Avoiding the Pump and Dump: A Beginner's GuideAvoiding the Pump and Dump: A Beginner's Guide to Protecting Your Investments
In the dynamic world of stock trading, new traders are constantly seeking ways to maximize profits and minimize risks. Unfortunately, one of the most deceptive and harmful schemes that can easily trap beginners is the infamous pump and dump scheme. This fraudulent practice has been around for decades, targeting unsuspecting traders by artificially inflating a stock's price and then swiftly cashing out, leaving the victims with significant losses. For traders on platforms like TradingView, especially those just starting, it’s crucial to understand how to spot these schemes and avoid falling prey to them.
This guide will provide you with the knowledge you need to recognize pump and dump schemes by analyzing monthly, weekly, and daily charts, identifying repetitive patterns, and understanding market sentiment. By the end, you'll know exactly what to look for to safeguard your investments.
What is a Pump and Dump?
A pump and dump scheme occurs when a group of individuals, often coordinated through social media or private channels, artificially inflates the price of a stock. They "pump" up the stock by spreading misleading information or creating hype around the asset, leading to increased buying interest. Once the stock price has risen significantly, the perpetrators "dump" their shares at the elevated price, leaving uninformed buyers holding a stock that will soon plummet in value.
The key elements to watch out for are:
Unusual price spikes without any corresponding fundamental news.
High trading volume during these spikes, suggesting that a group of individuals is actively manipulating the price.
Aggressive promotion through emails, forums, or social media channels, often making exaggerated claims about a stock's potential.
Understanding Timeframes: Monthly, Weekly, and Daily Charts
One of the most effective ways to spot pump and dump schemes is by analyzing various timeframes—monthly, weekly, and daily charts. Each timeframe provides different insights into the stock's behavior, helping you detect irregular patterns and red flags.
Monthly Charts: The Big Picture
Monthly charts give you a broad overview of a stock's long-term trends. If you notice a stock that has been relatively inactive or stagnant for months, only to suddenly surge without any substantial news or developments, this could be a sign of manipulation .
What to look for in monthly charts:
Sudden spikes in price after a prolonged period of flat or declining movement.
Sharp volume increases during the price rise, especially when the stock has previously shown little to no trading activity.
Quick reversals following the price surge, indicating that the pump has occurred, and the dump is on its way.
For example, if a stock shows consistent low trading volume and then experiences a sudden burst in both volume and price, this is a classic sign of a pump. Compare these periods with any news releases or market updates. If there’s no justifiable reason for the spike, be cautious .
Weekly Charts: Spotting the Mid-Term Trend
Weekly charts help you see the mid-term trends and can reveal the progression of a pump and dump scheme. Often, the "pump" phase will be drawn out over several days or weeks as the schemers build momentum and attract more buyers.
What to look for in weekly charts:
Gradual upward trends followed by a sharp, unsustainable rise in price.
Repeated surges in volume that don’t correlate with any fundamental analysis or positive news.
Recurrent patterns where a stock has previously been pumped, experienced a sharp decline, and is now showing the same pattern again.
Stocks used in pump and dump schemes are often cycled through multiple rounds of pumping, so if you notice that a stock has undergone several similar spikes and drops over the weeks, it’s a strong indicator that the stock is being manipulated.
Daily Charts: Catching the Pump Before the Dump
Daily charts provide a more granular view of a stock's price movement, and they can help you detect the exact moments when a pump is taking place. Because pump and dump schemes can happen over just a few days, monitoring daily activity is critical.
What to look for in daily charts:
Intraday price spikes that happen suddenly and without any preceding buildup in momentum.
A huge increase in volume followed by rapid price drops within the same or subsequent days.
Exaggerated price gaps at market open or close, indicating manipulation during off-hours or lower-volume periods.
On a daily chart, if a stock opens significantly higher than the previous day's close without any news or earnings report to back it up, this could be the start of the dump phase. The manipulators are looking to sell their shares to anyone who has bought into the hype, leaving retail traders holding the bag.
Repeated Use of the Same Quote: A Telltale Sign of a Pump and Dump Scheme
Another red flag is when the same stock or "hot tip" keeps resurfacing in social media, forums, or emails. If you notice that the same quote or recommendation is being promoted repeatedly over time, often using the same language, this is a strong sign of manipulation. The scammers are likely trying to pump the stock multiple times by reusing the same tactics on new, unsuspecting traders.
Be cautious of stocks that:
Have been heavily promoted in the past.
Show a history of sudden spikes followed by rapid declines.
Are promoted with vague, overhyped language like "the next big thing" or "guaranteed gains."
If the same stock is mentioned multiple times in trading communities, check its historical chart. If the stock has undergone previous pumps, you will likely see sharp rises and falls that align with the promotional periods.
How to Avoid Pump and Dump Schemes
Now that you know how to spot the signs, here are actionable steps you can take to protect yourself from becoming a victim of a pump and dump scheme:
Do Your Research: Always verify the information you receive about a stock. Check if there’s legitimate news, earnings reports, or significant company developments that justify the price movement. Avoid relying solely on social media or forums for your stock tips.
Look at Fundamentals: Focus on stocks with solid fundamentals, such as earnings growth, revenue increases, and strong management. Stocks targeted for pump and dump schemes often have weak or non-existent fundamentals.
Use Multiple Timeframes: As we've discussed, examining stocks across different timeframes—monthly, weekly, and daily—can help you spot abnormal price behavior early on.
Monitor Volume and Price Movements: If you see large, unexplained surges in volume and price, be skeptical. Legitimate price increases are usually accompanied by news or fundamental changes in the company.
Avoid Low-Volume Stocks: Pump and dump schemes often target low-volume, illiquid stocks that are easier to manipulate. Stick to stocks with healthy trading volumes and liquidity.
Set Stop Losses: Always use stop losses to protect yourself from sudden price drops. Setting a stop loss at a reasonable level can help limit your losses if you accidentally invest in a stock being manipulated.
Be Wary of Promotions: If a stock is being aggressively promoted, ask yourself why. More often than not, aggressive promotions are a sign that the stock is part of a pump and dump scheme.
Conclusion
Pump and dump schemes prey on traders’ fear of missing out ( FOMO ) and the allure of quick profits . However, by using a disciplined approach to trading, analyzing charts across multiple timeframes, and paying close attention to volume and price movements, you can avoid falling victim to these schemes.
Remember: If something seems too good to be true, it probably is. Protect your investments by staying informed, doing thorough research, and trusting your analysis. By following these guidelines, you can navigate the markets with confidence and avoid the pitfalls of pump and dump schemes.
Happy trading, and stay safe!
Trend Analysis
Average Range Levels Money Print Long Model Bullish Model:
Entry: 1/3AWR-
Stop-Loss: 50% of 1/3AWR- & ADR-
Take-Profit: Buyside Liquiditiy (Old High)
Breakout Retest, A+ setup explained with todays R5 Silver longFull recap of my todays NY session showing my preparation, my shortlist, my thinking process into my entry window and a detailed breakdown of the trade, including a detailed explanation of the setup, what to look for and how to trade it. One more trade for your playbook!
Learn Supply and Demand Zones in Gold Trading
In this article, I will teach you how to identify supply and demand zones on Gold chart easily.
You will learn what are supply and demand zones and how to apply it in Gold trading.
In order to identify supply and demand zones on Gold chart, the first thing that you should do is to execute a complete structure analysis.
You should identify horizontal structures: support and resistance levels/zones; vertical structures - trend lines.
That's how a complete support and resistance analysis should look.
On a daily time frame, I have underlined all significant horizontal and vertical structures.
First, let's look for demand zones.
A demand zone is a specific area on a price chart that combines multiple key structure supports: horizontal or vertical ones.
Buying orders of the market participants will be placed within that entire area.
Our first demand zone will be based on a Horizontal Support 1 and a Vertical Support 1. A trend line and a horizontal support compose an expanding area.
We will call such an area a demand zone, simply because we assume that buying volumes will accumulate within that entire zone. And lower the price will move inside that area, more buying orders will become active.
Our second demand zone will be based on Horizontal Support 3/4/5.
All these structures are lying very close to each other. Some supports even have common boundaries.
These supports will compose a demand zone , a wide horizontal area where buying orders will be placed.
Vertical Support 2 is lying very closely to our Demand Zone 2.
A horizontal demand zone and a trend line will compose and expanding demand zone.
Now let's discuss supply zones.
A supply zone is a specific area on a price chart that combines multiple key structure resistances: horizontal or vertical ones.
Selling orders of the market participants will be placed within that entire area.
There is one supply zone on our Gold price chart. It will be based on a Horizontal Resistance 1 and Vertical Resistance 1.
Both structures are lying very close to each other.
We will assume that selling orders will be placed throughout that entire area and the higher the price moves within that, the more selling orders will become active.
Remember that you can identify Supply and Demand Zones on Gold on any time frame.
A bullish movement and a bullish reaction will be expected from a Demand Zone.
While a bearish movement and a bearish reaction will be expected from a Supply Zone.
Because Supply and Demand Zones are relatively large areas, it is very important to analyze a price action within these zones before you place a trade.
Thank you for reading!
❤️Please, support my work with like, thank you!❤️
Patience Pays Off: Key Strategies for Long-Term InvestorsInvesting is a fundamental pillar in building wealth and securing financial stability. Among the myriad strategies available, long-term investing stands out as one of the most reliable and rewarding. Unlike short-term trading, which seeks to capitalize on price fluctuations over days or weeks, long-term investing focuses on holding assets for several years, or even decades, to allow for substantial growth. This approach is deeply rooted in the principle of patience, which enables investors to navigate market volatility, leverage compounding returns, and achieve their financial goals.
