Discussion Effective risk management is crucial when trading futures and options. The Collar strategy inherently incorporates risk management by design, but understanding and applying additional risk control measures is essential for successful trading. Key Risk Management Techniques: Limited Risk: By default, the Collar strategy is a limited risk strategy where the risk is calculated by looking at the current Nasdaq Futures price compared to the Put strike price and adding or subtracting the Collar execution price for a debit or credit respectively. Use of Stop-Loss Orders: Although the Collar strategy provides a natural hedge, setting stop-loss orders beyond the put option's strike can provide an extra safety net against gap risk and extraordinary market events. Regular Review and Adjustment: As market conditions change, the relevance of the chosen strike prices may alter. Regularly reviewing and adjusting the positions to ensure they still reflect your risk appetite and market outlook is advised. Diversification: While the Collar strategy protects an individual position, diversifying across different asset classes can further protect the portfolio from concentrated risks associated with any single market. Conclusion The Collar strategy offers Nasdaq Futures traders a structured way to manage risk while maintaining the potential for profit. By capping potential losses with a protective put and limiting gains with a covered call, traders can navigate uncertain markets with increased confidence. This strategy is particularly applicable in volatile markets or during periods of geopolitical tension, providing a buffer against significant fluctuations. When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. General Disclaimer: The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
CME_MINI:NQ1!Education
by traddictiv
What Is a Chaikin Volatility Indicator in Trading?What Is a Chaikin Volatility Indicator in Trading? Understanding volatility is crucial for creating effective trading strategies. One popular tool used when measuring volatility is the Chaikin Volatility indicator. In this article, we will take an in-depth look at this tool, how it’s calculated, and how to use it when trading. What Is the Chaikin Volatility Indicator? The Chaikin Volatility indicator, named after its creator, Marc Chaikin, is a tool used to gauge volatility in financial markets and anticipate potential reversals. Volatility, in its simplest terms, refers to the degree of price fluctuation in an asset over a given period. High volatility is often associated with increased risk but also comes with the potential for greater returns. Conversely, low volatility suggests more stability. Chaikin Volatility focuses on the trading range, quantifying the difference, or spread, between high and low prices over a specified period, typically 10 candles, and measures the rate at which this range expands or contracts. Unlike other volatility indicators, it doesn’t account for an asset’s direction but rather the momentum of its movements. When this spread widens, it indicates increasing volatility, accompanied by a sharp spike in the measure’s value. Conversely, a narrowing spread suggests decreased volatility, which results in the value declining. How Is Chaikin Volatility Calculated? As with many technical indicators, Chaikin Volatility appears complex at first glance. But, its calculation is relatively straightforward. The tool is based on the exponential moving average (EMA) of the difference between the high and low prices of a given period. The formula involves a two-step process. First, calculate an EMA of the difference between the high and low prices over N periods. N is typically 10. High-to-Low EMA = 10-period EMA of (H-L) Then, work out the percentage change in the EMA over a further N period, also usually 10. Chaikin Volatility Value = (Current EMA value - EMA value 10 periods ago) / EMA value 10 periods ago * 100 The result is a value that oscillates above and below 0. You don’t need to worry about doing the calculation yourself; in FXOpen’s free TickTrader platform, you will find the Chaikin Volatility indicator and dozens of other tools waiting for you. How to Trade With Chaikin Volatility Including the Chaikin Volatility indicator in a strategy can offer traders a unique edge by providing insights into market events. Generally speaking, a rise in its value indicates an expanding trading range, which often precedes a substantial price move (normally a reversal). However, determining whether an increasing value signals a reversal or a breakout can be tricky, as these spikes are relative to the defined period's range. Hence, traders consider the wider context and look for spikes at key technical areas like support/resistance levels or overbought/oversold zones, as suggested by indicators like the relative strength index (RSI). Much like the RSI, traders can use the indicator to spot waning buying or selling pressure. This occurs when the price fluctuations decrease at a seeming top or bottom, typically over an extended period. Effectively, traders look for the highs in the indicator to diverge from price. This means that while the price may be reaching new highs (in a bearish reversal) or new lows (in a bullish reversal), the tool should be creating lower highs and higher lows, respectively. This divergence demonstrates that interest in the asset is dying down and that a reversal may be due. Common Mistakes to Avoid To maximise the effectiveness of the Chaikin Volatility Indicator, it’s important to be aware of some common mistakes. Misinterpreting Volatility: A common misconception is that high value equals bullish and low value equals bullish. Remember, the tool measures price fluctuations, not an asset’s direction. Overreliance: Like any other indicator, Chaikin Volatility should not be used in isolation. It's best used in combination with other forms of technical analysis to confirm its signals. Ignoring the Market Context: Always consider the broader context. If the chart is trending strongly in one direction, even seemingly accurate signals may not result in a price reversal. The Bottom Line In summary, Chaikin Volatility is an invaluable tool that traders can use to better understand the markets. While not as popular as other similar measures, it’s definitely worth experimenting with this indicator to see how it could fit into your strategy. Once you feel ready, you can open an FXOpen account to apply the indicator to over 600 markets in the advanced TickTrader platform. Good luck! 