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Trend Analysis

Strategy: The Butterfly Reversal. Harmonics are a very useful tool for gaining insight into possible reversal levels after strong trends. "M" shapes are often found at the bottom of trends and "W" shapes at the top. Most often these fit into the rules of the butterfly reversal. A defining characteristic of the butterfly is the final leg (D leg) is always a very strong leg. It's a strong and scary false breakout. Comes out of a range and always tends to look like trend continuation. In the times the butterfly reversal will work, the strong move is terminal. It'll run just far enough to take out the stops and bring in breakout traders and then have a spectacular reversal. Another trait of harmonics is the reversal is at least as strong as the move heading into it, often stronger. Since they have as a defining feature very strong swings at different points, when we have large chart harmonics these are often also accompanied by news that drives the fast moves. In the times they work, harmonics are one of the most accurate forms of forward looking signals for a reversal. However, it should be noted that trading harmonics as a sole strategy against a trend is not expected to have a winning outcome. Typically you'd expected to hit about 1/3 winners on 1:3 RR and come out around even. That's if you do it really well. Otherwise, it's a losing game. Lots of "M" shapes form in a downtrend and lots of "W" shapes form in an uptrend. The formation of these does not always mean reversal, but when there are reversals; you often see these structures signalling them. Harmonic butterflies are a classic false breakout / stop hunt pattern and very useful to know about.
NYSE:LOWEducation
by holeyprofit
1
Don't Trade These Trend Lines | Forex Trading Basics A lot of traders apply trend lines for trading and making predictions on different financial markets. Trend line can also be an important element of price action patterns. However, only few knows that some trend lines are better to be avoided. In this article, I will share with you the types of trend lines that you should avoid and not rely on for making trading decisions. Invalidated Trend Line Even the strongest trend lines may lose their significance with time. Before you take a trade from a trend line, make sure that it still remains valid. If the trend line is not respected by the buyers and then by the sellers, or by the sellers and then by the buyers, we say that such a trend line lost its significance, and it is better to not trade it. Have a look at that rising trend line on USDCAD. We see strong bullish reactions to that, and we may expect a bullish movement from that, once it is tested. However, it was violated and after a breakout it should turn into a vertical resistance. Retesting that, the price easily went through the broken trend line. The trend line lost its significance, and it is better to not trade that in future. 2 Touches Based Trend Line When you are looking for a strong trend line to trade, remember that the trend line should be confirmed by at least 3 touches and 3 consequent bullish / bearish reactions to that. Above is the example of a valid and reliable trend line. However, quite often, newbie trade 2 touches based trend lines. Most of the time, such trend lines are neglected by the market. Moreover, relying on 2-touches-based trend lines, your chart will look like a complete mess. Simply because there are too many trend line meeting that criteria. Receding trend line There are the trend lines that go against your trade with time while remaining valid. Have a look at a major falling trend line on NZDCHF on a daily time frame. You may open a swing long position from that on a daily or a day trade on intraday time frames like an hourly. You can see that the market may easily go against your predictions for a long time, while perfectly respecting a trend line. The price was sliding on that trend line for 6 consequent days before it finally started to grow. Such trend lines are better to be avoided . Make sure that a trend line and your trade have the same direction. Trend lines can provide very safe points for trading entries. However, the trend lines are not equal and while some of them can be very profitable, some of them can lead to substantial losses. ❤️Please, support my work with like, thank you!❤️
Editors' picks
OANDA:XAUUSDEducation
by VasilyTrader
20
Swing Mapping Part 3: Trade Management StrategiesWelcome to Swing Mapping Part 3, where we delve into three different approaches to trade management using swing mapping methods. Trade management always represents a trade-off between taking profits early and letting winning trades run. There is no perfect solution, but by understanding different approaches, traders can tailor their strategies to their risk tolerance and market conditions. 1. Aggressive Approach: Exit on Failure at Swing High (Low) The aggressive approach involves exiting a trade when the market fails to hold above a swing high (swing low if short). Method: Once you’ve entered the trade (long), continue to map the swings highs as defined in Swing Mapping Part 1. Should the market fail to break and hold above the swing high, a trader using this strategy may close their trade. This strategy aims for quick profits without giving back gains, capitalising on short-term market movements. Traders employing this strategy often prioritise locking in profits swiftly, especially in volatile or uncertain market conditions. However, by exiting at the first sign of resistance, traders may miss out on potential larger gains if the market continues to move in their favour. Positives and Negatives: Positive: Quick profits may allow for rapid capitalisation on short-term price movements. Positive: Avoids giving back gains by exiting at the earliest indication of a potential reversal. Negative: Potential for leaving profits on the table if the market continues to trend favourably after the exit signal. Example: EUR/USD 1hr: Exit on Failure at Swing High This example on the hourly candle chart illustrates the active approach of taking small profits following failures at a swing high. The first entry takes a retest of support and exits as the market fails to break above prior swing resistance. The second entry then takes a breakout above the swing highs and the aggressive exit approach works well as the market fakes out at swing highs. Past performance is not a reliable indicator of future results 2. Passive Approach: Exit on a Break Below Swing Low Contrary to its name, the passive approach still requires active monitoring of the market. This strategy involves exiting a trade when the market breaks below a swing low, indicating a potential reversal or loss of momentum. Method: Once you’ve entered the trade (long), continue to map the swing lows as defined in Swing Mapping Part 1. Should the market break and close below a swing low, a trader using this strategy may close their trade. While this approach provides a more conservative exit compared to the aggressive approach, it may result in giving back some profits gained during the trade. Traders employing this strategy often prioritise running winning trades over taking quick profits – pairing well with trend following entry techniques. Positives and Negatives: Positive: Gives winning trades more time to run and allows for pullbacks. Positive: Provides a conservative exit strategy, minimising the risk of significant drawdowns. Negative: By definition this strategy will result in giving back profits as the market retraces. Example: S&P 500 5min: Exit on a Break Below Swing Low This example is an intra-day trend continuation trade on the S&P 500 5min candle chart. The entry setup was a simple breakout above a cluster of swing highs in-line with the prevailing trend. We can see that whilst we had several stalls at swing highs, taking a more passive approach and using mapped swing lows worked well when managing this trade. The trade was closed when the market broke and closed below a mapped swing low. Past performance is not a reliable indicator of future results 3. Predictive Approach: Place a Limit Order at Key Swing Resistance (Support) We mentioned in Swing Mapping Part 1 that not all swings are equal. The more bars either side of the swing high or low, the larger the peak or trough in the market – the more significant the turning point. These more significant swings can be used as profit targets. Method: Prior to entering your trade, identify a key swing on your chart – one that has not been broken for a large number of bars. A trader using this strategy would place a limit order to take profits at the highest close prior to the key swing. This strategy allows traders to set a predefined target for profit-taking, reducing the need for continuous monitoring of the market. By setting a fixed order, traders can automate their exit strategy and focus on other aspects of their trading plan. However, the challenge lies in accurately predicting price targets, as objectives may not always align with market movements. With this in mind, this approach can work in tandem with either the aggressive or passive swing exit methods outlined above. Positives and Negatives: Positive: Fixed order placement enables traders to "set and forget" their exit strategy, reducing emotional decision-making. Positive: Allows you to define your risk/reward prior to entering a trade. Negative: Objectives may not always align with market movements, leading to missed opportunities or premature exits if the target is not reached. Example: Tesla Daily: Place a Limit Order at Key Swing Support Here’s an example of the key swing limit order approach to managing trades. Each entry is a short fakeout entry setup that we discuss in depth in Swing Mapping Part 2. We identify the nearest key swing level that we believe the trade could reach. A limit order is then placed at the lowest close nearest the key swing level. Past performance is not a reliable indicator of future results Summary Swing mapping can help you gain a deep understanding of price action and reduces reliance on lagging indicators. It allows you to quickly analyse the strengths of different markets, pinpoint precise entry levels and manage trades in a dynamic way that quickly adapts to changing market conditions. Now you’ve reached the end of this mini-series on swing mapping, we hope you will feel confident enough to put some of the techniques into practice. Happy swing mapping! Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84.01% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
NASDAQ:TSLAEducation
by Capitalcom
Strategy: The 1.61 Head Fake Strategy. The 1.61 head fake strategy is intended to give early signals of where a high/low might be and be an early tell on the potential turn of the trend. This strategy can be used for both pullbacks and reversals. When traded as a correction, this strategy usually is successful in the forecasting and trading of the end of Elliot wave 5 heading into the ABC. Absolute highs and lows can also be made with this 1.61 head fake. Breaking of the 2.20 fib triggers failure of this strategy.