Patience is more than simply waiting; it requires discipline, confidence, and the ability to withstand short-term market turbulence. For long-term investors, patience plays a key role in benefiting from compounding returns, reducing transaction costs, and minimizing tax liabilities. The patience-driven investor is less prone to impulsive decisions and is better positioned to reach financial success over time.
Understanding Long-Term Investing
Long-term investing involves purchasing and holding assets like stocks, bonds, mutual funds, or real estate for extended periods—typically five years or more. The main objective is to benefit from the growth of the investment over time, whether through capital appreciation, dividends, or interest. Unlike short-term strategies, which aim for quick profits, long-term investing emphasizes steady and sustainable growth.
Key to this approach is the power of compounding. Compounding occurs when earnings from investments are reinvested, generating additional returns. Over time, this snowball effect can lead to exponential growth. Long-term investing also benefits from lower transaction costs, as frequent buying and selling of assets is avoided. Furthermore, long-term capital gains are taxed at lower rates than short-term gains, offering additional financial advantages.
While long-term investing still carries risks, particularly during market downturns, it provides the potential for recovery and continued growth. In contrast, short-term investors may face higher volatility and risk due to frequent trades and quick shifts in market sentiment.
S&P500 from 1980 monthly chart
Advantages of Long-Term Investing
The long-term investing approach comes with several compelling advantages:
Compounding Returns: The most powerful advantage of long-term investing is the compounding effect, where reinvested earnings generate additional returns. The longer the investment period, the more significant the compounding becomes. Even modest returns can lead to considerable wealth over time.
Lower Costs: With fewer trades, long-term investors incur significantly lower transaction fees and commissions. This not only preserves capital but also enhances overall returns.
Tax Efficiency: Long-term capital gains are generally taxed at a lower rate than short-term gains, leading to more favorable after-tax returns. The buy-and-hold strategy reduces the frequency of taxable events.
Reduced Stress: Long-term investing minimizes the need for constant market monitoring, providing peace of mind. Investors don’t need to react to daily market swings, allowing them to remain focused on their long-term financial goals.
Alignment with Financial Goals: Long-term investing is well-suited for achieving major financial milestones, such as funding retirement, education, or home purchases. It provides a structured and systematic approach to accumulating wealth over time.
GC1! GOLD FUTURES From 1980 Monthly Chart
Why Patience is Essential in Long-Term Investing
Patience is the cornerstone of long-term investing, as it helps investors remain focused on their goals despite market fluctuations and emotional pressures. Here are key reasons why patience is critical:
1. Navigating Market Volatility
Financial markets are inherently volatile, with asset prices fluctuating due to economic data, geopolitical events, and shifts in investor sentiment. While short-term investors may react to these movements, long-term investors recognize that volatility is part of the market cycle. Patience allows them to ride out these fluctuations, avoiding impulsive decisions and giving their investments time to recover and grow. By not panicking during downturns, long-term investors can stay committed to their strategy and avoid selling assets at a loss.
2. Compounding Returns
Patience is vital in maximizing the benefits of compounding. Compounding requires time to work its magic, as reinvested earnings generate further returns. The longer an investor remains in the market, the greater the potential for compounding to significantly boost their wealth. Even modest annual returns can accumulate into substantial wealth over decades.
3. Behavioral Finance and Emotional Control
Investing often involves emotional decision-making driven by fear, greed, and market noise. Behavioral finance studies show that emotions like panic during market downturns or overconfidence during rallies can lead to poor investment decisions. Patience helps investors manage these emotions by keeping their focus on long-term goals rather than short-term market movements. Investors who remain patient and disciplined are more likely to make rational decisions that align with their overall strategy.
NDX Nasdaq 100 Index Monthly Chart
Strategies to Cultivate Patience in Investing
Maintaining patience as a long-term investor requires a combination of strategies that foster discipline and reduce emotional reactivity:
1. Set Realistic Expectations
Establishing clear, realistic financial goals helps investors stay grounded. Understanding that markets fluctuate and that significant returns take time can reduce impatience. Setting specific goals, such as saving for retirement over a 20- or 30-year period, provides a long-term perspective and a framework for measuring progress.
2. Regular Monitoring Without Overreacting
While it's important to monitor your portfolio, it’s equally important to avoid overreacting to short-term market moves. Periodic reviews, such as quarterly or annual check-ins, allow investors to assess performance without being influenced by daily volatility. By maintaining a big-picture view, investors can avoid impulsive decisions and stay on track with their goals.
3. Diversification
Diversification spreads risk across various asset classes, sectors, and regions, helping to reduce the impact of poor performance in any single investment. A well-diversified portfolio provides a smoother experience, allowing investors to remain patient even during periods of underperformance in certain areas.
4. Continuous Learning and Education
Staying informed about market trends and investment strategies helps investors feel more confident in their decisions. The more knowledge an investor has about market behavior, historical trends, and the benefits of long-term investing, the more patient they can remain during challenging times. Education empowers investors to understand that short-term volatility is part of the process.
Case Studies and Historical Examples
Several well-known examples illustrate the power of patience in long-term investing:
Warren Buffett: One of the most famous proponents of long-term investing, Warren Buffett has built his wealth through patience and disciplined investing. His purchase of Coca-Cola shares in 1988 is a prime example. Despite periods of market volatility, Buffett held his shares, allowing the company's growth and compounding returns to generate significant wealth.
KO Coca-Cola Monthly Chart
Index Funds: Index funds, which track major market indices like the S&P 500, demonstrate the benefits of long-term investing. Over decades, these funds have delivered solid returns, often outperforming actively managed funds. Investors who stay invested in index funds, even during market downturns, benefit from overall market growth.
Common Pitfalls and How to Avoid Them
While patience is key, there are common mistakes that can derail long-term investing:
Panic Selling: Investors who panic during market downturns often sell at a loss, only to see the market recover later. Staying patient and focused on long-term goals helps avoid this costly mistake.
Trying to Time the Market: Attempting to predict market highs and lows is a risky strategy that often leads to missed opportunities. Staying invested allows investors to benefit from overall market growth without the risk of mistimed trades.
Overtrading: Frequent buying and selling erode returns through higher transaction costs and taxes. A buy-and-hold approach helps preserve capital and reduces unnecessary trading.
Conclusion
Patience is not just a virtue in long-term investing—it is a necessity. By maintaining discipline, staying focused on long-term goals, and avoiding emotional reactions to market volatility, investors can harness the full potential of compounding returns and achieve financial success. The strategies of setting realistic expectations, diversifying, and staying informed provide the foundation for a patient, long-term approach to wealth building. Through patience, long-term investors can navigate the ups and downs of the market and emerge with a stronger financial future.
Using Big Data Analytics in Forex TradingUsing Big Data Analytics in Forex Trading
Recent years have seen explosive growth in the amount of data in circulation, and the financial industry is no exception. The use of big data analytics in forex trading has become increasingly popular as traders and institutions look to gain a competitive edge through the analysis of vast data sets.
The forex market is the largest financial market in the world, with a daily turnover of trillions of US dollars. The market is constantly changing. One might argue that such a tendency to change makes it difficult for traders to make decisions. Therefore, the use of big data in forex analytics acts as an essential advanced tool and serves as a means to overcome decision-making challenges.
This FXOpen article explores why big data in trading has the potential to revolutionise the way traders approach the market and looks into how it can provide them with valuable insights.
Big Data in Forex Trading
Big data refers to the large quantity of diverse information that is generated every day from a variety of sources. Such volumes of information cannot be processed and analysed by users or simple office software. Therefore, there’s a whole set of sophisticated technologies designed for working with it.
The set typically includes tools for data collection, storage, preprocessing, cleaning, and analysis. To collect and store large amounts of information, traders use cloud computing and distributed databases. Before analysing it, traders preprocess and clean it to remove any noise or inconsistencies using techniques such as normalisation and outlier detection.
In the context of forex trading, big data includes market figures, economic indicators, social media sentiment, news articles, and more. The role of big data in forex is enormous. With the help of analytics, traders can select relevant, promising assets and make informed trading decisions, thereby gaining a competitive advantage.
Sources of Big Data in the Forex Market
Predictive analytics and big data provide actionable insights about the FX market and the general mood of market participants. Here are some of the sources incorporated into big data models used for forex trading purposes:
- Market figures — real-time and historical price, order flow, and trade execution data.
- Economic indicators — figures of inflation, GDP, employment, various indices, earnings reports, industrial production figures, and other economic indicators.
- Social media sentiment — comments from social media platforms such as Twitter, LinkedIn, and Facebook, which provide insights into public sentiment towards certain countries and their currencies.
- News articles — articles from financial news sources such as Bloomberg and Reuters, which inform traders about market trends, governmental policies, and major events.
How Big Data Analytics Affect Forex
Big data analytics significantly impact forex trading, offering both advantages and challenges. Let’s first explore how big data analytics can help in forex trading.
Pros:
- Improved forecasting and predictive modelling
- Real-time market monitoring and analysis
- Enhanced risk management and decision support
Analysing big data helps traders uncover future market movements and identify patterns that may not be visible through traditional analysis methods. It can provide traders with real-time insights into current trends and high-impact economic events, which allows them to react quickly to changes. Analytics can also simplify risk identification and management.