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
Support and Resistance levelsSupport and resistance levels, the bedrock of technical analysis, are fundamental elements. They serve as critical points that delineate potential price movements and are pivotal in decision-making processes for traders and investors alike The basis: There are several fundamental concepts in trading that remain the same over a long period of time. Among them, the concepts of support and resistance levels stand out. When used correctly, support and resistance levels improve trading efficiency in financial markets. Today we will delve deeper into these concepts. Price behavior: The fundamental principle of price behavior lies in the concept of supply and demand, governing the existence and operation of any market. When demand outweighs supply, it prompts an upward push in prices, while in reverse circumstances, a decrease is observed. By identifying levels of supply and demand, traders significantly enhance their success rate. A support level indicates a price range where strong buying positions are concentrated, typically defined by two minimum price points. A resistance level, conversely, denotes a price range around which strong selling positions are clustered, often marked by two maximum price points. It's important to note that support and resistance levels should not be viewed as precise lines. Prices may not necessarily adhere to these levels point by point; often, they may not even touch the level directly, sometimes piercing through it. This variability is normal, so these levels should be perceived more as zones of support and resistance. The width of these zones can vary, with the magnitude of dispersion dependent on the timeframe in which trading occurs. The higher the timeframe, the potentially broader the range of support and resistance levels. Once again for strengthening: Support and resistance levels represent specific price ranges on a chart (often represented by rectangles in my analysis) where the direction of price movement has historically changed. These ranges attract traders' attention because they provide clear points for setting stop losses and entering trades. In addition, these levels usually attract large buyers or sellers whose limit orders contribute to market dynamics. Essentially, the level denotes the price area in the market where traders perceive the price to be either overpriced or underpriced, depending on the prevailing market conditions. Therefore, it is extremely important to closely monitor key levels where the role of support and resistance has changed or where significant price reversals have occurred. Blending levels signify pivotal points on a price chart where price action can prompt a reversal in the opposite direction. In the presence of a robust trend, price movements may penetrate through these supply and demand levels, leading to potential shifts in direction. Such occurrences typically coincide with heightened transaction volumes. The interplay of price adjustments, heightened market activity, and trading volumes collectively influence market direction. When resistance is breached and the price retraces to its previous level, there's a likelihood that bulls will once again push it upwards. Conversely, if the price retraces to the breached level after breaking through support, bears are likely to actively drive it downwards. Support and resistance levels can be identified as areas in the market where traders are more inclined to buy or sell, depending on current market conditions. This creates a zone of collision between buyers and sellers, often prompting the market to change its direction. Retest: A retest of a level refers to a brief return of the price to the breached support or resistance line for testing purposes. Following the retest, the price typically continues its movement in the direction of the breakout. On higher time frames, support and resistance levels become more powerful: It is important to observe the price action around levels: If the price swiftly reverses from a level into the opposite trend, it indicates significant importance of that level. If the price tests a specific area multiple times with minor retracements, it's likely that the level will eventually be breached. Swing zones refer to areas where the price retraces to the previous pullback in either a downtrend or uptrend. In less robust trends, the price tends to return to the boundary of the previous correction before continuing its movement. Of course, support and resistance are dynamic concepts that require constant attention and analysis as their meaning changes depending on prevailing market conditions. Moreover, it is critical to consider multiple confirmations such as volume analysis and breakouts to confirm the strength of these levels. Thank you for your attention!
