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HOW TO DETERMINE THE TRENDHello everyone! Today I want to discuss with you the methods of trend identification. Finding a trend is an important task, because it is by trading according to the trend that you can earn a lot of money. PATTERNS Thanks to the patterns, you can understand where the price will go. There are many patterns confirming the trend: flag, pennant, wedge, and so on. The exit from these patterns is the confirmation of the strength of the main trend. Follow the patterns, they will help you find the trend. MA Moving Average is an important trend indicator and is quite clear and simple. The moving average is used by analysts in large banks and funds for a reason. The main trend indicator is the price rebound from the moving average. If the price bounces from the moving average towards the trend, then the trend is strong. CHANNELS The trend pushes the price in one direction and even the corrections become shorter. Under such conditions, the channel boundaries are directed towards the trend. Channel breakouts also occur in the direction of the trend, which is a confirmation of the trend. FIBONACCI Thanks to the Fibonacci levels, you can identify good entry points. It is enough to stretch the grid to the price impulse. This trend helps to open a position with a good entry point. And what methods do you use to identify the trend? Traders, if you liked this idea or if you have an opinion about it, write in the comments. I will be glad 👩💻
Education
by Lingrid
47
VIX IndexThe Volatility Index VIX is one of the most popular methods for determining stock market emotions. In full, it stands for CBOE Volatility Index, the volatility index of the Chicago Board Options Exchange. The market is an emotion, always has been, always will be. Robots? Great, but they are created by people with emotions. And a trader needs a method that allows him to identify these emotions. That's where the VIX index comes in. It is based on the volatility of options on the S&P 500 Index. Yes, yes, it's actually an index for an index, this happens in the markets. The VIX index is also known as the Fear and Greed Index. The index is expressed as a percentage and indicates the probability of the S&P 500 index moving over a period of 30 days, where the probability level is 68% (one standard deviation from the normal distribution curve, aka the Gaussian curve). Let's say that if the VIX is 15, therefore the expected change in the S&P 500 index over the course of a year, with a 68% probability, is less than 15% up or down. What does that have to do with emotion? For that, we need to understand the forces that underlie any strong market movement. Greed is the desire to possess more and more than is really needed. Whether it be money, goods, services, or any material values. According to a number of scientific studies, greed is the product of a chemical reaction in our brains that causes common sense to be discarded and sometimes causes irreversible changes in both the brain structure and the body. Perhaps someday a pill for greed will be invented, but for now, everyone is greedy without restraint. Greed is as addictive as smoking or drinking alcohol. "He has pathological greed," "he's the greediest guy the world has ever seen," are all victims of a very common mania. The average trader comes to the market and he is subjected to the strongest emotional influence, caused by the very brain "chemistry". He wants more and more and more, all the time. He wants more numbers on the account. He can't stop, he can't control himself. As the result, brokers and different near-market agents use this obsession with pleasure, exploiting his mental disease. Similar effects are associated with the emotions of "happiness" and euphoria. As a result, such traders' brains are constantly bombarded with emotional temptations and endless financial carrots, just as narcotic substances give the effect of not getting high at all but of temporary relief. The dot-com bubble This is a classic example of market greed. The Internet bubble led to millions of investors continuously pouring money into Internet companies between 1995 and 2000, despite the fact that most of them had no future. It got to the point of absurdity. Some companies were getting hundreds of millions of dollars just for creating the website "XYZ dot com". Greed bred greed, led to a colossal overestimation of assets and their real value. Investors, obsessed with making easy money, invested insane amounts of money in nothing. The inflated bubble naturally burst and took all the money of the greedy people with it. The Financial Crisis of 2008 The book "The Big Short: Inside the Doomsday Machine" by Michael Lewis (and the movie "The Big Short ") tells the story of how a few people profited from the massive greed of others. An instrument like CDS (Credit Default Swap) turned into a crazy financial pyramid scheme with a turnover of over $62 trillion. In the financial crisis of 2007-2010, the volume of this market shrank threefold another bubble driven by greed and obsession burst at the seams, and the financial world shuddered and shrank dramatically. Only a few people made a fortune as they worked against the greed of the crowd. Fear An uncomfortable state of constant stress, waiting for the worst fate and constant threat. The dot-com bubble also demonstrated this emotion well. To cope with the horrific results of the dot-com bubble, out of fear, investors took money out of the stock market and put it into the safest possible instruments, like stable investment funds or government-backed funds. These funds were not very profitable, but their main advantage in the eyes of investors was minimal risk. This is an example of how investors ruined all of their long-term investment plans because fear forced them to hide their money literally under their pillow. These assets did not