NYSE:LOWEducation
by holeyprofit
Strategy: 76 Correction Trend Continuation. The 76 correction strategy aims to pick up optimal continuation trades into large retracements. It's a trend following strategy that aims to enter into strong counter trend moves to a 76% retracement of the previous trend leg. This strategy usually performs best when combined with Elliot wave. Waiting for there to be a full impulsive leg in 5 waves followed by a big ABC correction. The strategy aims to pick up trades into the "C" point in such a correction. With a default minimum risk:reward of 1:3 the strategy is expected to breakeven on win rates of 35% or higher.
NYSE:LOWEducation
by holeyprofit
2
How to Use Fibonacci Retracements for CryptoHow to Use Fibonacci Retracements for Crypto Fibonacci retracements have long been used in traditional financial markets. However, with the advent of crypto trading, they’ve also found popularity amongst digital asset traders. In this article, we answer the question “What is Fibonacci in crypto?”, discuss how to trade retracements and offer some strategies you can get started with today. Understanding Fibonacci Retracements Fibonacci retracements are based on the Fibonacci sequence mathematical concept. This sequence was discovered by Leonardo Fibonacci, a 13th-century Italian mathematician, and consists of a series of digits where each number is the sum of the two preceding ones, starting from 0 and 1. The sequence is 0, 1, 1, 2, 3, 5, 8, and so on. The most interesting aspect of this sequence is the so-called Golden Ratio of 1.618. This ratio can be found throughout artificial and natural structures, including the Taj Mahal, tornadoes, and spiral galaxies. This ratio, and complementary ratios, also seem to significantly influence the financial markets. Fibonacci retracement levels are percentages derived from the Golden Ratio. The most widely used retracement levels are 38.2%, 50%, and 61.8%. These levels represent potential support and resistance areas where the price of an asset, like a cryptocurrency, might bounce back or reverse during a trend. Additional retracement levels, like 23.6% and 78.6%, are also sometimes used, although they are considered less significant. As traders, we can use the Fibonacci sequence in crypto trading to identify potential areas where a price may reverse or stall, allowing us to make informed decisions about when to enter and exit a position. The retracement levels can be applied to any timeframe, making them versatile tools for different trading styles, including day trading, swing trading, and position trading. What Does Fib Mean in Crypto? “Fib” is an abbreviated term describing Fibonacci retracements. While there are other types of Fibonacci tools, such as extensions, fans, and spirals, Fibs will almost always refer to retracements. How to Use Fibonacci Retracements for Crypto Trading Using Fibonacci levels in crypto has become increasingly popular in recent years, especially for the world’s largest and most popular digital asset, Bitcoin. The highly volatile nature of cryptocurrencies makes it crucial for traders to identify potential areas of support and resistance where prices may reverse. To find and use your own Bitcoin Fibonacci levels, follow these steps: Plot the Bitcoin Fibonacci retracement levels by selecting an extreme low and high in an uptrend and vice versa. This can be done using the Fibonacci retracement tool available in most charting software, including the TickTrader platform by FXOpen. Observe price action at the 38.2%, 50%, and 61.8% levels. Each level acts as an area that may prompt a reversal. If the price breaks through one level, it can be assumed the trend is continuing and that the asset will move to the next level. When drawing the Fibonacci retracement, it’s essential to follow these two rules: When looking to plot support levels, set the first point at a swing low and the second at a swing high. When looking to plot resistance levels, set the first point at a swing high and the second at a swing low. Optimising Entries and Exits While Fibonacci retracements can help traders pinpoint support and resistance levels, there are a few factors to consider to make the most out of Fibs for crypto trading. Trade with the Trend Like many technical tools, Fibonacci retracements are best applied in line with a broader trend. While you might be looking for a short-term reversal, the setup will have the highest probability of working as expected when it conforms to a higher timeframe trend. In other words, you would want to look for retracements in a larger uptrend and vice versa. Think of the Levels as Areas Like traditional support and resistance levels, Fibonacci retracement levels shouldn’t be treated as the exact point where the price will reverse. It happens occasionally, but the price will often move slightly beyond the level before reversing as expected. It may even stop just short of it. Instead, you can treat them as areas of interest and then wait for confirmation using other tools. Combine Fibs with Other Technical Tools When looking at a crypto Fibonacci chart, it can be tempting to simply set a limit order at one of the significant levels and call it a day. While this sometimes works, there’s no guarantee these areas will remain consistent. It’s better to evaluate the likelihood that the area will hold, or is holding, using other tools. For example, you could look for it to line up with a horizontal support/resistance level or a trendline. Momentum indicators, like the relative strength index (RSI), can also offer insights into whether the trend is weakening and is due for a reversal. Additionally, candlestick and chart patterns can provide extra confirmation. Strategies for Trading Bitcoin with Fibonacci Retracements Let’s take a look at some specific Fibonacci retracement strategies you can use to trade Bitcoin and other cryptocurrencies. Trend Trading with Support and Resistance This approach simply requires identifying a broader trend and waiting for a pullback to one of the key levels that lines up with the horizontal support and resistance level. Entry: Limit orders can be set at the level within the support/resistance area. Alternatively, you could wait for the area to show signs of reversal before entering with a market order. Stop Loss: Stop losses can be set just above (in an uptrend) or below (downtrend) the horizontal area. It should be somewhere that invalidates your idea without being unnecessarily wide. Take Profit: Traders often begin to take profits at the chosen high or low. In the example shown, we could start to take profit at the retracement’s swing low. Relative Strength Index (RSI) Divergences and Fibonacci This strategy combines the popular momentum indicator, the relative strength index (RSI), with the Fibonacci retracement tool. Specifically, we’re looking for divergences that indicate a potential reversal as the price moves to a Fib level. Entry: Wait for a regular divergence to appear at a significant Fibonacci level (right-hand trendline). When the price shows signs of reversal, validating both the retracement and the divergence, traders can enter with a market order. Stop Loss: A stop can be placed above or below the entry candle, depending on the direction of the trade. Take Profit: As with the previous strategy, a good place to consider taking profit is at the high or low of your plotted retracement. As a bonus here, we also have a hidden divergence (the left-hand trendline) that indicates that bullish momentum is likely to happen. Fibonacci and Chart Patterns In this strategy, we use chart patterns to confirm the level is holding. In the Bitcoin Fibonacci chart shown, we’ve used a bullish wedge (a common reversal pattern), but you can use any pattern you prefer. Entry: After observing a chart pattern at a retracement level, you could wait for the pattern to be confirmed with a breakout. Then, you may enter on the retest of the pattern’s trendline. In this example, we could wait for the upper trendline to be broken before waiting for a pullback and entering. Stop Loss: Stops can be placed above or below the pattern’s opposing trendline. Here, we’d place it below the wedge’s bottom trendline. Take Profit: You could take profit at the retracement tool's extreme points. This setup also had extra confirmation with the double bottom before the wedge broke out, providing