These benefits make big data analytics a key tool for renowned and successful financial institutions. For example, JPMorgan Chase uses it to analyse millions of transactions daily, detect suspicious patterns, and prevent fraudulent activities and money laundering. Meanwhile, the investment bank Goldman Sachs uses it to identify trends in various markets, improve the company’s trading strategies, and enhance risk management.
Despite the inspiring cases and the benefits of using it, big data analytics is not a cure-all and has some downsides.
Cons:
- Requires significant resources
- Possible security issues
- Possible overfitting
Since big data analysis requires significant computing power and storage, as well as high bandwidth, using this approach is not cheap, and it can be problematic for retail traders and trading start-ups. Besides, big data analytics involves collecting sensitive financial information, which is often targeted by cyberattacks. Unintentional breaches are also possible, so companies employ additional security algorithms. This can increase costs as well.
Another issue comes when the data analysis model fits too closely to its training basis. Overfitting makes it unable to perform accurately against unseen information. It is related to the issue of capturing patterns without being overly influenced by irrelevant information. If traders rely on algorithms to analyse data, this drawback could hinder their performance.
Risk Management in Big Data-Driven Trading
Based on the limitations and possible problems with large-scale analyses, the question of risk management in the use of big data arises. Here are some considerations on what a trader could do to minimise risks.
1. Traders use risk controls and backtesting to check whether trading strategies are effective and not overly risky.
2. To ensure that the figures are accurate, consistent, up-to-date, and reliable, traders may implement quality control measures such as data validation and verification.
3. Leveraging different sources of big data allows traders to drive their risk management strategies with more confidence as they get a holistic picture of the currency market.
Big Data Analytics Strategies in Forex
The most popular big data forex trading strategy involves using traditional technical and fundamental analysis, which is enhanced by additional insights and information obtained through big data analytics.
Then comes trading based on sentiment analysis and social media monitoring. As mentioned, social media is necessary to understand how the trading community feels about the currency and whether they think it is a good decision to trade it.
Lastly, big data analytics improves algorithmic trading, which involves using computer programs to execute trades automatically based on predefined rules. Big data analysis may be helpful in determining these rules.
Final Thoughts
The use of big data in forex trading and analysing vast amounts of information helps traders gain valuable insights into market trends and make more informed decisions. However, there are also challenges and limitations associated with big data analytics, including overfitting and cybersecurity threats.
If you want to trade in the forex market with attractive conditions, you can open an FXOpen account. To create and test trading strategies, you can use the TickTrader trading platform. Alongside trading tools and various assets, there are advanced charts with accurate price history.
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.
The Basics of Support and Resistance LevelsSupport and resistance levels are fundamental concepts in technical analysis, widely used by traders across asset classes, strategies, and trading techniques. In this post, we’ll cover the basics of support and resistance so that any trader following us here on TradingView can have a foundation to work with.
What is Support?
Support is a price level where a falling asset tends to stop and reverse direction. In the chart above, utilizing FOREXCOM:EURUSD, you’ll see some lines drawn, showcasing this example. Support is a concept that is drawn on the chart to help predict or forecast where other buys may step in based on the preceding rate fluctuations.
When an asset’s price drops to this level, buyers can often step in, preventing further decline and typically causing the rate to rise again. The support level acts as a floor that the asset’s price struggles to break below, usually testing it multiple times. Support levels can be identified on charts across various timeframes and are not exclusive to bear markets; they also appear in bull markets as higher support levels are established.
What is Resistance?
Resistance, on the other hand, is a price level where an asset’s upward movement is continuously halted by selling pressure. When the rate reaches this level, sellers usually dominate, often causing the price to fall back. This level acts as a ceiling that the asset’s price struggles to break above, bouncing off it as a result. Like support, resistance levels can be found in both bear and bull markets and are crucial for identifying potential price reversals.
Why are Support and Resistance Levels Important?
Traders use support and resistance levels (along with other technical and fundamental data) to help them make informed decisions about when to enter or exit trades. For instance, buying near a support level can be profitable if the market bounces back, while selling near a resistance level can capitalize on the move before a downward reversal.
In summary, support is a method for locating potential bottom areas and resistance is a method to locate potential topping areas.
The best way to get started with Support & Resistance is to draw out the levels yourself and use a demo account to test out the concepts. This way, you can practice, review, and learn about these levels without risking real funds.
Did you learn something new?
Our team of researchers and market specialists will be sharing more educational content so be sure to follow our TradingView account for instant updates. Also, be sure to check out our latest ideas here .
What Is Money Flow In & Out of a Stock? And Why Should You Care?Professionals often speak of money flowing in or out of a stock, but how can that be if there is an equal number of buyers and sellers? It is because “Money Flow” comes from the balance of the lot sizes.
There are four possible positions in any one stock:
Buy
Buy to Cover
Sell
Sell Short
Each investor and trader in the stock has their own separate agenda. Each may come from a different Market Participant Group. There are now 9 Stock Market Participant Groups, starting from those who buy first, at the bottom of a new upward cycle:
The giant Buy Side Institutions who invest Mutual and Pension Funds and/or create ETFs and other kinds of stock market derivatives.
The Sell Side Institutions, aka the big banks and major market makers
Wealthy Individual Investors
Corporations
Institutional/ Pro Traders
High Frequency Traders (HFTs)
Small Funds
Individual Small-Lot Investors, Investment Groups and Individual Retail Traders
Odd-Lot Investors
Buyers are anticipating that the stock is going to move up. Their stock order types span the spectrum, for example: Market Orders, Limit Orders, Stop Orders. Buy to Cover Orders are placed by traders who sold short and are now taking profits.
Those who are selling the stock are anticipating that the stock is going to move down. In an uptrending stock, this is profit-taking near the top of the run. It can also be similar in a downtrending stock because the seller is afraid that the stock is going to move down more, and they have been holding through what they thought was a short retracement. Most of these stock order types will be “Sell at Market” (SAM). Sell Short Traders are anticipating that the stock is going to move down, and they can place a variety of orders just like the buyers.
Both Buyers and Sell Shorters are entering the trade, while Buy to Covers and Sellers are exiting the trade.
It is the mix of these different types of buying and selling coupled with the kind of investor or trader and the size of their share lots that causes money to flow in or out of a stock.
If the buyers are mostly large lots and the sellers are mostly small lots, who is in control? The buyers purchasing large lots . This is because, at some point, there will not be enough small-lot sellers, and those who are Selling Short will turn and start Buying to Cover, creating more of a shortage of sellers. Consequently, this will put more pressure on the buy side.
There are always latecomers to a stock run, and they are usually small-lot buyers. As the stock moves up in price, more of the small-lot buyers will step in, pushing the price up even further. Most small-lot buyers typically use a “Buy at Market” Order, which is the worst kind to use to control the entry price.
As the stock moves up further in price, the last of the Short Sellers will panic and Buy to Cover, causing the stock to gap up or jump even higher. This then triggers the large-lot buyers to start selling for profit. As profit-taking begins, the stock dips in price. This causes the odd-lot buyer, who is the last in the market participant cycle to buy, to rush into the stock and buy because they have been told to “Buy the Dip.” By now, the news media has been talking about this stock and its great run. Consequently, the odd-lot uninformed investor finds the dip irresistible and buys on pure emotion without any analysis of the stock. This causes the final gap up and exhaustion pattern.
Now, while all of those odd-lot latecomers are buying, who is selling to balance the equation? Market Makers are Selling Short and the Smart Money, who were the first to enter, are selling to take profits. Suddenly, the large lots are now shifting to the downside, and what happens? The control switches to the sellers who are moving larger lots. Now, money is flowing out of the stock, yet the price may go up briefly before a downtrend develops.
Large lots are usually wiser investors and traders who know more than the other investors and traders. So the giant Buy Side Institutions investing Mutual and Pension Funds, who have access to information often not yet available to Individual Investors and Retail Traders, are called the Smart Money.
It can be assumed that the smaller the lot size, the less the investor or trader knows and understands about the market. As smaller lots move in, a shift of power occurs due to the large lots moving to the sell side, and thus money shifts to flowing out of the stock.
As the stock collapses and reaches a price or equilibrium near a base or bottom, those smaller lots who held through the collapse reach an emotional point of extreme pain of loss and begin to sell in panic. In response, the Smart Money and Market Makers switch roles again, Buying to Cover their profitable shorts and buying to hold as the stock moves up again.
Summary:
Every time you take a position in a stock, there are also three other positions in that same stock. You need to be aware of each of these and make sure that you are with the right group. Most of the time, traders who are having problems with their trades are simply trading with the wrong group. It is important, then, to learn about today's stock market structure and what I call the "Cycle of Market Participants." When traders can trade with the flow of the Smart Money, they have a decided advantage.
Can You Use Math to Elevate Your Trading Strategy?In the world of trading, understanding market movements is crucial for success. One of the most effective frameworks for interpreting these movements is Wave Theory, a concept that helps traders identify price trends and potential reversals. By incorporating mathematical projections, traders can enhance their analysis and make informed decisions. In this article, we’ll explore the fundamentals of Wave Theory and demonstrate how to project price movements using wave measurements—specifically, measuring Wave 1 to project the size of Wave 3.
Understanding Wave Theory
Wave Theory, popularized by Ralph Nelson Elliott, posits that financial markets move in repetitive cycles or waves, driven by collective investor psychology. Elliott identified two primary types of waves:
Impulse Waves: These are the waves that move in the direction of the prevailing trend, typically comprising five waves (labeled 1, 2, 3, 4, and 5).