Editors' picks
Education
by truepersonal
26
Miners' Bitcoin Holdings Decrease While Value in USD IncreasesWhile the amount of Bitcoin in miners' hands continues to decrease, its value against the dollar is increasing. Miners' Bitcoin Reserves: In 2019, Bitcoin miners held approximately 2.9 million Bitcoin.This number has been steadily decreasing since then. As of today, miners hold approximately 2 million Bitcoin (source: intotheblock). Value of Miners' Bitcoin Reserves: In nominal terms, the amount of BTC they hold has decreased. However, in terms of value, it has reached the 2021 level again. To illustrate: On April 5, 2021, miners held 2.37 million Bitcoin, worth approximately $142 billion. As of today, miners hold approximately 2 million Bitcoin (worth approximately $129 billion). Conclusion: After the halving, we can expect miners' reserves to decrease (also to meet the increasing demand). However, this is not a scary situation. I expect the dollar value of Bitcoin in miners' hands to exceed the previous all-time high in the near future. The reason for this is that the "realised price" (approximately the cost) of Bitcoin will increase after the halving. Overall, this is a data point that we should regularly check to better understand the bull cycle. TradingView code for tracking the data: BTC_MINERRESERVESUSD BTC_MINERRESERVES Thanks for reading.
BEducation
by Bullfighterr
BITCOIN HALVING MYTHSIn a week, another bitcoin halving is expected to take place, which is expected by many cryptocurrency traders. Cryptocurrencies are still a dark horse for traders: sharp price fluctuations in both directions, high volatility attract traders with the supposed simplicity of making money. And although many consider the industry a bubble, there are still enthusiasts willing to take risks. What Is Halving In Simple Words? 📜 Halving is a reduction for rewarding miners for performing operations on the bitcoin blockchain network. Currently, the reward for solving equations for a block of data on the blockchain is 6.25 bitcoins. After halving, it will be cut exactly in half to 3.125 bitcoin. Basically, miners act as accountants in the blockchain network or as an equivalent of the collective Central Bank in the blockchain and serve as a guarantee of transparency and veracity of information: it is impossible to fake it in one block without other miners noticing it, but it is necessary to fake the entire chain of operations in the entire blockchain, which is practically impossible. Miners are responsible for processing all transactions: if there were no miners, there would be no new bitcoin transactions. How Bitcoin's Halving In 2024 Will Affect The Price? 📈📉 Bitcoin's halving in 2024 is one of the most expected and discussed events of the first half of this year. In most cases, analysts cannot clearly explain why the price of BTC (and subsequently other alts) changed, finding unconvincing reasons in hindsight. Therefore, the upcoming event is a reason to try to predict the future behavior of the price before it happens. Halving is a halving of miners' profits. That is, a miner bought expensive equipment, spends electricity in the hope that each block will be rewarded with 6.25 BTC. But then halving occurs and now the reward per block is 3.125 BTC. In theory, halving means that fewer coins will be mined and some miners will leave the market altogether. This will be followed by an increase in the scarcity of BTC, and therefore an increase in its price. At least, this is how optimists explain the growth of BTC price after halving. But the question is: how will the reduction in the volume of its production contribute to its price increase? 1️⃣ The Approaching Halving Is Already Priced In . This myth is taken from the fundamental analysis of stock market if investors are sure that, for example, if the Fed's interest rate is going to be exactly changed in a month, they buy or sell dollars in advance. However, this does not work in cryptocurrencies for several reasons: ✔️ Halving is embedded in the blockchain and for BTC it is done every 4 years. But that doesn't mean it is already factored into the pricing. ✔️ There are very few people involved in mining. And it is not a fact that investors are basically aware of what halving is and when it will take place. Short-term speculators may still be interested in this information. Those who bought BTC with the expectation that someday it will rise again (or did not sell it after a fall) are hardly interested in it. ✔️ The role of mining in the share of speculative circulation is not high. Market makers rule the market, which can simply squeeze miners with capital. 2️⃣ Bitcoin's Price Will Fall. The halving of bitcoin in 2024 may indeed affect the prices, but not as drastically as many investors would like. An argument in favor of a fall is the example of LTC, which got cheaper before halving profits. Compare the volumes of LTC and BTC, which occupies more than 54% of the entire cryptocurrency circulation. LTC is a speculative instrument, whereas BTC has a large share of long-term capital. 3️⃣ Halving Will Lead To The Annihilation Of The Mining Industry . Supporters of this myth argue that mining is becoming less and less profitable. In addition, more and more startups are being developed on more modern algorithms that do not involve mining. In reality, existing miners aren't going anywhere. Those who have already invested money in it will continue to "recoup" their costs. There will be no influx of new miners, so the mining industry will eventually disappear on its own. But halving will definitely not be to blame for this. ✅ Conclusion Halving bitcoin's price can affect the price significantly. The price may shift to one side or the other, but there are enough fundamental factors for growth, but not for a fall in price. Therefore, it is very likely that this event will be noticed.