a high-probability trade. Confirming Fibonacci with Other Technical Indicators Of course, RSI isn’t the only indicator you can combine with Fibonacci retracements. Here are some other popular indicators to use: Moving Averages: Moving averages can offer dynamic support and resistance levels that add extra confluence to a Fib setup. Longer-term averages, like a 50 or 200-period moving average, are often respected. Meanwhile, pairing two faster moving averages can help confirm reversals when they cross over. Bollinger Bands: Bollinger Bands are often used to spot potential reversals. Touches to the band that move away sharply can be a sign of a reversal and, when combined with a retracement level, can make for a decent entry. MACD: MACD is another momentum indicator that can help traders find reversals. When the MACD and signal lines cross at a Fibonacci level, this can indicate a reversal is inbound. Risk Management Techniques As with all trading strategies, risk management is critical to a sustainable system. However, there are a few techniques that are specific to Fib retracements. Look For High-Quality Setups The first step in managing your risk is to only trade the best setups. This means looking for Fibonacci trades that have multiple confirmation factors and waiting patiently to see what you want to see. You might miss some moves this way, but it’ll also keep you out of many losing trades. Set Logical Stop Losses When using Fibonacci retracements in crypto, it can be tricky knowing where to place your stop loss. It’s good practice to consider the wider context of your trade idea and how your stop-loss placement fits into it. If you’re confident that the retracement level will hold or are trading short-term price movements, setting a stop loss beyond the entry level is suitable. Likewise, if you’re less confident that the area will prompt a reversal or are taking a longer-term view of the market, then you may prefer to set your stop loss at the high or low of the Fibonacci retracement. Establish Take Profit Targets in Advance By knowing where you want to exit a profitable trade, you prevent yourself from giving up too much profit by holding on too long. Using the take-profit levels discussed is a good place to start, as are Fibonacci extensions. Develop a Rule-Based System Having clearly defined rules for Fibonacci entries will remove a lot of the guesswork that comes with discretionary trading. It helps you find the best quality setups, avoid impulsive decision-making, and means you can easily adjust your strategy as you progress. Common Mistakes to Avoid When using Fibonacci in crypto trading, traders can sometimes fall into pitfalls. Let’s examine some of the most common errors. Confusing Highs and Lows: As mentioned, selecting a high or low as your first point when plotting the retracement depends on whether you’re looking for support or resistance. Be sure to follow the rules described earlier to avoid any confusion. Confusing Fibonacci Retracements for Extensions: Retracements identify potential support and resistance levels during a price pullback, while extensions project potential target levels beyond the original high or low. Double-check the name of the tool you’re using to avoid getting the two mixed up. Ignoring the Bigger Picture: Always consider the overall market context and trend before making a trade. If the market is strongly trending in one direction, a reversal at a Fibonacci level might be less likely. Misidentifying Significant Price Points: Selecting the correct high and low points is essential for accurate retracement levels. This usually means selecting the most extreme swing highs and lows that are easily visible. Take your time to identify the most significant price points, and be prepared to adjust your points as the market progresses. Closing Thoughts In summary, Fibonacci retracements can make for an excellent addition to your crypto trading arsenal. While they shouldn’t be used in isolation, combining Fibs with other technical tools and indicators can make for an effective strategy. However, the tips, techniques, and strategies described here aren’t exclusive to crypto: they can be applied to whichever market you prefer to trade, like forex, stocks, and commodities. Want to see for yourself? You can open an FXOpen account to gain access to these markets and the advanced TickTrader platform, where you’ll find the Fibonacci retracement tool and the indicators discussed waiting for you. Good luck! *At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules, respectively. They are not available for trading by Retail clients. 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
BITSTAMP:BTCUSDEducation
by FXOpen
6
Double EMA Strategy...For Beginners Hey Rich Friends, Happy Monday! It's a new week which means many new opportunities to get into the market...but it doesn't mean that you have to take all of them. Make sure you focus on finding the best setups by sticking to your plan and following your confirmation checklist. The best out of 25 will give you a good idea of your win/loss ratio. If you are still struggling to find a SIMPLE strategy that works for you, try using this Double EMA strategy that I apply to my trades. Let me know what you think and if it works for you! Today we will cover: 1. How to use EMAs on Tradingview 2. Double EMA Strategy 3. Feel confident taking a buy or sell in Forex trades 4. Trade with the trend Peace and Profits, Cha
Editors' picks
Education
0
by MoneyMantraCha
19
Where to Put Your TP and SL | Learn in 10 MinutesHey Rich Friends, This quick video will explain how I easily find my TP and SL for my Forex Trades. I've noticed how many new traders struggle with this, so hopefully this video will help. Here is what I do: 1 . Identify the overall trend of the market. It is important to understand that a Selling market will look like a roller coaster going up, have more red candles and it will continue to create Lower Highs and Lower Lows. A Buying market will look like a roller coaster going down, have more green candles, and continue to create Higher Highs and Higher Lows. This is very important. 2 . Collect my confirmations for the potential trade. Here are some questions I ask myself: - What color is the current candle? - Are the candles above or below my EMAs? - Have the EMAs crossed? - Is my Momentum indicator facing up or down? Is it positive or negative? - Is my Stochastic facing up or down? Is the Indicator's financial value above 50? These are the answers you should get: - Bullish/Buying: Green, Above, Up, Over, Higher, and Positive - Bearish/Selling: Red, Below, Down, Under, Lower and Negative 3. Enter the market at Market Execution or set a Pending Order. 4. Choose my TP and SL using the Long position tool for buying and the Short position tool for selling. Buys: Place TP above previous high and SL below the previous low Sells: Place TP below previous low and SL above the previous high - Peace and Profits, Cha
Education
0
by MoneyMantraCha
10
Scalping Strategy for Trading BTCUSD on 15minThe Bollinger Band is a versatile technical indicator. It identifies trend direction, momentum, volatility, and overbought or oversold price conditions. This indicator provides all this information using three lines. The middle line of the classic Bollinger Bands is based on a 20-period Simple Moving Average (SMA). Two lines are then drawn above and below the middle line forming a channel. The upper and lower lines are derived from the middle line by computing for the standard deviation of price movements compared to the 20 SMA. Because the outer bands are based on a standard deviation of price movements, the band tends to contract during market conditions with low volatility and expands during an influx of volume and volatility. Price breaching the bands could indicate a strong momentum, while price rejecting the outer lines could signal a probable mean reversal. The middle line of the Bollinger Band could also be used just as a standard Simple Moving Average. Trend could be based on how the line is sloping. It could also be used as a dynamic support or resistance line where price could bounce off. Advanced Bollinger Bands is a modified Bollinger Band which allows more control over how the lines are drawn. Traders could modify the type of moving average, the basis of price being applied to the computation, and much more. == MACD