Corrective Waves: These waves move against the prevailing trend and consist of three waves (labeled A, B, and C).
In a typical bullish market, you will observe a series of impulse waves followed by corrective waves. Understanding these waves allows traders to identify potential entry and exit points based on price patterns.
The Mathematics Behind Wave Projections
One of the key aspects of Wave Theory is using mathematical relationships to predict future price movements. A common approach is to measure the length of Wave 1 and use that measurement to project the size of Wave 3. Research indicates that Wave 3 often ranges between 1.0 to 1.68 times the length of Wave 1.
Steps to Project Wave 3:
Identify Wave 1: Begin by determining the starting point of Wave 1 and measuring its length. This can be done by noting the price levels at the start and end of Wave 1.
Calculate the Length of Wave 1:
Length of Wave 1 = End Price of Wave 1 - Start Price of Wave 1.
Project Wave 3:
To project Wave 3, multiply the length of Wave 1 by the desired factor (1.0 to 1.68).
Projected Length of Wave 3 = Length of Wave 1 × (1.0 to 1.68).
Determine the Target Price:
Add the projected length of Wave 3 to the endpoint of Wave 2 to determine the target price for Wave 3.
Target Price = End Price of Wave 2 + Projected Length of Wave 3.
Example: Applying Wave Theory in a Trading Scenario
Let’s say we’re analyzing a stock and identify Wave 1 as follows:
Start of Wave 1: $50
End of Wave 1: $70
Step 1: Measure Wave 1:
Length of Wave 1 = $70 - $50 = $20
Step 2: Project Wave 3:
Using the range of 1.0 to 1.68:
Minimum Projection = $20 × 1.0 = $20
Maximum Projection = $20 × 1.68 = $33.60
Step 3: Determine the Target Price: Assuming Wave 2 has an endpoint of $80:
Minimum Target Price = $80 + $20 = $100
Maximum Target Price = $80 + $33.60 = $113.60
Thus, based on Wave Theory, we would anticipate that Wave 3 could reach between $100 and $113.60.
Wave Theory, combined with mathematical projections, provides traders with a structured approach to understanding market dynamics and predicting future price movements. By accurately measuring Wave 1 and projecting Wave 3, traders can make informed decisions based on calculated price targets, improving their chances of success in the financial markets.
As you incorporate Wave Theory into your trading strategy, remember that no system is foolproof. Always combine technical analysis with sound risk management practices to protect your capital. With patience, discipline, and a strong mathematical foundation, you can leverage Wave Theory to enhance your trading prowess and navigate the markets with greater confidence.
How can you see yourself incorporating mathematical projections like Wave Theory into your trading strategy, and what has been your experience with predicting market movements using these techniques? Let me know in the comments.
Happy trading!
Master Breakout Trading: The Strategy Every Trader Needs to KnowIn the world of trading, a "breakout" refers to a price movement that occurs when an asset moves beyond a predefined support or resistance level. These pivotal moments often signal a significant shift in market dynamics and can lead to substantial price changes. Breakouts are crucial for traders as they can mark the beginning of a new trend. A breakout above a resistance level may suggest the start of an uptrend, while a breakout below support could indicate a downtrend. Learning to identify and trade breakouts effectively can unlock profitable opportunities and help traders capitalize on shifting market conditions.
What Are Breakouts in Trading?
Breakouts occur when the price of an asset surpasses a well-established support or resistance level, suggesting a potential shift in market direction. A bullish breakout happens when the price breaks above resistance, signaling upward momentum. Conversely, a bearish breakout occurs when the price drops below support, often indicating the continuation of a downtrend.
Breakouts are significant because they often lead to increased trading activity and volatility, offering traders opportunities to enter or exit positions at pivotal moments. These breakouts are often accompanied by increased trading volume, which helps confirm the validity of the price move and suggests that a new trend is forming.
How Breakouts Occur and Their Importance
Breakouts occur when price action surpasses critical price levels—either support or resistance—that have acted as barriers in the past. These levels are often identified through technical analysis and represent key turning points where buyers or sellers have historically entered the market in large numbers.
--Support Levels: A price point where an asset tends to stop falling and may reverse upward. A bearish breakout occurs when the price drops below this level, signaling a continuation of the downtrend.
--Resistance Levels: A price point where an asset typically stops rising and may reverse downward. A bullish breakout occurs when the price surpasses this level, suggesting the potential for further upward movement.
Breakouts are important because they can indicate the start of a new market trend. When price breaks through a support or resistance level, it signals that the market sentiment has shifted, and traders can take advantage of this movement to capture profits. For successful breakout trading, it's essential to confirm these breakouts using volume and other technical indicators to avoid being caught in a false breakout, where price briefly breaks a level but reverses direction shortly after.
Examples of Breakout Scenarios
Breakouts can present profitable trading opportunities in both bullish and bearish markets. Here are two examples:
--Bullish Breakout Example
Take a look at the following EUR/USD chart, where the price breaks above the 1.0200 level after previously rebounding off resistance. Traders would interpret this as a bullish breakout and may look to enter long positions, expecting the pair to sustain its upward momentum. This breakout provides a buying opportunity as market sentiment turns positive and shifts to the upside.
--Bearish Breakout Example
Take a look at the following EUR/USD chart, where the price breaks below the 1.03500 level after previously rebounding off support. Traders would view this as a bearish breakout and may consider entering short positions, anticipating the pair to maintain its downward momentum. This breakout offers a selling opportunity as market sentiment shifts to the downside.
In both examples, breakouts offer traders clear entry points based on the movement beyond established levels, allowing them to profit from the new trend.
👆 Read Also this deep article where we cover everything you need to know about Support-and-Resistance in trading.
The Concept of Breakout Trading
Breakout trading is based on the premise that once price moves beyond significant support or resistance levels, it is likely to continue in that direction for some time. This approach involves recognizing these levels, waiting for the breakout to occur, and entering a trade in the direction of the breakout.
Key elements of breakout trading include:
--Identifying Key Levels: Use technical analysis to locate critical support and resistance levels where price has previously struggled to break through.
--Confirming the Breakout: Ensure the breakout is accompanied by strong volume to confirm its validity.
--Risk Management: Employ Stop Loss orders to protect against false breakouts, where the price briefly breaks the level but then reverses.
--Maximizing Profits: Traders aim to capture as much of the price movement as possible, staying in the trade as long as the breakout trend remains intact.
To identify potential breakouts, traders often use indicators like trendlines, moving averages, and volume analysis. Chart patterns, such as triangles or flags, can also signal a potential breakout. When combined with volume analysis, these tools help confirm that a breakout is likely to lead to a sustained price movement.
Popular Breakout Trading Strategies:
--Trendline Breakout Strategy
One of the most popular strategies involves using trendlines. A trendline is drawn by connecting two or more price points, creating a visual representation of market direction. When the price breaks through the trendline, it signals a potential reversal or continuation of the trend.
Step 1: Draw trendlines by connecting significant highs and lows.
Step 2: Monitor price as it approaches the trendline.
Step 3: Enter a trade when the price closes beyond the trendline, with confirmation from increased volume.
Step 4: Place a Stop Loss order just below/above the breakout level to manage risk.
Support and Resistance Breakout Strategy:
This strategy involves identifying key support and resistance levels on a chart. Once these levels are breached, traders enter the market based on the direction of the breakout.
Step 1: Identify key support and resistance levels from historical price data.
Step 2: Wait for the price to approach these levels.
Step 3: Enter a position after the price breaks through, with confirmation from volume.
Step 4: Use Stop Loss orders to protect against false breakouts.
Volume-Based Breakout Strategy:
Volume is a critical component of successful breakout trading. A significant increase in volume during a breakout indicates strong market interest, making it more likely that the breakout will continue.
Step 1: Monitor volume as the price approaches key levels.
Step 2: Confirm the breakout with a volume spike.
How to Implement a Breakout Trading Strategy
To implement a breakout trading strategy effectively:
--Set Up Your Platform: Ensure your trading platform is equipped with real-time charts like Tradingview, technical indicators, and alerts to identify breakouts as they happen. Customizing your charts with trendlines, support/resistance levels, and volume indicators will help in visualizing breakout points.
--Use Risk Management: Proper risk management is key to avoiding large losses. Place Stop Loss orders just below (for bullish breakouts) or above (for bearish breakouts) the breakout level to limit potential losses from false breakouts.
👆 Read Also this article where we cover everything you need to know about Risk Management in trading, from essential strategies to practical tips for safeguarding your capital.
Common Mistakes in Breakout Trading
Breakout traders often fall into a few common traps:
--Overtrading: Jumping into too many trades or reacting to every price movement can lead to losses. It's crucial to wait for confirmed breakouts before entering trades.
Falling for False Breakouts: A false breakout occurs when price temporarily moves beyond a key level but then reverses. Confirming the breakout with volume or other indicators can help avoid this mistake.
-Ignoring Risk Management: Failing to set proper Stop Losses can lead to significant losses if the market moves against you. Always manage risk by placing Stop Loss orders at appropriate levels.
Tips for Successful Breakout Trading
--Combine Indicators: Use multiple technical indicators, such as moving averages, volume analysis, and trendlines, to confirm breakouts. This increases the reliability of breakout signals.