Education
by Lingrid
4
Trading Psychology and Your Losses Hey traders, In this post, we will discuss a common fallacy among struggling traders: overestimation of a one single trade . 💡The fact is that quite often, watching the performance of an active trading position, traders quite painfully react to the price being closer and closer to a stop loss or, alternatively, coiling close to a take profit but not being managed to reach that. Fear of loss make traders make emotional decisions : extending stop loss or preliminary position closing. The situation becomes even worse, when after the set of the above-mentioned manipulation, the price nevertheless reaches the stop loss . Just one single losing trade is usually perceived too personally and make the traders even doubt the efficiency of their trading system. They start changing rules in their strategy, then stop following the trading plan, leading to even more losses. ❗️However, what matters in trading is your long-term composite performance . A single position is just one brick in a wall. As Peter Lynch nicely mentioned: “In this business, if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.” There are so many factors that are driving the markets that it is impossible to take into consideration them all. And because of that fact, we lose. The attached chart perfectly illustrates the insignificance of a one trading in a long-term composite performance. Please, realize that losing trades are inevitable, and overestimation of their impact on your trading performance is detrimental. Instead, calibrate your strategy so that it would produce long-term, consistent positive results. That is your goal as a trader.
OANDA:XAUUSDEducation
by VasilyTrader
1
COPPER, THE MUSICAL.. ERR I MEAN, GUIDE. (Cu, Copper)COPPER, What's the deal with this shiny brown stuff that I hear everyone steals? Should I steal copper or is there a better way? What do I need to know? What is the fast summary to catch me up? First, let's talk about the technicals. Some massive trends, all strong. price targets labeled there are numbers that go pretty high, but it seems a retracement might be needed to get there. Potential to buy under 3. Potential to sell over 4. idk where it heads first. Copper: A Comprehensive Overview Introduction Copper , denoted by the symbol Cu on the periodic table, is a versatile metal with a wide range of applications. It is renowned for its excellent electrical and thermal conductivity, corrosion resistance, and malleability. These properties make it a valuable resource in various industries. Uses of Copper Copper is extensively used in the electrical industry due to its superior conductivity. It forms a crucial component in electrical equipment such as wiring and motors. In the construction industry, copper is used for roofing and plumbing, thanks to its durability and resistance to corrosion. Interestingly, copper’s antimicrobial properties are leveraged in healthcare settings to reduce the number of patients who acquire infections in hospitals. How and Where Copper is Found Copper is typically found in nature in association with sulfur. The extraction process involves mining and concentrating low-grade ores containing copper sulfide minerals. This is followed by smelting and electrolytic refining to produce pure copper. Copper deposits are found in various locations worldwide, including South America, South Central Asia, Indochina, and North America. It is found as a primary mineral in basaltic lavas and also as reduced from copper compounds. History of Copper Use Copper has a rich history of use by humans. It was one of the first metals ever extracted and used by humans, first appearing in coins and ornaments around 8000 B.C. The advent of copper tools around 5500 B.C. helped civilization emerge from the Stone Age. Copper in the Periodic Table In the periodic table, copper is a transition metal located in Group 11, along with silver and gold. These metals share similar electron structures, which result in many shared characteristics. Comparable Metals and Alloys Copper is often compared to other “red metals” like brass and bronze. While copper is a pure metal, brass and bronze are copper alloys. Brass is a combination of copper and zinc, while bronze is a combination of copper and tin. Copper is also alloyed with other metals like nickel, aluminum, and beryllium to enhance its properties. Costs and Difficulties of Working with Copper Despite its importance, the extraction and use of copper come with significant challenges. Mining copper can lead to environmental hazards, affecting water access, air quality, and Indigenous cultural sites. Moreover, the cost of copper has been rising due to increasing demand and supply constraints. Future Potential of Copper The future of copper looks promising, especially considering its role in the energy transition. Copper is critical for renewable energy systems, including solar and wind power, and electric vehicles. However, the potential for a copper shortage is drawing concerns about how to sustainably meet future demand. Conclusion Copper is an incredibly versatile and important metal with a rich history and a promising future. As we continue to innovate and move towards a more sustainable future, the role of copper is likely to become even more significant.