generate income, but remained conditionally safe. How to read VIX The correlation between the VIX and the S&P 500 is quite clear. Let's compare the values, where the blue line is the VIX and the orange line is the S&P 500. As we can see, a decrease in the VIX corresponds to an increase in the S&P 500, while an increase in the VIX (fear) in contrast is a signal of a collapse of the S&P 500. Statistics show that there is an inverse correlation between the VIX and the S&P 500, as the VIX moved in the opposite direction from the S&P 500 more than 80% of the time between 2000 and 2012. Where the VIX peaks, there is a decline in the S&P 500 and all the associated effects that affect both the dollar and other currencies. So, if the VIX is less than 20, investors are less worried, the volatility of the S&P 500 is expected to be low. If the VIX is greater than 30, investor fear increases as option prices on the S&P 500 rise; hence, investors pay more to hedge their assets. A typical picture is, for example, the VIX is at an ultra-low 10 and the S&P 500 is breaking new growth records. This is all an indication of an impending collapse of the S&P 500. However, if the Central Banks change monetary policy accordingly, this VIX level could very well become the new "normal" value. One scenario to use is to wait for the VIX to consolidate above 30 and enter the SPX on its decline. When investors have a scare, it's an indication of a panic sell-off. Let's look at some real examples. Since the beginning of this year, the VIX Index has been hitting fear records, reaching a high of 30. In theory, this means a drop in the SPX index. Well, why in theory? In practice it worked out 100%, the SPX index really collapsed spectacularly. Conclusion As we know, the S&P 500 index, which we have already studied, is the "king" index. It not only shows the state of the U.S. economy and stock market, but also indirectly shows the state of a mass of other assets, from interrelated indices to the value of the dollar. Because of correlation, Fear and Greed indices can be adapted to everything, both indices and currency pairs. It is one of the most popular stock indicators, unique in its kind and actively used for long-term market forecasts.
CBOE:VIXEducation
by DeGRAM
24
MOMENTUMB and MARKET CORRECTIONHello everyone! Today I want to draw your attention to the momentum and price correction. In fact, any price movement consists of an impulse and a correction. You can earn money on each of these phases. Impulse An impulse movement is a strong price movement towards the main trend. As a trader, it is right that you should open positions in this direction. This movement is quite easy to identify. How correctly an impulse movement will spend less time covering a longer distance than a corrective movement. The impulse has a large force that pushes the price in the right direction, so the movement is strong and fast. Correction The corrective movement is characterized by a smaller force of movement. Very often, the correction will move in one corridor without much updating of the highs or lows. The fact is that with a corrective movement in the price, there is not enough force to update the maximum or minimum. The movement will be weak, resembling trampling on the spot. Of course, you can earn money in such a period, but it will be more difficult to do this than when trading on impulse movement. In addition , there is always a risk that the trend will pick up again and push the price against you and very quickly . You simply won't have time to close a position if you haven't set a stop loss. Support and resistance It is important to note how the level from which the price makes a reaction is first support, then resistance when breaking through. This is a frequent occurrence in all markets. The impulse conceals a force that cannot break through the level immediately, so the correction begins and the accumulation of new energy to overcome the level. After that, a breakdown occurs. At this point, support becomes resistance. The price during the correction, as we remember, does not have sufficient strength to update the maximum and the level becomes a resistance that the price cannot pass. The correction rests on the level and failed to overcome it. And this structure is quite common. Conclusions The main conclusion is simple - trade according to the trend. Learn to identify impulse movement and corrective movement, so it will be easier for you to determine the trend. Watch how the price reacts to the levels. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
13
Cycles Exchange giants FTT (FTX, Alameda Research)+BNB (Binance)Comparative analysis. The main trend of the two exchange coins BNB and Alameda Research, and yes the exchange FTX. The time interval is one month. Logarithm. Coins of two liquid exchanges: Binance and FTX . Coinmarketcap: FTX Token Coinmarketcap: BNB Here's what it looks like on a line chart of the price. Is Sam Bankman-Fried a young potential "grandpa" Warren Buffett or a fintech criminal with a life sentence? Could Alameda replicate the success of Binance, led by future PR wunderkind Sam Bankman-Fried, i.e. a young Warren Buffett? A joke? Ta, no... That's his role after his grandfather died. Or is it? Think about it... Do you think the pseudo-asset market, the various cryptocurrency scams, can be compared to the tokenized stock market ? Can you smell XRP?) Right now, in 2022, Binance is a mastodon in terms of cryptocurrency trading. Just like Poloniex in 2017). Think about who is behind companies like Alameda Research ? Why are they allowed to do what others are not? Why can some liquidate, ostensibly for their own benefit, entire projects with billions of dollars in capitalization and a community of millions of people with impunity, while others can't even breathe a breath? Who has the right to pardon or punish? Who can claim such a huge piece of the fat pie as