--Maintain Discipline: Stick to your trading plan and avoid making emotional decisions. Impatience can lead to entering or exiting trades prematurely, undermining your strategy.
--Refine Your Strategy: Continuously review and refine your trading strategies based on market conditions. Markets evolve, and regular analysis helps ensure your breakout strategies remain effective.
👆 Lastly, read this article where we cover everything you need to know about the Trader's Checklist for Successful Trading, providing key steps and insights to help you stay on track and maximize your trading success.
In Conclusion..
Breakout trading offers a powerful way to capitalize on significant price movements in the market. By mastering strategies like trendline, support/resistance, and volume-based breakouts, traders can position themselves to profit from new trends. Effective risk management and discipline are crucial for long-term success. With continuous learning and strategy refinement, breakout trading can become a highly rewarding approach to navigating financial markets.
Nailing Crypto Risk Management: 7 Ways to Protect Your PortfolioYou’re leveraged to the hilt and riding the crypto wave—eyeing those sweet gains, living for the adrenaline rush and peeking at your vision board where you’ve got the lambo cutout for inspo.
But here’s the harsh truth: for every moonshot, there’s a black hole ready to reel in your portfolio. Welcome to the not-so-glamorous side of crypto: risk management. If you don’t have this locked down, you might as well be throwing darts in the dark.
So, how do you stack the odds in your favor and avoid getting rekt ? Let’s break down 🤸♂️ the essentials of managing risk in the vast world of crypto like a pro. Grab your notepad, take one more look at the lambo and let’s roll.
1. Position Sizing: Don’t Go All In, Even If You Want To
We get it—Bitcoin’s pumping, and FOMO is real. But listen: putting your entire stack on one trade is quite often a path to whipping up a not-so-great track record. Pro traders? They never bet the farm. They calculate position sizes based on the risk they’re willing to take—the golden rule is to bet no more than 1-3% of your capital per trade.
🔑 Pro tip : Use a risk calculator to figure out exactly how much of your portfolio should go into each trade. It’s the difference between surviving a bad move or calling it quits.
2. Stop-Losses: The Safety Net You Probably Ignore (but Shouldn’t)
Here’s the thing: everyone will get it wrong every now and then. No matter how many YouTube gurus tell you otherwise or how some trading signals group churns out 100% success rate, every trader gets slapped by the market. That’s where the stop-loss comes in—a non-emotional tool that automatically closes your position before your losses become catastrophic. Set it, forget it, and avoid waking up to a disaster.
🔑 Pro tip : Don’t just dump your stop-loss under the last support level. Base it on your risk tolerance. If you’re losing sleep over your trade, you’ve placed it too far away.
3. Diversification: Don't Put All Your Eggs in One Crypto Basket
Bitcoin BTC/USD is the OG token and dominates the crypto board —no question about it. This is why Bitcoin is the preferred crypto for institutional investors and why billions of dollars get sloshed around in spot Bitcoin exchange-traded funds (ETFs).
Bitcoin, as odd as it may sound, is likely the crypto with the least amount of risk, given its size and investor base. So why not look elsewhere for tenbaggers? Small caps definitely look attractive with their relatively low valuations, compared with Bitcoin’s $1.3 trillion weight.
In this light, try to make sure you’re not going to end up rug pulled. Spread out the risk. Diversify across different coins, sectors and use cases. The goal is to reduce your exposure to any one asset's mood swings.
🔑 Pro tip : Don’t over-diversify either. Owning 20 low-cap coins won’t save you if the whole market crashes.
4. Avoid Leverage Unless You Really, Really Know What You’re Doing
Leverage is that spicy little tool that lets you borrow money to boost your gains—or sometimes, your losses. The more you leverage, the quicker you can get washed out if the market moves against you.
🔑 Pro tip : If you must use leverage, keep it low.
5. Have an Exit Strategy: Don’t Get Greedy
Crypto loves to pump, and we all love to see it. But when it does, don’t just sit there watching your profits grow—have a plan to take them. Greed kills portfolios faster than bad trades. Know when to get out before the inevitable pullback has a chance to take a shot at your gains.
🔑 Pro tip : Set clear targets for both taking profits and cutting losers. Lock in some profits on the way up and have no shame in bailing when things head south.
6. Keep Your Emotions in Check: Your Worst Enemy Is… You
Let’s face it, we all get caught up in the hype. Whether it’s panic selling at the bottom or FOMO buying at the top, emotions are portfolio killers. Detach yourself from the swings and trade based on your strategy, not your emotions.
🔑 Pro tip : If a trade has you looking at your portfolio while under the shower, it’s time to re-evaluate. Chill, stick to the plan, and let the market do its thing.
7. The Golden Rule: Only Invest What You Can Afford to Lose
This should be obvious, but it’s worth repeating. If losing your investment would make you sell your car or move back with your parents, you’re overexposed. Crypto is volatile, and while the upside is exciting, the downside is real. Play it smart, and don’t gamble with money you can’t afford to lose.
Wrapping Up: Trade Smart, Stay Sharp
Risk management is what separates the survivors from the rest of the pack in crypto. Anyone can ride a bull market but only the disciplined make it through the bruising pullbacks without getting squashed. Stick to your trading plan and never assume you’re invincible just because the charts are green today.
Oh, and if you’ve got your own tips for managing risk like a crypto boss, drop them in the comments. We’re all here for the gains—but surviving the swings? That’s what separates the real traders from the noobs.
HOW TO CONNECT A BROKER WITH TRADINGVIEWHere on this video i show you how you can connect a broker with tradingview and trade inside tradingview so you can monitor your trade in one place . I show you how to login and set up trade to create limit order or execute market immediately.
Global Currency Trade: In-Depth Analysis Global Currency Trade: In-Depth Analysis
Global currency trade, a cornerstone of the modern financial landscape, orchestrates the ebb and flow of money across international borders. It's not just a market but a complex network where varied currencies, pivotal in shaping economies, are exchanged. This article delves into the intricacies of this dynamic world, offering a clear understanding of its mechanisms, key players, and the significant impact it has on international economics and geopolitical relations.
What Is Global Currency Trade?
Global currency trade, often referred to as the global foreign exchange market or simply the global forex market, is a vast financial domain where currencies are exchanged. It's the backbone of international commerce and investment, enabling global trade where money exchanges hands across borders. This market encompasses a network of buyers and sellers, including banks, financial institutions, governments, and individual traders, who trade different currencies for a variety of reasons—from conducting international business to speculation and hedging risks.
Unlike stock markets, the forex market operates 24/7, offering continuous opportunities for trade. It's characterised by high liquidity, meaning currencies can be bought and sold without significantly impacting their exchange rate. The prices in this market are influenced by numerous factors, including economic indicators, geopolitical events, and market sentiment. The global forex market plays a crucial role in setting exchange rates, which in turn affects the cost of imports and exports, ultimately impacting the international economy.
Major Currencies and Their Global Influence
In the global forex exchange, several currencies stand out due to their significant impact on trade and finance, shaping economic policies, trade agreements, and international financial stability:
- US Dollar (USD): Dominates the market as the primary reserve currency, widely used in international trade and investments.
- Euro (EUR): Central to the European Union's economy, influencing trade within and outside the EU.
- Japanese Yen (JPY): Asia's key currency, pivotal in regional and global financial transactions.
- British Pound (GBP): Holds historical significance, remaining influential in forex trade.
- Swiss Franc (CHF): Known for its relative stability, it's sought-after in times of economic uncertainty.
You can observe how each of these currencies has performed over recent years in FXOpen’s free TickTrader platform.
Global Currency Markets: Participants and Their Roles
The global forex markets are a stage where diverse participants play crucial roles:
- Central Banks: Regulate money supply and interest rates, directly impacting monetary values. They can intervene in the forex market to stabilise or devalue their national currency.
- Commercial Banks and Financial Institutions: Major players in forex trading, facilitating transactions and providing liquidity to the market.
- Multinational Corporations: Engage in forex for business operations abroad, affecting currency demand through trade and investment activities.
- Investment Managers and Hedge Funds: Speculate and invest in currencies, aiming to take advantage of interest rate differentials or hedging against risks.
- Retail Forex Traders: Individuals trading through brokers or banks, contributing to market dynamics on a smaller scale.
Forex Trading Instruments
Forex trading instruments are the tools traders use to engage in the international forex market, each serving unique purposes and strategies. Understanding these instruments is key to grasping how global currency trading works.
Forex Spot Market
Here, currencies are traded for immediate delivery. The spot market is the most direct and immediate reflection of current currency values, heavily influenced by real-time economic events and geopolitical news. It's preferred for quick, day-to-day transactions and forms the underlying asset for other forex instruments.
Futures Contracts
These contracts obligate the buyer to purchase and the seller to sell a specific amount of currency at a predetermined future date and price. Traded on exchanges, futures are standardised in terms of contract size and expiration dates, offering traders a way to hedge against foreign exchange risk or speculate on price movements.
Options Contracts
Options provide the right, but not the obligation, to buy (call option) or sell (put option) a certain amount of currency at a specified price on or before a certain date. They offer greater flexibility and are used for hedging risk or speculative purposes.
Currency Swaps
In a swap, two parties exchange equivalent amounts of different currencies with an agreement to reverse the transaction at a later date. These are used for hedging long-term exchange rate risk or obtaining better loan rates in a foreign currency.
Currency Forwards
A forward contract is a customised agreement to buy or sell a specific amount of currency at a specified rate on a future date. Used primarily by businesses to hedge against price fluctuations, forwards are not traded on exchanges and are tailored to the needs of the contracting parties.