CAPITALCOM:COPPEREducation
by nicktussing77
2
Potential Consequences of a TON Crash on April 12, 2024Potential Consequences of a TON Crash on April 12, 2024 Accurately predicting the impact of a TON crash on April 12, 2024, is extremely difficult as it depends on various factors, including: Cause of the crash: Was it due to a technical error, cyberattack, or other factors? Severity of the crash: How significantly did it affect the TON network and applications built on it? Community response: How would the TON community react to the crash? Would they retain trust in the project and continue using TON? Nevertheless, we can hypothesize some potential consequences of a TON crash: Negative Impacts: Decreased TON token value: The value of the TON token could plummet due to lost investor confidence. Reduced usage: The number of users and developers using TON could dwindle. Project's damaged reputation: The TON project could lose credibility within the blockchain community. Financial losses: Users could lose money due to the crash. Positive Impacts: Buying opportunity: The crash could create a buying opportunity for those who believe in the project's potential to acquire TON at a lower price. System improvement: Developers could leverage the crash to enhance the TON system and address potential flaws. Strengthened community bonding: The TON community could unite more firmly to support the project through challenging times. Overall, a TON crash on April 12, 2024, could have both negative and positive repercussions. The actual impact would hinge on various factors. Disclaimer: This information is for reference only and should not be considered investment advice. Due to the complex nature of the cryptocurrency market, predicting the price of any coin is highly challenging and involves significant risks. For the most accurate and up-to-date information on TON's situation, consult reliable news sources and analyses in the blockchain domain. #TonTradingBot - Facilitates Easy and Quick #BUY #SELL of Tokens and Coins on the #TON Ecosystem Utilize TonTradingBot Now: https://bit(.)ly/3VSqMhd @TonTradingBot Usage Guide: Tutorial Video: https://bit(.)ly/huong-dan-tontradingbot Text File: https://bit(.)ly/tontradingbot-huong-dan-su-dung-text
Education
by toanlealpha
Why both Gold & U.S. Dollar Index are rising ? (IMPORTANT)The Intricate Dance of Gold and the U.S. Dollar The relationship between the U.S. Dollar Index (DXY) and Gold prices is a fascinating study in economics. Typically, these two have a reverse correlation. The reason for this inverse relationship is that gold is priced in U.S. dollars. Therefore, when the dollar strengthens, gold becomes more expensive for investors using other currencies. This can decrease demand for gold and subsequently lower its price. However, this correlation is not set in stone. There are times when both the DXY and gold prices can increase simultaneously. This can occur due to a variety of factors such as geopolitical tensions, market uncertainty, or changes in monetary policy. For instance, from early 2022 to the beginning of 2024, the correlation between gold and the DXY has seen periods of both synchronicity and divergence. This indicates that other factors are influencing gold prices. Currently, despite the rising DXY, gold prices are also on an upward trend. This could be attributed to investors seeking safe-haven assets amidst economic or geopolitical uncertainty. This increases the demand for gold, driving up its price even as the dollar strengthens. Additionally, expectations of changes in monetary policy, such as interest rate cuts, can also affect gold prices. In conclusion, while the DXY and gold prices often move in opposite directions, there are times when they dance to the same tune. This intricate dance is influenced by a myriad of factors, making the relationship between the DXY and gold prices a complex and intriguing aspect of global economics. Prepared by : Arman Shaban
OANDA:XAUUSDEducation
by ArmanShabanTrading
6
As a trader, how can you train your mental endurance? Trading psychology is actually a very complex subject. It should be said that subjects related to human nature have a certain degree of complexity and dialectics. Trading is actually a chain of links. If you do not realize the profound impact of human nature on trading and its results, then there is a high probability that you will be out with a loss in future transactions. Loss is actually not terrible. What is terrible is that there is still no objective, fair and comprehensive analysis during the review afterwards. For novices who are new to the market, which one is more important, technology or mentality? This is a topic that may never be avoided. The important thing is not the technology, but the belief in trading. Of course, being