Signals == The classic Moving Average Convergence and Divergence (MACD) is based on the difference between a 12-period and 26-period Exponential Moving Average. It is then displayed as an oscillator that becomes positive during an uptrend and negative during a downtrend. A second line, called the signal line, is then derived from the MACD line. The signal line is a Simple Moving Average (SMA) of the MACD line. Trade signals are then generated based on the crossing over of the MACD line and the signal line. MACD Signals is modified version of the classic MACD. It allows more control for traders by allowing traders to tweak the type of moving average line used on each parameter. It could also be set to indicate trade signals generated by the MACD. The MACD Signals is displayed as an oscillating histogram. Positive bars indicate a bullish trend while negative bars indicate a bearish trend. Trade signals could be generated based on the crossing of the bars over its midline. == Trading Strategy == This trading strategy identifies possible trade setups based on the crossing over of a 5-period Simple Moving Average (SMA) line and the midline of the Bollinger Bands. These signals should be in confluence with the signals generated by the MACD Signals indicator. Trades should first be filtered based on the direction of the long-term trend. To do this, we will be using a 200-period Simple Moving Average (SMA). Trend direction are simply based on the location of price in relation to the 200 SMA, as well as the slope of the 200 SMA line. Then, we will be waiting for a confluence of the crossover of the 5 SMA line and midline of the Bollinger Band and the trend reversal signal generated by the MACD bars. Trades are then confirmed based on the type of price action and candlestick patterns occurring around significant areas on the Bollinger Bands. It could be an indication of price rejection of the outer bands or a strong momentum as price crosses over the midline. == Indicators == 200 SMA (Green) bollinger_bands (default setting with 21 MA) MACD_Signals MAFast: 6 MASlow: 15 MASignal: 1 Preferred Time Frames: 15 min Trading Sessions : Tokyo, London and New York sessions == Buy Trade Setup == Entry Price should be above the 200 SMA line. The 200 SMA line should be sloping up. The 5 SMA line should cross above the midline of the Bollinger Band. Price action should show bullish patterns and indications. Enter a buy order on the confirmation of these conditions. Stop Loss Set the stop loss on the fractal below the entry candle. Exit Close the trade as soon as price closes below the midline (21MA) of the Bollinger Band.
BITSTAMP:BTCUSDEducation
by Michael_Harding
Google search trend for BTCWorldwide, 90days, search trend in Google for bitcoin (red arrows). Orange arrows represent " bitcoin use case ", ie the educated investor? It shows you the mainstream peak euphoria, enthusiasm or fear , usually at market extremes? Highest search volume coincides with trade volume. Other indicator for "hype" would be bitcoin hashtag in twitter/X. According to theory - during enthusiasm people would ignore the bad news or events, and only see everything as positive. This is a contrarian style, which is often the opposite of T.A., ie strong trend can be longterm bad. Pessimistic or skeptical sentiment is usually good (opposite of mainstream view or mood), or usually it means more money is left at sidelines.
BITSTAMP:BTCUSDEducation
by citsvar
How to compare other coins to BTCAn easy way and using a single chart to compare multiple coins to Bitcoin is by using the "+" button next to the Symbol input. It quickly shows us which coins outperformed BTC in the past weeks/days and is a good indicator of how good altcoins are performing. I added the top market cap coins that showed good results and the winners are SOL, AVAX and BNB. To my surprise, ETH is pretty even with BTC. A new challenger that rose up within just a month is TON which market cap went up 185%.
CRYPTOCAP:BTCEducation
by cyatophilum
Indicators for trading using Bill Williams' Profitunity strategyI published 3 indicators for trading using Bill Williams' Profitunity strategy. For each indicator, I have added a visual and detailed description in English and Russian. In this post I will briefly describe these indicators and how I use them together. AFDSA indicator (Alligator + Fractals + Divergent & Squat Bars + Signal Alerts) Includes Williams Alligator, Williams Fractals, Divergent Bars, Market Facilitation Index, Highest and Lowest Bars, maximum or minimum peak of the Awesome Oscillator, and signal alerts based on Bill Williams' Profitunity strategy: Bullish and Bearish Divergent Bar Signal + Squat Bar + Green Bar + Fake Bar + Awesome Oscillator Color Change + AO Divergence. Crossing the green line (Lips) of an open Alligator. Formation of a fractal. Signal about the breakdown of the last upper or lower fractal. Signal about the appearance of a new maximum or minimum peak of AO in the interval of 140 bars from the last bar. I also added an Alligator display for the higher timeframe, for example, if the chart timeframe is 1 hour, then the higher timeframe will automatically be 4 hours, if the chart timeframe is 4 hours, then the higher timeframe will be 1 day, etc. AOE Oscillator (Awesome Oscillator + Bars count lines + EMA Line) Includes the Awesome Oscillator with two vertical lines at a distance of 100 and 140 bars from the last bar to determine the third Elliott wave by the maximum peak of AO in the interval from 100 to 140 bars according to Bill Williams' Profitunity strategy. Additionally, a faster EMA line is displayed. I also added display of the AO line for the lower timeframe instead of the EMA line if the Moving Average Line values (method, length and source) are equal to the Awesome Oscillator values in the indicator settings. For example, if the chart timeframe is 1 day, then the lower timeframe will automatically be 4 hours, if the chart timeframe is 4 hours, then the lower timeframe will be 1 hour, etc. VBCHL indicator (Visible bars count on chart + highest/lowest bars, max/min AO) The indicator displays the number of visible bars on the screen, including the prices of the highest and lowest bars, the maximum or minimum value of the Awesome Oscillator. The values change dynamically when scrolling or changing the scale of the chart, but with a delay of several seconds, so this feature is included in a separate indicator so as not to slow down the work of other indicators. Indicator settings In the AFDSA indicator I use the following settings: By default, the Squat Bar is colored blue, and all other bars are colored to match the Awesome Oscillator color, except for the Fake bars, which are colored with a lighter AO color. But I also enable the display of "Green" Divergent bars in the "Green Bars > Show" field. I enable the display of Alligator for higher timeframes in the "Alligator for higher timeframe > Enable" field. In the indicator style settings, I disable the display of the highest and lowest bars, maximum and minimum AO peak labels, because these labels are also displayed by the VBCHL indicator depending on the number of visible bars in the chart window. Only after opening a position, I enable all additional alerts in the “Enable all additional alerts” field (after changing this field, you need to re-create the alert for the current chart): crossing the green line of an open Alligator, formation of a fractal, appearance of a new maximum or minimum AO peak. In the settings of the AOE oscillator, I enable the display of the AO line for the lower timeframe instead of the EMA line, setting the same values in the fields for the Moving Average Line (method, length and source) and Awesome Oscillator. In the VBCHL indicator settings, I only enable the simple display text style for labels in the "Simple display text style for labels" field. As a result, when analyzing the current chart, I immediately see all the signals on the chart, the location of the bars relative to the Alligator on the higher timeframe and changes in the Awesome Oscillator on the lower timeframe. And thanks to the VBCHL indicator, I quickly select the desired timeframe for analyzing the 5-wave Elliott impulse, focusing on the interval of 140 bars, and immediately see whether there is divergence between the maximum AO peak and the following lower AO peak in this interval.