Currency CFDs (Contracts for Difference)
Currency CFDs, or Currency Contracts for Difference, are financial derivatives that allow traders to speculate on the price movements of various currency pairs without owning the underlying asset.
Impact of Global Currency Trade on World Economies
Global forex trading significantly influences international economics and geopolitical relations. Currency values directly impact international trade. A stronger currency makes imports cheaper but exports more expensive, affecting a country's trade balance. Conversely, a weaker currency can stimulate exports but make imports costlier, influencing inflation and domestic economic health.
Central banks play a pivotal role in this dynamic through intervention. By buying or selling large amounts of their own currency, they can influence exchange rates. For instance, a central bank might buy its own currency to strengthen it, making exports more expensive and imports cheaper. This can be a strategic move to control inflation or reduce trade deficits. Alternatively, selling their own currency to weaken it can boost exports by making them more competitive internationally.
Such interventions can lead to tensions in international relations, especially if a country is perceived to be manipulating its currency for unfair trade advantages. The interconnectedness of economies in the international forex market means that changes in one region can have ripple effects worldwide, influencing economic policies, trade negotiations, and even diplomatic relations.
The Bottom Line
In the intricate world of global currency trading, knowledge is power. This article has illuminated the multifaceted nature of the international forex market, from the influential currencies and market participants to the diverse trading instruments and their impacts on world economies. To navigate these waters and capitalise on the opportunities presented, consider opening an account with FXOpen and step confidently into the realm of smart global currency trading.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Chart with trend(MACD), momentum(DMI), and market strength(OBV)
Hello, traders.
If you "Follow", you can always get new information quickly.
Please click "Boost" as well.
Have a nice day today.
-------------------------------------
BW+ indicator is an indicator that comprehensively evaluates MACD, DMI, and OBV indicators.
Therefore, knowledge of MACD, DMI, and OBV indicators is required.
I added the existing HA-Low and HA-High indicators to express the section to start trading more clearly.
-
The indicators have changed and been supplemented a lot over the past 6 years of using TradingView.
It was not easy to express my trading method as an indicator.
Because of this, I think there are people who unintentionally interpret my writing differently from what I think.
So, to narrow this gap, I am explaining the indicators used in my article.
Since these indicators are automatically generated by a formula, no one can change them.
Therefore, I think anyone can look at the chart and interpret it from the same perspective.
However, there may be differences in interpretation depending on one's investment style or average purchase price.
However, since everyone talks about the same point, there will be no confusion.
-
When talking to each other in the community, if you talk with the chart tool you drew, you may talk differently and there may be room for misunderstanding.
So, I think the conversation often goes in a strange direction because the conversation ends up talking about whether it is LONG or SHORT right now.
I think that charts drawn with chart tools are not very meaningful because they only show a part of the person's thoughts through chart analysis.
This is because they do not tell you the selection point using the chart tool, so interpretation or understanding is lacking.
Therefore, you cannot apply such content to your own chart.
So, since it can't be used as a trading strategy, I can't help but just say, "Oh, that could be possible."
However, if there is a chart that everyone can see and no one can change, I think it would be easier to talk and reflect each other's thoughts on my trading strategy.
I think that because of that, I can find out what I lacked and supplement it.
Not everyone sees the same thing and thinks the same, but if the basic point of the thought is the same, I think it can help me make other people's thoughts my own.
-
Anyway, I hope that this chart change will help you create a clearer analysis or trading strategy.
-
The MACD indicator added to the chart is an indicator with a modified formula from the existing MACD indicator, but the interpretation method is the same.
That is,
- If MACD > Signal, it is interpreted as an upward trend,
- If MACD < Signal, it is interpreted as a downward trend.
-
The DMI indicator added to the chart simplifies the interpretation of the existing D+, D- indicators by expressing them as lines on the ADX line.
That is,
- The section expressed in Aqua color means a downward section,
- The section expressed in Orange means an upward section.
- When ADX is above 25, it means that the strength of the upward or downward movement is strong,
- When it is below 25, it means that there is a high possibility of forming a box section or sideways section.
-
The OBV indicator added to the chart means an upward trend when each line is broken upward, and a downward trend when it is broken downward.
-
The indicator that expresses the contents explained above is the BW v1.0 indicator.
In order to see this more intuitively, the BW (100), BW (0), and Mid (50) indicators were added so that they can be expressed in the price candle section.
In addition, there are also High (80 Down), Low (20 Up) indicators.
-
It is never easy to interpret each indicator and evaluate it comprehensively.
It is especially difficult when trading in real time.
-
When interpreting the BW v1.0 indicator, it is basically divided into rising and falling based on the 50 point.
Therefore, passing the 50 point increases the possibility of a significant change in the trend.
Therefore, it seems that trading can be done based on whether there is support near the Mid (50) line generated when the BW indicator passes the 50 point, but this is not the case.
The reason is that volatility is likely to occur when a change in trend occurs.
When volatility occurs, your trading point will go up and down, so psychological pressure will increase and you may proceed with an inappropriate trade.
Therefore, a good point to start trading is the BW (0), BW (100) or HA-Low, HA-High point.
Since these indicators are generated at the boundary of the low or high point range, if you start trading based on whether there is support, you are more likely to get good results.
-
In any case, you should think in line with your average purchase price.
Otherwise, if you trade incorrectly due to psychological pressure when you get close to the average purchase price, you may end up with little profit or even a loss.
This means that when you start a new trade, it is better to start near the BW (0), BW (100), HA-Low, and HA-High indicators as mentioned above.
-
Have a good time.
Thank you.
--------------------------------------------------
The Impact of Overtrading on Trading PerformanceOvertrading and micromanaging trades are significant factors that contribute to losses for many traders. Often, traders fail to recognize when they are overtrading because they lose sight of the limits that indicate when to stop. Over time, this behavior can become a habitual pattern, ultimately resulting in financial losses. In this review, we will explore what overtrading is, examine the associated risks, and propose effective strategies to address the issue.
📍 Overtrading: How to Optimize Your Efforts
Pareto's Law states that 20% of effort often yields 80% of the results. When we apply this principle to everyday life, several observations come to light:
20% of people own 80% of the world's assets.
80% of sales come from 20% of customers.
20% of managers account for 80% of transactions.
The same principle holds true in trading: 80% of your results stem from just 20% of your efforts. Many traders overlook this insight, striving to "give their best" while in reality, 80% of their efforts may be largely ineffective.
Overtrading reflects both the actions and mindset of a trader who is overly focused on profit. This relentless pursuit can lead to stress, fatigue, and ultimately, significant losses. Overtrading often arises from improper prioritization of tasks and strategies. Recognizing and addressing this issue can help traders optimize their efforts and improve their performance.
📍 Optimize Performance
To effectively manage overtrading and enhance your trading success, consider implementing the following methods:
🔹 Set a Minimum Desired Income Profit: Establish achievable profit targets for different time frames—daily, weekly, and monthly. Ensure these targets are realistic and grounded in your trading experience. If you find that you haven't met your target within the first week, resist the urge to chase after immediate results; focus instead on the bigger picture. It's possible that you might still achieve your overall monthly goal.
🔹 Concentrate on Specific Tools and Actions: Narrow your focus to a limited set of trading tools and methods. Avoid spreading your attention too thin across various markets or strategies. By concentrating your efforts, you can deepen your expertise in specific areas and improve your decision-making, ultimately leading to better results.
🔹 Evaluate the Effectiveness of Your Trading System: Maintain a detailed trading journal where you log each trade. This journal will serve as a valuable resource for analyzing your performance over time. Use it to collect data based on various criteria, such as the most productive times for trading, the most profitable assets, and any recurring patterns in your successes and failures. By evaluating this information, you can identify areas for improvement and optimize your trading strategy for better outcomes.
📍 What to Avoid in Trading?
To maintain a disciplined and effective trading strategy, it's crucial to avoid certain behaviors that can lead to overtrading or poor decision-making. Here are key pitfalls to steer clear of:
◼️ Constant Observation of Charts: Resist the urge to monitor charts continuously. Instead, focus on selecting a specific asset and trading session, making trades primarily during periods of maximum volatility. This practice will help you avoid unnecessary stress and maintain clarity in your decision-making.
◼️ Pointless Forum Browsing: Spending excessive time on forums in hopes of discovering valuable advice or a superior trading method can be unproductive. While some insights can be helpful, relying too much on external opinions may divert you from your own strategies and increase dependence on other traders' perspectives.
◼️ Chaotic Timeframe Switching: Avoid jumping between different timeframes in search of trading signals. This erratic behavior often leads to confusion and can negatively impact your ability to make sound trading decisions. Stick to a consistent timeframe that aligns with your trading strategy and risk tolerance.
📍 Understanding Trade Micromanagement
Micromanagement in trading refers to the excessive control and analysis of trades that often results in diminished returns. Common behaviors associated with micromanagement include:
🔹 Monitoring Every Market Tick: Constantly watching minute-to-minute price changes can lead to anxiety and impulsive decisions.
🔹 Frequent Adjustment of Stop-Losses and Take-Profits: Regularly changing these levels can indicate a lack of confidence in your trading system and may lead to inefficient outcomes.
🔹 Switching to Short Timeframes: Lower timeframes often bring more market noise and may lead to overtrading rather than clearer signals.