a supporter of technology does not deny the role of technology in the market, but we must look at trading objectively. The vast majority of traders come here to make quick money. They are like empty-handed wolves. Think about it, they are already empty-handed. What skills and mentality are needed? ...This will cause people to deviate from the way to make money and choose to take "shortcuts." As for whether they can make money, that is a matter for the future. Details determine success or failure, and attitude determines destiny. The same is true in trading. A trader's mentality is often determined by his or her own values, and each person's life values are developed from childhood and acquired through experience. Therefore, the trading methods of some of our traders are more like a condensed portrayal of their own lives, or everyone's trading system has some of their own life trajectories. Objectively speaking, if trading is indeed a craft, the quality of the craft can directly determine whether the "handicraft" produced is defective. There is a difference between "reckless doing" and "doing it methodically". There are methods and reasons to be found in any field, and I believe there are no exceptions to this. Remember not to be too impatient in the early stages of trading. Don’t forget that you are just a newcomer. As a trader who wants to survive in the market for a long time, you still need to give yourself a certain amount of flexibility and time. After all, it proves that long-term profits are not a short-term thing. Here are a few common mental issues that can help you: Under the condition that your own trading methods are relatively mature, (1) Place orders not in accordance with trading rules or indiscriminately. (2) I want to place an order every time I open the trading software. (3) I always feel that if I don’t trade at all times, I will miss the big market trend. (4) After a slight floating profit, you will be afraid of a slight correction in the market and want to close your position immediately. (5) Facing missed opportunities, I feel angry and unwilling, always wanting to pursue them. (6) You hit the stop loss that was buried or set in advance but you don’t believe it, thinking that you can come back if you resist. (7) Always eager to make back previous losses. (8) It is easy to be influenced by traders or friends around you, and what others say will be whatever you say. (9) When trading loses money, keep blaming the market and never looking for reasons in yourself. The biggest misunderstanding in trading is "what if". Many immature traders always fall into the trap of self-delusion. When they trade, they often imagine that if I intervene in the correct market early, I may make 50% or more more profits. Although it is difficult to develop a good trading mentality, it will be beneficial to our future transactions, and it will also be beneficial to manage our funds later when we increase the amount of funds; although bad trading behavior will make you very happy in the moment, But it is accompanied by long-term pain and repeated suffering, and the final result can only be a loss. You see, there are actually many questions and logic behind a simple decision and operation. Since we can form our own trading system through many years of trading experience, it proves that our trading logic is compact and reasonable. If it is unreasonable, It is necessary to adjust the trading method in a timely manner and not to place orders blindly. What you need most is deep thinking about trading. Thinking is a valuable behavior for traders, and it is also the freest way to improve one's level. We actually make orders with our eyes closed most of the time, and the improvement of transactions without repeated consideration and summary is close to zero, or even negative growth. Only by continuous learning and summary, the longer your trading level improves, the faster it will be. Only by learning to think deeply can you know which stage of trading you are currently in, and then you can reasonably analyze how funds should be used and how to utilize the existing trading strategies in hand. In fact, the problem of mentality will definitely accompany the entire transaction process, but as traders, we cannot abandon human nature, and there is no need to abandon human nature. Well, you can't avoid the psychological ups and downs, so don't have any delusions. If you think that your trading will be completely free from interference and influence of mentality, this is impossible and not objective. What we ultimately have to learn is to live in harmony with this mentality. When emotions rise and fall, you just need to know that the emotion is coming and don't let it control your thinking and behavior. This is the key to profitability in trading.