the tokenization of stocks or the materialization of money from nothing (stabelcoins) but the state? Exchanges. Hype and liquidity. Changing market leaders. Therefore, for conservative traders and investors, it is more rational to pay attention to the non-random mastodons of the crypto market. But, keep in mind that they tend to gain or lose fat over time. I didn't write about Poloniex as an example for nothing. It's an example of hype and decline from previous times of popularity. In 2017 there was such an influx of traffic to the exchange that it was impossible to trade. Five years later, things have changed. Liquidity flowed to the new mastodon of hype, Binance. Market cycles of cryptocurrency market spikes/declines . In the price chart, I have shown the time cycles of the cryptocurrency market. This is probably the most important thing everyone wants to know. Most market participants want to scroll through money and increase the amount available "here and now in the moment" - emptying their pockets. Typically, the market of such "burps up" before the next peak in the cycle. Don't be that kind of person. Very few people draw conclusions from their previous mistakes. They admit their mistakes and look for ways to solve them, rather than cite randomness. There is no randomness in non-accidental actions. Notice how the "crypto hamster traffic" has decreased in the market nowadays. I may be writing crudely, but it's understandable. Local reversals occur at times like this. Major FTT trend FTT/USD (FTX, Alameda Research). Main Trend. This is what this zone looks like on the line price chart on a larger scale. Pay attention to what zone the price is in now and at what values of profit. Take this into account in your trading. Main trend of BNB .
FEducation
by SpartaBTC
6
Beginner's Guide To Moving AveragesMoving averages are without a doubt the most popular trading tools. Moving averages are great if you know how to use them but most traders, however, make some fatal mistakes when it comes to trading with moving averages. In this article, I show you what you need to know when it comes to choosing the type and the length of the perfect moving average and how to use moving averages when making trading decisions. What is the best moving average? EMA or SMA? In the beginning, all traders ask the same questions, whether they should use the EMA (exponential moving average) or the SMA (simple/smoothed moving average). The differences between the two are usually subtle, but the choice of the moving average can make a big impact on your trading. Here is what you need to know: The differences between EMA and SMA There is really only one difference when it comes to EMA vs. SMA and its speed. The EMA moves much faster and it changes its direction earlier than the SMA. The EMA gives more weight to the most recent price action which means that when the price changes direction, the EMA recognizes this sooner, while the SMA takes longer to turn when the price turns. Pros and cons – EMA vs SMA There is no better or worse when it comes to EMA vs. SMA. The pros of the EMA are also its cons – let me explain what this means: The EMA reacts faster when the price is changing direction, but this also means that the EMA is also more vulnerable when it comes to giving wrong signals too early. For example, when the price retraces lower during a rally, the EMA will start turning down immediately and it can signal a change in the direction way too early. The SMA moves much slower and it can keep you in trades longer when there are short-lived price movements and erratic behavior. But, of course, this also means that the SMA gets you in trades later than the EMA. What is the best period setting? When you are a short-term day trader, you need a fast-moving average that reacts to price changes immediately. That’s why it’s usually best for day traders to stick with EMAs. On the other hand, Swing traders have a very different approach and they typically trade on higher time frames (4H, Daily +) and also hold trades for longer periods of time. Thus, swing traders should first choose an SMA and also use higher period moving averages to avoid noise and premature signals. The best moving average periods for day-trading 9 or 10 periods: Very popular and extremely fast-moving. Often used as a directional filter (more later) 21 period: Medium-term and the most accurate moving average. Good when it comes to riding trends 50 period: Long-term moving average and best suited for identifying the longer-term direction The best periods for swing trading 20 / 21 periods: The 21 moving average is my preferred choice when it comes to short-term swing trading. During trends, price respects it so well and it also signals trend shifts. 50 period: The 50 moving average is the standard swing-trading moving average and is very popular. Most traders use it to ride trends because it’s the ideal compromise between too short and too long term. 100 period: There is something about round numbers that attract traders and that definitely holds true when it comes to the 100 moving average. It works very well for support and resistance – especially on the daily and/or weekly time frame. 200 / 250 period: The same holds true for the 200 moving average. The 250 period moving average is popular on the daily chart since it describes one year of the price action (one year has roughly 250 trading days) How to use moving averages Trend direction and filter you can use a fast EMA to stay on the right side of the market and filter out trades in the wrong direction. Just this one tip can already make a huge difference in your trading when you only start trading with the trend in the right direction. The Golden Cross and the Death Cross But even as swing traders, you can use moving averages as directional filters. The Golden and Death Cross is a signal that happens when the 200 and 50-period moving average cross and they are mainly used on the daily charts. In the chart below, I marked the Golden and Death cross entries. Basically, you would enter short when the 50 crosses the 200 and enter long when the 50 crosses above the 200 period moving average. the screenshot shows that during the last bitcoin cycle if you stuck to the moving averages you would have been profitable most of the time both in the long and short directions. Also please notice how when the market is moving sideways it's not favorable to use the moving averages. I will end this article here, I hope you now have a better understanding in moving averages and how to utilize them to follow the trend.