🔹 Seeking Confirmation from Third-Party Resources: Looking for validation of your trades or decisions from forums, analysts, or other traders can undermine your conviction and disrupt your trading plan.
🔹 Unplanned Changes to Position Sizes : Modifying your trade size without a systematic approach can lead to increased risk and potential loss.
The underlying reason for micromanagement often stems from a lack of trust in the trading system and a fear of losses. Overcoming this psychological barrier requires time, practice, and rigorous backtesting to boost your confidence in your approach.
📍 Eliminating Overtrading: Optimizing Time and Efficiency
🔸 Reduce Screen Time: Aim to minimize the need to constantly be in front of your computer. Build confidence in your trading decisions by ensuring your trading system is effective, learning how to safeguard your positions, and actively working to minimize risks.
🔸 Avoid Impulsive Trades: Resist the urge to seize every trading opportunity that arises. Focus on identifying the strategies and conditions that yield the best results before opening a trade.
🔸 Learn from Mistakes: Regularly analyze your trading errors and strive to avoid repeating them. Dedicate time to reviewing your trade log to assess what went well and what could be improved.
🔸 Prioritize Your Trades: Be selective about which trades to pursue. Prioritization can help you focus on the most promising opportunities and enhance your overall performance.
📍 Conclusion
Remember, time is your most valuable resource. Those who truly enjoy their work and take the time to plan effectively will achieve greater success than individuals who spend all their time merely working.
Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment 📣
How Smart Money Traps Retail TradersExplaining How Smart Money Traps Retail Traders. Explaining Consolidation and the engineered liquidity by institutions to create orders to buy and push price around.
It's a TARP!!!!
Parabolic Reversals, A+ setup explained with todays NAS R5 shortRecap of todays NY Session with my shorts on NAS and Gold. I am explaining the parabolic reversal setup in detail since it happens quite often currently and is one of my favourite setups.
SWING TUTORIAL - PODDARMENTIn this tutorial, we analyzes the reversal of NSE:PODDARMENT 's 50% decline, identifying key technical indicators that signaled a buying opportunity. We'll explore how to recognize bullish momentum and optimal entry points using chart analysis.
NSE:PODDARMENT reached its all-time high before experiencing a significant downturn. However, the stock began forming support levels at 250 in June 2023 and repeatedly retested this level until June 2024.
Key Observations:
1. Support Levels: The stock consistently found support at ₹250, indicating a potential reversal.
2. MACD Indicator: The Moving Average Convergence Divergence (MACD) line showed steady upward momentum, signaling increasing bullish pressure.
3. Consolidation: Price action demonstrated a consolidation phase, forming a strong support zone.
4. MACD Crossover: The successful crossover in June 2024 confirmed the bullish trend, creating an entry opportunity.
Trading Strategy and Results:
Based on this analysis, our entry point was established at the MACD crossover. The stock subsequently rose to its swing high levels, yielding approximately 67% returns.
Note: This case study demonstrates the effectiveness of combining technical indicators to identify bullish momentum. By recognizing support levels, MACD movements, and consolidation patterns, traders can pinpoint potential entry points.
Would you like to explore more technical analysis concepts or case studies? Share your feedback and suggestions in the comments section below.
XAUUSD GOLD: Understanding Trend Shifts for Precision Entries👀👉 In this video, we explore the inner workings of market trends and, more importantly, how smart money manipulates price action to sweep liquidity, allowing them to place their orders and sustain the trend. We also showcase a powerful, free indicator from TradingView’s extensive toolset. Here's what we cover:
📊 Understanding Trends: How trends truly operate in the market.
💰 Smart Money Tactics: How institutional traders manipulate price action to sweep liquidity and execute large orders.
🔑 Key Levels: Identifying crucial accumulation and distribution zones to approach potential trade setups effectively.
🛠 TradingView Indicators: Learn how to access tools that help spot when price is overextended.
🔎 Market Structure: Discover how to locate resting liquidity and anticipate price reactions, understanding the role of liquidity in market movement.
📈 Trade Setups: Using a practical approach, we examine price interactions with liquidity, blending Wyckoff theory and ICT concepts for sharper trade decisions.
Disclaimer: This video is for educational purposes only and is not financial advice. Trading involves significant risks. Be sure to conduct your own research before making any decisions. Trade responsibly.
Options Blueprint Series [Intermediate]: Vega-Neutral Gold Play1. Introduction
Gold is currently in an uptrend, presenting a potentially favorable environment for bullish traders. However, with implied volatility (IV) sitting around its mean, there’s uncertainty about whether IV will rise or fall in the near future. In such a scenario, traders may want to neutralize their vega exposure to avoid being negatively affected by changes in volatility.
This article focuses on setting up a Call Ratio Spread, a bullish option strategy that provides positive delta while allowing for further adjustments that could keep vega neutral. This allows traders to capitalize on Gold’s potential uptrend while minimizing risk from changes in implied volatility.
2. Current Market Context
The Gold futures market shows strong levels of support, which reinforces the bullish outlook. On the continuous Gold futures chart above GC1!, we observe key support levels at 2646.2 and 2627.2-2572.5. These levels could act as price floors, helping the uptrend continue if tested.
Similarly, when examining the contract-specific below chart for GCQ2025, we identify supports at 2725.4 and 2729.5-2705.5. These levels provide solid ground for bullish trades on this specific contract, giving traders additional confidence in entering long positions.
With implied volatility near its average (see the chart below), the market’s future volatility direction is unclear. Traders using options may choose adapt to this environment, ensuring that changes in volatility do not work against them.
3. Options Strategy: Call Ratio Spread
To take advantage of Gold’s uptrend while neutralizing the risk from changes in volatility, we could employ a Call Ratio Spread. This strategy offers a bullish stance while maintaining vega neutrality, protecting the trader from swings in implied volatility.
Setup:
Buy 1x 2600 Call at 256.15
Sell 2x 3500 Calls at 23.32
Expiration: July 28, 2025
This configuration generates positive delta, meaning the strategy will benefit from upward price movement. At the same time, by selling two calls at a higher strike, we offset the vega exposure, ensuring that changes in volatility won’t dramatically affect the position.
The strike prices and expiration selected help create a risk profile that works well in a bullish market. The maximum gain potential occurs if Gold continues to rise but stays below the higher 3500 strike, while the vega neutrality minimizes any volatility risks as the trade begins.
Notice the breakeven point for this strategy is 2809.5, meaning the trade becomes profitable if Gold exceeds this level by expiration.
4. Why Use Micros?
Traders looking for a more flexible approach can consider using Micro Gold Futures (symbol: MGC) instead of standard Gold futures contracts. Micro Gold Futures offer smaller contract sizes, which translate into lower margin requirements and a more precise way to control risk. This makes them an attractive alternative for traders with smaller accounts or those looking to scale into positions gradually.
Additionally, Micro Gold Futures allow traders to fine-tune their exposure to Gold without the larger capital commitment required by standard contracts. For those implementing strategies like the Call Ratio Spread, Micros provide a cost-effective way to execute similar trades with a lower financial commitment.
Contract Specs and Margin Requirements
Gold Futures (symbol: GC) represent 100 troy ounces of gold, and their margin requirements can vary depending on market volatility and the broker. Typically, the initial margin requirement for a standard Gold futures contract is around $10,000 to $12,000, but this can fluctuate. For traders seeking more flexibility, Micro Gold Futures (symbol: MGC) offer a smaller contract size, representing 10 troy ounces of gold. The margin requirement for Micro Gold Futures is significantly lower, usually in the range of $1,000 to $1,200, making it a more accessible option for those with smaller accounts or those looking to fine-tune their exposure.
5. Risk Management
As with any options trade, managing risk is essential. In the case of a Call Ratio Spread, the primary risk comes from the naked short calls at the 3500 strike price. If Gold rallies aggressively beyond 3500, the trader faces unlimited risk due to the uncovered nature of the short positions.
To mitigate this risk, traders should consider using stop-loss orders or adjusting the trade if Gold's price approaches the 3500 level too quickly. Another way to eliminate the unlimited risk component to the upside would be to convert the Call Ratio Spread into a Call Butterfly by buying an additional call above the 3500 strike price, effectively capping the risk. This adjustment still allows for positive delta exposure while limiting potential losses if Gold moves sharply higher.
Additionally, monitoring implied volatility is key. While the position starts with neutral vega exposure, this will change as the underlying asset price moves and time passes, especially as expiration approaches. The vega exposure can increase or decrease depending on these factors. If maintaining the vega-neutral characteristic is a priority, further adjustments—such as rolling options or modifying strike prices—could be made to keep the position aligned with the trader’s volatility outlook.
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.
How to Trade Crude Oil: Trading StrategiesHow to Trade Crude Oil: Trading Strategies
Learning how to trade crude oil requires a nuanced understanding of its fundamental aspects, instruments, and trading strategies. This comprehensive article offers insights into the critical elements that affect crude oil prices, the range of instruments available for trading, and specific strategies traders use in this market.
The Basics of Crude Oil
Crude oil, often referred to as "black gold," is a fossil fuel derived from the remains of ancient organic matter. It serves as a crucial raw material for various industries, including transportation, chemicals, and manufacturing.
Two primary types of crude oil traded on global markets are West Texas Intermediate (WTI) and Brent Crude. WTI is primarily sourced from the United States and is known for its high quality and low sulphur content. On the other hand, Brent Crude originates mainly from the North Sea and serves as an international pricing benchmark.