TVC:GOLDEducation
by cdfxcdfx
How to Use the Best Klinger OscillatorHow to Use the Best Klinger Oscillator In the ever-evolving world of trading, finding the right tools and indicators to stay ahead of the game is crucial. One such tool that has withstood the test of time and continues to be popular among traders in 2023 is the Klinger oscillator. In this article, we will discuss what the Klinger oscillator is, how it works, and how to use it effectively. What Is the Klinger Volume Oscillator? The Klinger oscillator, also known as the Klinger volume oscillator, is a technical analysis tool used to measure the difference between two exponential moving averages (EMAs) of volume. It was created by Stephen Klinger in the 1980s to address the shortcomings of other tools that failed to capture changes in volume trends. The indicator can be used to identify bullish and bearish momentum, as well as potential trend reversals. It’s plotted as two lines on a chart, one called the “Klinger” and the other known as the “signal”. The Klinger line oscillates according to volume force – a measure of price and volume – while the signal line is typically a 13-period moving average of the Klinger. Klinger Volume Oscillator Formula The Klinger oscillator is calculated by working out an asset’s volume force, and then subtracting a short EMA of volume force from a long EMA. Finally, the signal line is created by determining an EMA of the Klinger. The formula for the indicator is as follows: Step 1: Compute the Volume Force (VF) The first step is determining the Volume Force (VF). To do this, you'll need to calculate the following components: 1.1 Trend: Calculate the difference between the current period's high and low prices (H-L). 1.2 Price Range (PR): Find the range of prices by calculating the maximum of these three values: The absolute value of the current high minus the previous close (H-Cn-1) The absolute value of the current low minus the previous close (L-Cn-1) The current high minus the current low (H-L) 1.3 Volume Multiplier (VM): Determine the Volume Multiplier by using this formula: VM = - 1 1.4 Calculate the Volume Force (VF): Finally, compute the Volume Force using the following formula: VF = VM x Volume Step 2: Calculate EMAs of VF Once you have the VF, you need to compute two EMAs of the Volume Force: A short-term EMA, typically 34 periods A long-term EMA, usually 55 periods Step 3: Determine the Klinger Oscillator Subtract the long-term EMA of VF from the short-term EMA of VF to obtain the indicator value: Klinger oscillator = short-term EMA of VF - long-term EMA of VF Step 4: Calculate the Signal Line To create the signal line, compute the 13-period moving average of the oscillator. The result is two lines: the faster Klinger oscillator and the slower signal. While this formula may seem complicated, the advent of trading software means you don’t need to try and calculate the Klinger oscillator in Excel. In FXOpen’s native TickTrader platform, you’ll find the Klinger indicator and dozens of other tools waiting for you. How to Trade the Klinger Oscillator The Klinger is a versatile tool that can be used in a variety of trading strategies. Here are two common ways to use the indicator while trading: Trading Divergences One way to use it is to look for divergences between the indicator and the price. A bullish divergence occurs when the price makes a new low, but the Klinger makes a higher low. This indicates that there is strong buying pressure despite the price being lower. Conversely, a bearish divergence occurs when the price makes a new high, but the indicator makes a lower high. This indicates substantial selling pressure even with a higher price. Traders could use these divergences to enter trades in the corresponding direction. You can learn more about regular and hidden bullish and bearish divergence here. Trading Crossovers The signal line is usually a 13-period moving average of the Klinger and serves to smooth out the Klinger and provide buy and sell opportunities. When the oscillator crosses above the signal line, it is a bullish sign, indicating that the momentum is shifting from bearish to bullish. Traders can use this sign to enter a long position. Similarly, when the Klinger crosses below the signal, it demonstrates that the momentum is moving from bullish to bearish. This provides an opportunity for traders to go short. How to Confirm Signals It's important to note that traders do not rely solely on the Klinger indicator. It's always a good idea to confirm the signals with other technical and fundamental analysis tools. For example, if the oscillator crosses above the signal line and the price of the security is also above its 200-day moving average (blue), this could be a sign to buy. On the other hand, a potential sell signal emerges if it falls below the slower line and the security's price is also below its 200-day moving average. One feature of the indicator not yet mentioned is the Klinger oscillator 0 line. The 0 level, while less important than divergences or crossovers, may be used to confirm the direction of the trend. While a move above or below 0 doesn’t necessarily precede a bullish or bearish trend, respectively, a bullish or bearish trend can be confirmed when the