OANDA:XAUUSDEducation
by grigorykov
2
What I mean when I say "Activate an algorithm" - Quick TutorialThis should be helpful for anyone looking to understand further what I define as an activation of an algorithm. This candle on the hourly is a beautiful example after my video this market where I said we want to see yellow "activated". It is basically proof that price is now respecting and following that algorithm/channel and this is so important to understand for my analysis and trading style. Always here to answer further questions for those who are interested in learning more! Happy Trading :)
NYSE:KSSEducation
by ReigningTrades
A Trader's Tapestry of Strategy, The Importance of DCAIn the grand Cosmic Ballet of Finance, where Celestial bodies of opportunity align in the vast expanse of the market universe, we navigate the Ethereum Vortex with a seasoned Trader’s Poise. Our chart, a Navigator's star map, is a chronicle of strategy, a testament to the art of Dollar-Cost Averaging (DCA), and an epic etched in the annals of digital commerce. Behold the Ethereum chart, now more complex with additional celestial markers, the Red and Green circles, constellations guiding our buying and selling strategies. Each circle, a planet on its orbit, represents a moment in time where we either fuel our rocket’s reserves or initiate a burn to propel profits into the void of realized gains. A deviation of 9%+ becomes our gravitational slingshot, harnessing the market's natural ebb and flow to catapult our portfolio through Space and Time. We acknowledge the cosmic law: Every action has an Equal and Opposite reaction. Thus, we place our DCA markers with precision, ensuring that each purchase, each sale, balances the forces of Risk and Reward. Ethereum, the Grand Monolith in the Cryptoverse, requires a Larger offering for its bounties compared to the more nimble Dogecoin. It demands a higher degree of commitment, yet the potential Edifice we construct with each DCA block could pierce the heavens, promising structures of wealth that stand the Test of Time. With the addition of new Buy and Sell points, our chart becomes a Saga of decision points, a series of If, Then propositions governed by the logic of Financial Prudence and the allure of Potential Prosperity. It is a bridge between the realms of patience and action. In this odyssey, we are reminded of the Alchemists of Yore, turning leaden patience into golden opportunity. We are not just Traders, we are Philosophers pondering the paradox of wealth, its transient nature, yet its potential to bestow lasting impact. Let us then cast our eyes upon this chart, our guide through the Ethereum Vortex, our compass through the storms of volatility. In DCA we trust, and with a 9%+ deviation our Steed, we ride through the valleys and peaks of price action, our course charted, our resolve Unwavering, our Spirits High. "Per Aspera Ad Astra" - Through Hardships to the Stars. May our journey be as Fortuitous as the Ancients who first charted the Constellations by which we now navigate. Happy Trading. T.
Education
by Tyler-Turczak015
Relative Strength vs Relative Strength IndexRelative Strength vs Relative Strength Index: What Are the Differences? While the Relative Strength and Relative Strength Index indicators might share similar names, it’s important to know the difference between the two. In this article, we’ll discuss their unique characteristics, offer insights into their differences, and help determine which one is best for you. Understanding Relative Strength Relative Strength (RS) is a method that helps traders assess the performance of a particular security compared to a benchmark or another security. For example, a trader may use Relative Strength to compare the performance of Microsoft’s MSFT stock to the S&P 500 and determine whether the stock is outperforming its benchmark. Relative Strength is expressed as a ratio. It’s calculated by dividing the price of the chosen security by another. In this example, we would divide Microsoft’s current share price of approximately $280 by the market value of the S&P 500, around $3,980. This results in a Relative Strength of ~0.07. In isolation, this figure doesn’t mean much. But plotted over time, it can show the trend of a security’s relative strength against a comparative security or benchmark. If this 0.07 value were to rise, it would mean that MSFT is outperforming the S&P 500, and vice versa if it were to decrease. Relative Strength can be used as a tool to help highlight market leaders and laggards, as well as identify overvalued or undervalued assets. For instance, if an asset’s Relative Strength is well below its historical average, it could be undervalued and ready for a reversal. Understanding the Relative Strength Index While they share similar names, Relative Strength and the Relative Strength Index (RSI) shouldn’t be confused. The RSI is a popular technical analysis tool and momentum oscillator that indicates overbought and oversold conditions in the market. RSI measures the speed and change of price movements, oscillating between 0 and 100. To calculate RSI, the average gain and average loss of the security over a specific period, usually 14, are determined. The ratio of these averages is then used to calculate the RSI value. Formally, RSI can be expressed as: RSI = 100 - (100 / (1 + (Average Gain Over Period / Average Loss Over Period))) An RSI value above 70 indicates overbought conditions, suggesting the security may be due for a pullback. Conversely, an RSI value below 30 indicates oversold conditions, hinting that the price may see a bullish reversal. Furthermore, moves above the midpoint, 50, can confirm bullishness, while action below can show bearishness. Traders predominantly use RSI to find potential entry and exit points in the market. For example, when the RSI moves above 70, traders might consider selling or shorting the security. Divergences, where the price forms a new high or low, but RSI fails to do the same, can offer additional opportunities to find reversal or continuation setups. Want to see how RSI works firsthand? Hop on to our free TickTrader terminal at FXOpen to get started with RSI and dozens of other tools ready to help you navigate the markets. Key Differences Between Relative Strength vs Relative Strength Index So what exactly are the most significant differences between RS vs the RSI indicator? Purpose RS aims to compare the performance of a security to a benchmark or another security. Meanwhile, RSI measures the speed and change of price movements to identify overbought and oversold conditions in a single asset. Calculation This difference can be seen when comparing their calculations. Relative Strength is a simple ratio of two securities’ prices, whereas RSI is calculated using a more complex formula that accounts for average gains and losses over a specified period. In this sense, Relative Strength provides a broad picture of a security’s performance, while RSI is concerned with recent price action. Use Case When putting both into practice, traders will use Relative Strength and RSI in vastly different ways. Relative Strength can show which sectors, industries, or individual assets are outperforming their peers. This might help a trader formulate a hypothesis supporting a decision to invest in a particular market, like a stock or an Exchange Traded Fund (ETF). Meanwhile, RSI focuses on a single asset’s momentum and is used to gauge potential trend reversals or the strength of the overall trend. This makes it better suited for entering and exiting positions rather than conducting top-down analysis. Relative Strength vs RSI: Which Is Better? Determining whether Relative Strength or RSI is better ultimately depends on the individual trader. Both indicators have unique strengths and different utilities. Relative Strength may be better for helping longer-term traders and investors to identify trending markets. Throughout a day’s trading, Relative Strength might not indicate much; MSFT’s comparative performance to the S&P 500 can easily change each day. But, over weeks or months, a strong RS reading can demonstrate that MSFT is likely to continue outperforming the benchmark, making it a potential candidate for swing or position trading. Likewise, traders looking to capitalise on trending sectors can use Relative Strength to determine attractive markets. For example, a trader may consider consumer staples a strong industry that could outperform the S&P 500 and then compare the S&P 500 Consumer Staples