The Organization of the Petroleum Exporting Countries (OPEC), which includes members like Saudi Arabia, Iran, and Venezuela, plays a pivotal role in determining global oil supply. By adjusting production levels, OPEC influences crude oil prices significantly. Additionally, other countries like Russia and the United States contribute to the world's oil supply, further affecting market dynamics.
What Time Does the Oil Market Open?
Like forex markets, crude oil trading hours are nearly 24/5. They’re typically highly liquid and offer traders multiple opportunities across a given day. For example, the New York Mercantile Exchange (NYMEX) opens for trading from Sunday evening to Friday afternoon, with a brief daily trading break.
Activity is most intense during the US session, which runs from 9:00 AM to 17:00 PM EST, and the European session, from 2:00 AM to 11:00 AM EST. These periods coincide with peak market activity and are generally the most volatile, with the overlap between the US and European sessions (between 9:00 AM and 11:00 AM EST) offering the greatest volatility and trading activity.
Factors Affecting Crude Oil Trading
In oil trading, economics is a fundamental aspect that traders need to grasp to make educated decisions. Several factors drive the price of crude oil, and here are some of the most significant:
- Supply and Demand: At its core, the price of crude oil is determined by how much of it is available (supply) versus how much is wanted (demand). An oversupply can depress prices, while high demand can cause prices to spike.
- Geopolitical Events: Conflicts, wars, and diplomatic tensions in oil-producing regions can disrupt supply chains, affecting prices. For instance, sanctions on Iran or instability in Venezuela can push prices higher.
- Currency Fluctuations: Oil prices are generally quoted in US dollars. A strong dollar can make oil more expensive for countries using other currencies, thereby affecting demand.
- Seasonal Changes: During winter, demand for heating oil can rise, pushing crude oil prices up. Conversely, a mild winter might result in lower demand and prices.
- Technological Advances: Innovations in extraction methods, such as fracking, can alter the supply landscape, making it easier to extract oil and thereby affecting prices.
- OPEC Decisions: As previously mentioned, OPEC has a significant influence on oil prices. Their production quotas can tighten or flood the market, causing price swings.
- Economic Indicators: Data like unemployment rates, manufacturing output, and interest rates can indicate the health of an economy, which in turn can affect oil consumption and prices.
- Environmental Policies: Increasing regulations and policies aimed at reducing carbon emissions and promoting renewable energy sources can impact the demand and supply of crude oil, thereby influencing prices.
- Natural Disasters: Events such as hurricanes, earthquakes, and other natural disasters can disrupt oil production and supply chains, leading to fluctuations in crude oil prices.
- Global Economic Growth: The overall growth of the global economy plays a critical role in crude oil demand. Economic booms often lead to higher energy consumption, driving up oil prices, while economic slowdowns can reduce demand and lower prices.
How Is Crude Oil Traded?
When learning how to trade oil, traders have a variety of instruments to choose from.
CFDs
Contracts for Difference (CFDs) are popular instruments when trading crude. CFDs are used by traders to speculate on price movements without owning the underlying asset. Essentially, a CFD is a contract between a trader and a broker to exchange the difference in price from the point the position is opened to when it is closed. One of the key benefits is the use of leverage, which means traders can control a larger position with a smaller initial investment, amplifying both potential returns and losses.
Margin requirements vary by broker but are typically lower for CFDs on oil compared to some other instruments. This makes it appealing for crude oil day trading strategies, where traders aim to capitalise on short-term price movements. However, managing risk effectively is crucial, as the leveraged nature of CFDs can result in significant losses if the market moves against you.
At FXOpen, we offer both CFDs on WTI Crude oil and Brent Crude. Head over there to explore a world of trading tools and other assets beyond crude oil.
Futures
Futures contracts are another well-established avenue for trading crude oil. Unlike CFDs, futures are standardised agreements to buy or sell a specific quantity of oil at a predetermined price at a set date in the future. They are traded on regulated exchanges, providing an added layer of transparency and security.
Spot Market
In spot trading, one buys or sells crude oil and takes immediate delivery and ownership. Unlike futures and CFDs, there's no leverage in spot trading, making it a less risky option. However, the absence of leverage requires a higher initial investment. While retail traders often avoid spot trading due to storage and transportation challenges, it's commonly used by entities directly involved in production or consumption. This method is more straightforward but demands the logistical capabilities that individual traders usually lack.
ETFs
Exchange-traded funds (ETFs) offer an alternative for those interested in the crude oil market without dealing with futures contracts or physical ownership. Crude oil ETFs typically track the price of oil or related indices by holding futures contracts or a blend of oil company stocks. This allows investors to indirectly gain exposure to oil price movements with less complexity.
Investing in a crude oil ETF can provide a degree of diversification, as these funds may also include assets like bonds or other commodities in their portfolio. However, it's essential to be aware of the management fees and potential tracking errors in the ETF's performance compared to the actual commodity.
Stocks
Another route to gain exposure to the crude oil market is by investing in the stocks of companies involved in the industry. This includes major producers, refineries, and even transportation companies. By owning shares in these businesses, investors are indirectly influenced by crude oil prices. To use an example, a rise in oil prices often boosts the profitability of oil-producing companies, potentially leading to stock price appreciation.
Unlike trading futures or CFDs, investing in stocks means actually owning a piece of the company, often with the added benefits of dividends. However, conducting thorough research is crucial, as these stocks can be affected by company-specific risks in addition to oil price movements.
Crude Oil Trading Strategies
Given the volatile nature of crude oil prices, traders employ specific strategies to capitalise on price fluctuations. Here are some strategies that may be useful for crude oil trading:
Trend Following with Moving Averages
The trend is your friend, especially in commodities like crude oil. This is a well-known technique but it may be very useful for commodity trading. One effective way to follow the trend is by using moving averages, such as the 50-day (blue) and 200-day (orange). When the 50-day crosses above the 200-day, it's generally a bullish signal, and vice versa for a bearish trend. However, as with all technical analysis tools, moving averages can sometimes trigger false signals.
Range Trading
Due to supply-demand dynamics and geopolitical factors, crude oil prices often fluctuate within a specific range. Identifying these ranges can be useful for short-term trading. Traders buy at the lower end of the range and sell at the higher end, applying technical indicators like RSI or Stochastic Oscillator for entry and exit signals.
News-Based Trading
In crude oil markets, news about OPEC decisions, US oil inventory data, geopolitical tensions, and technological advancements can dramatically impact prices. Traders keeping an eye on oil news can take advantage of sudden announcements or an economic release likely to push prices in a particular direction. Given the high leverage commonly available in CFD trading, this strategy can be effective but also comes with significant risk.
Trade Crude Oil at FXOpen
Trade WTI and Brent Crude oil CFDs at FXOpen to take advantage of our competitive spreads, high liquidity, and lightning-fast execution speeds.
We offer four different trading platforms, MetaTrader 4, MetaTrader 5, TickTrader, and TradingView, each with desktop, web-based and mobile versions for access anytime and anywhere. Take advantage of advanced technical analysis tools, including many trading tools and expert advisors for automated trading.
Traders can rest easy knowing that FXOpen is also regulated by the FCA in the UK, CySEC in Cyprus, and is licensed to provide financial services in Australia: AFSL 412871 – ABN 61 143 678 719. Start trading oil and gas commodity CFDs with confidence at FXOpen and explore a world of trading opportunities across more than 600 markets.
To access Crude Oil markets with competitive spreads and rapid execution speeds, consider opening an FXOpen account today and step confidently into the world of crude oil trading.
The Bottom Line
In crude oil trading, having the right strategies and tools is essential. By understanding the fundamentals, market dynamics, and utilising specific trading techniques, you are now equipped with the knowledge you need to get started!
FAQ
How to Trade Brent Crude Oil?
To trade Brent Crude oil, you can use various instruments such as futures contracts, CFDs, ETFs, or stocks of oil companies. Most retail traders use CFDs, which provide a way to speculate on price movements without owning the asset. CFDs also allow for leverage, which can amplify both potential gains and losses.
What Is the Brent Oil Trading Strategy?
A common Brent oil trading strategy involves trend following using moving averages. For instance, traders use the 50-day and 200-day moving averages to identify bullish or bearish trends. Range trading and news-based trading are also popular strategies.
What Hours Does Crude Oil Trade?
Crude oil trades nearly 24/5. The New York Mercantile Exchange (NYMEX) operates from Sunday evening to Friday afternoon with a daily break. The most active trading occurs during the US session (9:00 AM to 2:30 PM EST) and the European session (6:00 AM to 11:00 AM EST).
What Is the Best Time to Trade Brent Crude Oil?
According to theory, the best time to trade Brent Crude oil is during the overlap of the US and European sessions, from 9:00 AM to 11:00 AM EST, when market liquidity and volatility are highest. However, you should consider fundamental factors as they can lead to unexpected price movements.
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.
BOS or CHOCH! What's the difference?Break of Structure (BOS) is when price is in a dominant trend, either uptrend or downtrend, price will respect the trend by/and breaking into new structure by breaking above or below a HH or LL.
Change of Character (CHOCH) happens when price pulls into a higher timeframe POI and has a CHOCh on a lower timeframe by disrespecting the dominant trend and creating a new cycle or trend.
HOW TO USE RECTANGLE CHAT PATTERNHere on this video i show you how you can use rectangle chat pattern and trade so you can maximize your profit so it is very simple to use and you can apply it when price break above or below rectangle. Use money management