INDEX:BTCUSDEducation
by m3rr0r
5 Steps to Better TradingStart journaling This is one of the most important things in trading. You can see the numbers clearly without fooling yourself and know what's working and what's not. It also helps to start noticing the most common trading mistakes you may be making, whether you enter/exit early, whether you are better at managing trades actively or passively, the quality of your SL/TP levels and the likelihood of reaching them, etc. If you spend 20 minutes going over your log this weekend, it will give you more insight into how to minimize losses and maximize profits than anything else you can do. Stop trying to predict the market This is another big problem. Wizards effortlessly take other people's money: Casinos, they don't try to predict a player's next move, they just set up a statistical edge in their favor and watch it happen over time. This is the closest thing to the Holy Grail that will ever exist. Not opening a position is in itself a position FOMO causes traders to get into losing trades more often than anything else. Learn to be patient and just wait for quality trades, it has given me one of the biggest boosts to growth and greatly limits losses. Staying committed to a trading plan, limits the temptation to make impulsive trades. This habit will help to control the FOMO trades. be patient, be disciplined the market will always present opportunities. Solid risk-management Limiting maximum drawdown and MAE, limiting leverage (but also increasing it on high probability sets), backtesting, equity curve modeling, maintaining a good asymmetric RR, cross correlation/diversification, etc. Wait for confirmation before entering a trade. better to enter a trade late and be right, than early and be wrong. Treating trading as a job Take your work as seriously as any other important activity in your life. You should have regular trading start and end hours, and prepare very carefully for trading sessions. Also, write reports and collect statistics to document your work.
Education
by DeGRAM
7
Bites Of Trading Knowledge For New TOP Traders #18 (short read)Bites Of Trading Knowledge For New TOP Traders #18 ---------------------------------------------------------------- What is the Blockchain? - The Blockchain is a decentralized ledger that is append-only meaning that data can only be added to it. Once information is added, it is extremely difficult to modify or delete it. The Blockchain enforces this by including a pointer to the previous Block in every subsequent Block. The pointer is a Hash of the previous block. Hashing involves passing data through a one-way function to produce a unique Fingerprint of the input. If the input is modified even slightly, the Fingerprint will look completely different. Since the Blocks are linked in a Chain, there is no way for someone to edit an old entry without invalidating the Blocks that follow, allowing a secure structure. What Is a Blockchain Consensus Algorithm? - A consensus algorithm is a mechanism that allows users or machines to coordinate the agreement of what is a valid block in the Blockchain in a distributed setting. It needs to ensure that all participants in the system can agree on a single source of truth. Types of consensus algorithms include Proof of Work (PoW) and Proof of Stake (PoS). What is Proof of Work? - Proof of Work (PoW) is a mechanism for preventing the same bitcoin funds from being spent more than once. Proof of Work consists of a consensus algorithm, which is a protocol that sets out the conditions for what makes a block in the Blockchain valid. It ensures the security and integrity of bitcoin’s distributed ledger. RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS - Common application of financial market instruments for managing risk and opportunities. Hedging Portfolio Risk Hedging bitcoin exposure with the Bakkt ® Bitcoin (USD) Cash Settled Monthly Futures (BMC) contract is a way to manage portfolio risk by taking a directional position opposite to the underlying asset as protection. For example, a hedger may have plans to hedge downward price movement in bitcoin using futures contracts based on in-house market and portfolio analytical processes. The market analysis may use common technical analytical techniques such as support and resistance to formulate the trade decision. If bitcoin is expected to weaken as it nears the resistance area, the hedger may plan to enter into a short futures position using the Bakkt ® Bitcoin (USD) Cash Settled Monthly Futures contract under either price levels of $27,500 or $32,500 to lock in the value of their underlying bitcoin position. Alternatively, if the hedger was in a short bitcoin position and wanted to hedge their position as price rose, entering a long futures position above price levels $12,500 or $16,500 could be considered. TRADDICTIV · Research Team -------- Disclaimer: We do not provide investment advice, nor provide any personalized investment recommendations and/or advice in making a decision to trade. Before you start trading, please make sure you have considered your entire financial situation, including financial commitments and you understand that trading is highly speculative and that you could sustain significant losses.