Sector ETF’s (ICSU) Relative Strength readings to the S&P 500 to confirm their prediction. In contrast, while RSI can be applied across all timeframes, its focus on short-term price action may make it a better option for those interested in trading recent movements. As a versatile indicator, traders can use RSI to highlight potential reversals and trends through both its absolute value and divergences. This makes it ideal for someone looking to find specific entry and exit points rather than general market trends or long-term outperformance. Relative Strength Index vs True Strength Indicator: What Is the Difference? The True Strength Index (TSI) indicator is another momentum oscillator commonly confused with RSI. It’s calculated by smoothing price differences over a specific period and dividing the result by a double-smoothed average of the absolute price differences. The resulting TSI value oscillates around a zero line, with positive values indicating bullish momentum and vice versa. It also features a signal line, which is an average of the TSI line. While their plots are relatively similar, there are differences between RSI and TSI. The primary difference is in their interpretation. RSI mainly identifies overbought and oversold levels, while TSI indicates the overall trend direction using its value relative to the zero line. Their calculations also differ, resulting in a smoother TSI compared to the more erratic RSI. Test Your Skills Now that you have a solid overview of the differences between Relative Strength and RSI, it’s time to put your knowledge into action. You can open an FXOpen account to gain access to dozens of tradeable instruments and advanced technical analysis tools, including the RSI indicator. 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
DEMO KING SYNDROME: DISADVANTAGES OF A DEMO ACCOUNTThis post is directed towards novice traders who harbor the belief that honing trading skills and mastering profit-making strategies is achievable solely through practice on a demo account. However, the unforgiving reality of statistics paints a stark picture: approximately 65-80% of novice traders find themselves facing financial losses within the initial months of transitioning to a real trading account. Surprisingly, the extent of practice on a demo account beforehand appears inconsequential in mitigating these losses. If your aim is to cultivate profitable trading abilities while safeguarding your account from losses, relying solely on a demo account will inevitably fall short of achieving this goal. DISADVANTAGES OF A DEMO ACCOUNT 🚫 A demo account works like a simulator, allowing you to do everything you would on a real account, but with virtual money instead of real funds. In essence, it's designed to help you get comfortable with the trading platform. PSYCHOLOGY 🧠 Trading on a demo account provides a risk-free environment, shielding traders from the consequences of losing real money and thus alleviating mental strain. Consequently, traders might exhibit a tendency towards more aggressive decision-making compared to their approach on a live account. In the absence of mental pressure and the fear of missing out (FOMO), errors are less likely to surface. IT IS IMPOSSIBLE TO STUDY THE PSYCHOLOGY OF TRADING 📝 One of the pivotal aspects of successful trading lies in the adept management of emotions. Yet, it's widely acknowledged that the emotions experienced on a demo account pale in comparison to those felt on a live one, making it challenging for traders to grasp how these emotions influence their decision-making. When a trader initiates a trade, it's akin to embodying a different persona altogether. A demo account falls short in providing a crucial element: it fails to address the fear associated with taking the first step into live trading; instead, it perpetuates hesitation. Every time a trader deliberates on transitioning to a real account, excuses surface: "I'm not quite prepared yet," or "I need to further refine my strategies," and so on. Despite spending an indefinite amount of time on a demo account, the leap to real trading remains elusive. NO NEED TO CAREFULLY OBSERVE RISK MANAGEMENT 📊 There's often a tendency to overlook the importance of diligent risk management. Why bother calculating the risk percentage for each trade or determining the stop loss length when there's no fear of losing money from a demo account? After all, it's easy to replenish virtual funds at any time. Consequently, even if a trader sets out to learn about risk calculation, they may approach it with less seriousness at a subconscious level. Consider this: A trader may achieve impressive gains, perhaps even exceeding 20%, in a single trade on a demo account. But can they replicate the same success on a real account? SLIPPAGES 🔢 Slippage is a critical consideration in trading dynamics. On a live account, brokers source quotes from providers, and ensuring that traders receive these quotes with millisecond precision is technically advantageous for the broker. This precision becomes paramount in algorithmic trading, where even a split-second delay can translate into a significant price shift of several pips. Conversely, in the controlled environment of a demo account, trades are executed seamlessly. However, it's essential to note that slippages, especially those spanning several points, can markedly impact outcomes, particularly in high-frequency trading strategies like scalping. The primary distinction lies in the timeliness of quote delivery: traders on live accounts benefit from real-time, accurate quotes, whereas those on demo accounts may encounter delays. COMMISSIONS $ On a demo account, commissions are often not fully accounted for. ALL FUNCTIONS OF THE TRADING PLATFORM ARE NOT ALWAYS AVAILABLE 🖥️ It's worth noting that not all features of the trading platform are consistently available on demo accounts. Certain brokers might opt to limit access to specific functions on these trial platforms, perhaps as a means of encouraging traders to transition to a live account. However, it's important to recognize that a demo account holds intrinsic value. It serves as a practical tool for grasping the fundamental concepts of trading. Particularly for those who are new to the platform, a demo account offers a risk-free avenue for gaining familiarity. Moreover, viewing demo trading as a game of chance is not uncommon. Just as some individuals enjoy racing or strategy games, others find satisfaction in virtual trading simulations. Over time, engaging in this activity can gradually pique interest in trying one's hand in the real market. CONCLUSION 💡 Novice traders often perceive a demo account solely as a simulator for mastering the art of profitable trading, which is a misconception that frequently results in losses when transitioning to a real account. However, the true purpose of a demo account is twofold: first, to acquaint oneself with the functionalities of the platform, such as executing trades, calculating trade volumes, and utilizing indicators; and second, to test trading strategies. If a strategy proves to be unprofitable on a demo account, it's highly likely to yield losses on a real account as well. Conversely, even if a strategy yields positive results during demo testing, there's no guarantee of success on a real account. The true mastery of trading with financial assets can only be attained through experience on a real account. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
6