Klinger closes beyond 0. For instance, you could look for a bearish crossover (Klinger crosses below 0), then confirm the entry when the Klinger falls below 0, and vice versa. Doing so could help to reduce the number of false signals it generates. Limitations of the Klinger Oscillator While the Klinger is a handy tool for spotting trends and incoming trend reversals, it has its limitations. Here are some drawbacks of the indicator: It does give false signals, especially during periods of low or erratic volume. In trending markets, it may be unreliable and generate numerous false signals. The indicator can be affected by sudden spikes or drops in volume, which might distort the oscillator and the signal line. Final Thoughts In conclusion, the Klinger oscillator is an effective technical analysis tool that helps traders identify trends, momentum, and potential reversals in the market. By analysing volume and price data, it provides valuable insights into market dynamics and offers multiple signals, like divergences and crossovers. Now that you have an overview of how to read the Klinger oscillator and how to trade its different setups, it’s time to put your knowledge into practice. You can open an FXOpen account to gain access to over 600 markets alongside low trading fees and lightning-fast execution speeds in the advanced TickTrader platform. Good luck! 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
CHoCH, BOS(Break of Structure), and Pullback ExamplesCHoCH, BOS(Break of Structure), and Pullback Examples Multi Timeframe Analysis Daily ----> 4H 4H ----> 1H 1H ----> 15 min 30m ----> 5m Market Structure Simplified "Ultimate Market Structure Course - Smart Money Concepts" by Smart Money Concepts 1. First Step: Find Valid Pullbacks - Signal Trends - Valid Breaks - Reversals Pullbacks are defined by when a low of a candle is below previous candle low 2. Identify deepest point of pullback - That will be the unconfirmed low/high 3. Look for BOS or CHoCH to confirm valid lower/higher high or low
CME_MINI:ES1!Education
by EaszzzyE
Don't Get Duped by the RSIWhy This Popular Indicator Can Lead You Astray The Relative Strength Index (RSI) is a common technical analysis tool used by traders to gauge whether an asset is overbought (priced too high) or oversold (priced too low). It analyzes price movements over a specific period (often 14 days) and displays a score between 0 and 100. Generally, an RSI above 70 suggests an overbought condition, while an RSI below 30 suggests an oversold condition. While the RSI seems straightforward, there's a crucial catch: it's a lagging indicator. This means it reacts to past price movements rather than predicting future ones. This inherent lag can sometimes mislead traders, particularly when markets are volatile or trending strongly. Here's how the RSI's lagging nature can be deceptive: Overbought Traps: The RSI might reach overbought territory (above 70) during a strong uptrend. However, instead of signaling an imminent reversal, the price could keep climbing, potentially reaching new highs. This can lure traders into believing a correction is coming (based on the high RSI) only to miss out on further gains. Oversold Deceptions: Conversely, the RSI might dip into oversold territory (below 30) during a downtrend. This could be interpreted as a buying opportunity, anticipating a bounce back. But, in a strong downtrend, the price may continue to fall, and the RSI might stay oversold for extended periods. How to Use the RSI More Effectively: Despite its limitations, the RSI can still be a valuable tool when used strategically: Confirmation Tool: Combine the RSI with other technical indicators or chart patterns for confirmation. For example, an RSI divergence (where the RSI moves in the opposite direction of the price) might strengthen a potential reversal signal. Identify Trending Markets: The RSI can help identify the strength of a trend. During strong uptrends, the RSI may frequently reach overbought levels without signaling an immediate reversal. Conversely, in downtrends, the RSI may stay oversold for extended periods. Identify Overbought/Oversold Conditions: While not a precise timing tool, the RSI can indicate when an asset might be nearing extreme price levels, potentially due for a correction. However, be cautious about chasing these signals blindly. Beyond the RSI: Remember, the RSI is just one piece of the puzzle. Always consider other factors like market sentiment, news events, and overall price trends when making trading decisions. Here are some additional tips: Don't rely solely on technical indicators. Develop a comprehensive trading strategy that considers both technical and fundamental analysis. Backtest your strategies. Test your trading ideas using historical data to see how they would have performed in different market conditions. Start small and manage your risk. Don't invest more than you can afford to lose, especially when using potentially deceptive indicators. By understanding the limitations of the RSI and using it strategically, you can improve your technical analysis skills and make more informed trading decisions.
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BITSTAMP:BTCUSDEducation
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