Fib Retracement - better/important than most believeFibonacci. introduced by Italian mathematician "father of the Fibonacci sequence" Leonardo Da Pasa (born around A.D. 1170) in 1202 in his book Liber Abaci "book of calculations" which he handwrote as the printing was not yet invented, which also became the first book to be introduced to the Hindu-Arabic numeral system as it was a new way to write numbers and do calculations. Fibonacci in trading. the most important/popular fib tool in the trading/investing community is the Fibonacci Retracement applied from the Fibonacci sequence which is a set of steadily increasing numbers where each number is the sum of the preceding 2 numbers. Fibonacci retracement, is derived based on high and low price/ valley and peak in supply and demand terms. The most important Fibonacci ratios/percentage of the retracement measure is - 23.6%, 38.2%, 50%, 61.8%, 100%, with the ratio/percentage being represented by horizontal lines on the price chart. calculated by : in bull market, high price - (high price-low price) x percentage in bear market, low price + (high price-low price) x percentage Significance of Fib Retracement. these are very important too traders as the indicate significant price levels/areas like : - support and resistance - liquidity pool - using rectangle drawing tool to connect two fib retracement levels together as a zone not a singular ratio level. based on current market conditions and trading criteria. - price targets, exit price (Take Profit) - Stop Loss - stop and limit orders (set and forget for supply and demand traders) Fibonacci retracement also compliments other trading tool and indicators well and can be used by all sorts of traders, from position traders to scalpers. it works best on trending market conditions to identify reversals, corrections, pullbacks continuation moves. important note : - Leonardo did not invent Fibonacci, it was actually used and known to Indian mathematicians since the 6th century. - the 50% is not really a Fibonacci number instead is taken from Dow theory that assets usually retrace half their prior move. put together by : Pako Phutietsile as @currencynerd
OANDA:XAUUSDEducation
by currencynerd
Timeframes: The Power of Perspective.## Time Frames: Unveiling the Multifaceted Story of Bitcoin's Price Technical analysis is a compass guiding traders through the ever-shifting tides of the Bitcoin market. While technical indicators offer valuable insights, a crucial element often overlooked is **time frame analysis**. By examining Bitcoin's price movements across various time horizons, traders can gain a more nuanced understanding of potential trends and make informed trading decisions. **Zooming In, Zooming Out: Time Frames as Different Lenses** Imagine time frames as different lenses through a telescope, each revealing a distinct facet of Bitcoin's price narrative: * **Short-Term (Minutes/Hourly):** These time frames offer a microscopic view, ideal for day traders and high-frequency algorithms capitalizing on fleeting price fluctuations. Picture a scene straight out of a fast-paced trading documentary, capturing the rapid back-and-forth movements within a single trading session. Here, the focus is on scalping opportunities arising from short-term imbalances in supply and demand. Technical indicators like moving averages with shorter timeframes and the Relative Strength Index (RSI) become crucial tools for identifying potential entry and exit points within these fleeting price swings. * **Intermediate-Term (Daily/Weekly):** Daily and weekly charts provide a broader perspective, like a condensed market summary. Swing traders leverage these time frames to identify trends unfolding over days or weeks, highlighting the prevailing directional bias. Think of it as a news report, summarizing the overall price action and sentiment over a defined period. Here, technical indicators like moving averages with intermediate timeframes and the MACD (Moving Average Convergence Divergence) can be instrumental in gauging trend strength and potential turning points. * **Long-Term (Monthly/Yearly):** Monthly and yearly charts depict the sweeping historical saga of Bitcoin, revealing macro trends and broader market cycles. These time frames are invaluable for position traders seeking to capitalize on long-term price movements, similar to how an economic historian analyzes data to understand the evolution of an industry. On these timeframes, technical indicators like Bollinger Bands and Fibonacci retracements become more relevant, providing insights into potential support and resistance levels and the overall market volatility. **The Power of Perspective: Avoiding Confusing Signals** The beauty (and sometimes the challenge) of Bitcoin is that it can exhibit trends on multiple time frames simultaneously. This can lead to seemingly contradictory signals, potentially confusing novice traders. Here's an illustrative scenario: * The daily chart suggests a robust **uptrend** in Bitcoin (price has been steadily increasing over the past month). * However, the hourly chart displays a recent **downturn** (a temporary price dip within the last few hours). Focusing solely on the hourly chart might lead a trader to miss the larger uptrend and make a rash decision to sell. By employing time frame analysis, traders can: * **Confirm the Primary Trend:** The daily chart (intermediate term) indicates an uptrend, representing the overarching market direction. This is crucial for aligning trading strategies with the dominant force in the market. * **Identify Entry and Exit Points:** The hourly chart (short-term) can assist in pinpointing potential buying opportunities within the uptrend established on the daily chart (dips caused by short-term corrections) and areas to exit before potential retracements. **Putting Theory into Practice: A Time Frame Framework for Bitcoin Trading Strategies** Consider how a swing trader might utilize time frames for Bitcoin: 1. **Daily Chart (Intermediate):** Establish the overarching uptrend as the primary context for trading decisions. This is akin to a landscape artist first sketching the mountain range before focusing on details. Here, the swing trader is looking for confirmation of a bullish trend, potentially using trendlines or chart patterns to identify potential entry zones. 2. **Weekly Chart (Long-Term):** Verify the long-term bullish sentiment surrounding Bitcoin, ensuring the uptrend on the daily chart isn't an isolated event. Imagine this as consulting historical records to confirm the overall economic climate is favorable for Bitcoin's growth. Fundamental analysis also plays a role here, with the trader considering factors like upcoming halving events, regulatory changes, or institutional adoption that could influence the long-term trajectory of Bitcoin's price. 3. **4-Hour Chart (Short-Term):** Identify potential buying zones within the uptrend established on the daily chart. Think of this as a stock picker carefully selecting high-quality companies within a promising industry. Here, the swing trader might use technical indicators like price retracements to identify areas of support where the uptrend is likely to resume. **Prioritizing the Big Picture: Short-Term Noise vs. Long-Term Trends** Remember, short-term fluctuations are akin to background noise and shouldn't overshadow the primary trend. Utilize shorter time frames to validate signals gleaned from the larger timeframe chart, not to make impulsive decisions based on every minor price movement. Short-term volatility is inevitable.
BITSTAMP:BTCUSDEducation
by ParabolicP
HOW TO SET STOP LOSS | 3 SIMPLE STRATEGIES 📚 Hey traders, In this post, we will discuss 3 classic trading strategies and stop placement rules . I will teach you how to set a safe stop loss, relying on price action. 1️⃣The first trading strategy is a trend line strategy . The technique implies buying/selling the touch of strong trend lines, expecting a strong bullish/bearish reaction from that. If you are buying a trend line , you should identify the previous low. Your stop loss should lie strictly below that. Buying a test of arising trend line on GBPCHF, stop loss is lying strictly below the previous low. If you are selling a trend line , you should identify the previous high . Your stop loss should lie strictly above that. 2️⃣The second trading strategy is a breakout trading strategy . The technique implies buying/selling the breakout of a structure, expecting a further bullish/bearish continuation. If you are buying a breakout of a resistance , you should identify the previous low . Your stop loss should lie strictly below that. If you are selling a breakout of a support , you should identify the previous high. Your stop loss should lie strictly above that. Selling a retest of a broken structure on AUDJPY, Stop Loss is strictly set above the previous high. 3️⃣The third trading strategy is a range trading strategy . The technique implies buying/selling the boundaries of horizontal ranges , expecting bullish/bearish reaction from them. If you are buying the support of the range , your stop loss should strictly lie below the lowest point of support. Opening a long position from the support of the range on Dollar Index, stop loss is placed below its support. If you are selling the resistance of the range , your stop loss should strictly lie above the highest point of resistance. As you can see, these stop placement techniques are very simple. Following them, you will avoid a lot of stop hunts and manipulations. How do you set stop loss?
OANDA:XAUUSDEducation
by VasilyTrader
5
STOP LOSS more important than you think!Set STOP-LOSS and stop your loss! The Vital Role of Stop-Loss in Forex and Crypto Trading In the fast-paced realms of forex and cryptocurrency trading, where market volatility is the norm, the integration of a stop-loss strategy holds paramount importance. A stop-loss order acts as a critical risk management tool, shielding traders from excessive losses and preventing impulsive decision-making in turbulent market conditions. However, its significance goes beyond risk mitigation; stop-loss orders also play a pivotal role in guiding traders towards selecting optimal entry points. Let's delve into why incorporating stop-loss orders into your trading approach is essential for achieving long-term success. Fostering Discipline and Psychological Resilience One of the primary rationales for the necessity of stop-loss lies in its capacity to nurture discipline and psychological resilience among traders. By establishing predetermined exit points, traders not only manage risk effectively but also cultivate a disciplined mindset crucial for navigating the complexities of financial markets. Adhering to stop-loss levels compels traders to conduct thorough analyses of entry points, thereby refining their decision-making processes. This disciplined approach not only mitigates the influence of emotional trading but also fosters rationality and consistency, pivotal attributes for sustainable trading success. Empowering Effective Risk Management Practices Effective risk management forms the bedrock of successful trading endeavors. Without the implementation of stop-loss mechanisms, traders expose themselves to the peril of unchecked losses, which could potentially erode their entire trading capital. Stop-loss orders serve as a bulwark against such scenarios, capping losses at predetermined levels. By calculating appropriate position sizes relative to stop-loss distances, traders ensure that each trade aligns with their risk tolerance and overarching trading strategy. Moreover, the process of setting stop-loss levels inherently prompts traders to meticulously assess entry points, reinforcing the importance of selecting optimal trade setups. Optimizing Risk-Reward Dynamics An often-overlooked aspect by novice traders is the critical importance of maintaining favorable risk-to-reward ratios. Trading without stop-loss not only compromises risk management but also distorts the risk-reward dynamics of each trade. Well-placed stop-loss orders enable traders to define risk upfront, enabling them to seek out trades with favorable risk-reward profiles. By aligning potential losses with anticipated gains, traders can pursue asymmetric returns, where profit potential outweighs risk undertaken. This strategic alignment not only enhances profitability but also instills confidence in traders, empowering them to execute trades with conviction. Conclusion In conclusion, the integration of stop-loss orders into your forex and crypto trading endeavors is indispensable for cultivating discipline, managing risk effectively, and optimizing profitability. Beyond serving as a risk management tool, stop-loss orders nurture psychological resilience, refine decision-making processes, and uphold the principles of disciplined trading. Moreover, stop-loss implementation inherently encourages traders to scrutinize entry points meticulously, reinforcing the importance of selecting optimal trade setups. Therefore, traders must recognize the pivotal role of stop-loss in safeguarding capital and fostering long-term success in the dynamic world of financial markets.
OANDA:XAUUSDEducation
by traderstube
How setting stop-loss effects your entry-pointAbsolutely, trading without implementing a stop-loss strategy can indeed lead to significant challenges and ultimately undermine a trader's success. The Crucial Role of Stop-Loss in Forex and Crypto Trading In the dynamic world of forex and crypto trading, where market fluctuations are the norm rather than the exception, the importance of implementing a stop-loss strategy cannot be overstated. A stop-loss order serves as a vital risk management tool, protecting traders from excessive losses and preventing emotional decision-making during volatile market conditions. Let's delve into why integrating stop-loss orders into your trading approach is paramount for long-term success. Maintaining Discipline and Psychological Stability One of the primary reasons why stop-loss is indispensable lies in its ability to foster discipline and psychological stability among traders. Setting a predefined exit point not only helps in managing risk but also cultivates a disciplined mindset crucial for navigating the intricate landscape of financial markets. By adhering to stop-loss levels, traders are compelled to analyze entry points meticulously, thus enhancing their decision-making process. This disciplined approach not only minimizes the impact of emotional trading but also promotes rationality and consistency, two cornerstones of profitable trading. Enhancing Risk Management Practices Effective risk management is the cornerstone of successful trading endeavors. Without a stop-loss mechanism in place, traders expose themselves to the peril of unchecked losses, potentially jeopardizing their entire trading capital. Stop-loss orders act as a safeguard against such scenarios by limiting losses to a predetermined level. By calculating the appropriate position size relative to the stop-loss distance, traders can ensure that each trade adheres to their risk tolerance and overall trading strategy. This proactive risk management approach is fundamental for preserving capital and fostering sustainable growth over time. Optimizing Risk-to-Reward Ratio A key aspect often overlooked by novice traders is the significance of maintaining a favorable risk-to-reward ratio. Trading without a stop-loss not only compromises risk management but also skews the risk-reward dynamics of each trade. A well-placed stop-loss allows traders to define their risk upfront, enabling them to seek out trades with a favorable risk-reward profile. By aligning potential losses with anticipated gains, traders can strive for asymmetrical returns, where the profit potential outweighs the risk undertaken. This strategic alignment not only bolsters profitability but also instills confidence in traders, empowering them to execute trades with conviction. Conclusion In conclusion, the incorporation of stop-loss orders into your forex and crypto trading endeavors is indispensable for maintaining discipline, mitigating risk, and optimizing profitability. Beyond serving as a risk management tool, stop-loss orders foster psychological resilience, enhance decision-making processes, and uphold the principles of disciplined trading. As such, traders must recognize the pivotal role of stop-loss in safeguarding their capital and fostering long-term success in the dynamic world of financial markets.
Education
by traderstube
How to use L3 Ultimate Market SentinelScript Introduction The L3 Ultimate Market Sentinel (UMS) is a technical indicator specifically designed to capture market turning points. This indicator incorporates the principles of the Stochastic Oscillator and provides a clear view of market dynamics through four key boundary lines — the Alert Line, Start Line, Safe Line, and Divider Line. The UMS indicator not only focuses on the absolute movement of prices but also visually displays subtle changes in market sentiment through color changes (green for rise, red for fall), helping traders quickly identify potential buy and sell opportunities. In the above image, you can see how the UMS indicator labels different market conditions on the chart. Green candlestick charts indicate price increases, while red candlestick charts indicate price decreases. The Alert Line (Alert Line) is typically set at a higher level to warn of potential overheating in the market; the Start Line (Start Line) is in the middle, marking the beginning of market momentum; the Safe Line (Safe Line) is at a lower level, indicating a potential oversold state in the market; the Divider Line (Divider Line) helps traders identify whether the market is in an overbought or oversold area. Script Usage 1. **Identifying Turning Points**: Traders should pay close attention to the Alert Line and Safe Line in the UMS indicator. When the indicator approaches or touches the Alert Line, it may signal an imminent market reversal; when the indicator touches the Safe Line, it may indicate that the market is oversold and there is a chance for a rebound. 2. **Color Changes**: By observing the color changes in the histogram, traders can quickly judge market trends. The transition from green to red may indicate a weakening of upward momentum, while the shift from red to green could suggest a slowdown in downward momentum. 3. **Trading Strategy**: The UMS indicator is suitable for a variety of trading timeframes, ranging from 1 minute to 1 hour. Short-term traders can use the UMS indicator to capture rapid market fluctuations, while medium-term traders can combine it with other analytical tools to confirm the sustainability of trends. Advantages and Limitations of the Indicator **Advantages**: - Intuitive color coding that is easy to understand and use. - Multiple boundary lines provide comprehensive market analysis. - Suitable for a variety of trading timeframes, offering high flexibility. **Limitations**: - As a single indicator, it may not cover all market dynamics. - For novice traders, it may be necessary to use the UMS indicator in conjunction with other indicators to improve accuracy. - The indicator may lag in extreme market conditions. Special Note The L3 Ultimate Market Sentinel (UMS) indicator is a powerful analytical tool, but it is not omnipotent. The market has its inherent risks and uncertainties, so it is recommended that traders use the UMS indicator in conjunction with their own trading strategies and risk management rules. Additionally, it is always recommended to fully test and verify any indicator in a simulated environment before actual application.
Education
by blackcat1402
2