ICESG:SDX1!Education
by traddictiv
The Most Powerful Consolidation PatternWhat is the Cypher Pattern? Cypher is a powerful consolidation pattern. In the harmonic pattern world, the Cypher pattern is a four-leg reversal pattern that follows Fibonacci ratios. The Cypher pattern is less common because it's hard for the market price to match up with fixed Fibonacci ratios. The Cypher pattern needs to follow the Fibonacci sequence in order to work correctly. This pattern works well in the ranging markets. The winrate of this pattern can reach up to 70%. On an hourly timeframe, for example, it has a 72% win rate on AUDCAD. Defining the Cypher Pattern The first rule of the Cyper pattern is that the price of a security must stay above the 0.382 Fibonacci ratio and below the 0.618 Fibonacci ratio. There is a third point in the Cypher pattern, which is labeled "B." This is the point where XA's swing-leg retraces the 0.382 to 0.618 Fibonacci retracements. The next rule of the Cypher pattern is a Fibonacci extension of the XA leg that comes in at 1.27, but it doesn't exceed the 1.414 Fibonacci ratios. This point of the move is labeled "C" and completes the BC swing-leg of the Cypher pattern. The final part of the Cypher pattern is where our orders will be executed. This is at the point D, which is located at the 0.786 Fibonacci retracements of the entire move started from X up to C. How to Correctly Draw Cypher Pattern 1. The XA Move The market creates an impulse/anchor leg when prices move a lot in a specific direction. This is the leg that is farthest away from the body. Once we know which direction we want to go, we can look for other things that need to be met in order to go that way. 2. The AB Move After our initial move, we will look for price action to confirm our new position. If the candlestick matches the distance between the two legs by at least 38.2% then the move is considered valid. Price action does not have to close above the 38.2 be considered a valid. The (B) leg of the trade is considered invalid if the price action does not hit a minimum of 38.2% of the original price of the (XA) move, or if it closes beyond the 61.8% retracement of the (XA) leg's original price. 3. The BC Move Once we have met the requirements for step 2, we can look for the C leg. The market created a valid C leg by fulfilling at least a 127.2 extension of the (XA) leg. Price action also has to close above or below the previous (A) leg. This leg is invalid if it doesn't fulfill a 127.2 extension of (XA) or if it closes beyond a 141.4 extension of (XA). 4. Entry point The market formed a successful entry point by following a 78.6% retracement of the previous move. The market forms a successful (D) completion point (entry) by fulfilling a 78.6 retracement of the (XC) move. For this completion to be valid, the (D) leg must exceed the (B) leg. Take Profit, Stops, and Entries Entry: The (D) completion point, which is the 78.6 retracement of the (XC) move, serves as the entry point for the Cypher pattern. Stops: It is recommended to place stops 10 pip's beyond the (X) point. TP1: The 38.2 retracement of the (CD) leg is the first target. If targets are met, then stops move to breakeven. TP2: The (CD) leg's 61.8 retracement represents Target 2. *Fibonacci retracements should be updated to the highest/lowest (D) point following entrance if price movement continues. Examples Conclusion The Cypher trading strategy has a higher winning percentage than other harmonic patterns, but it's rare to see it appear on the chart. So, we need to take full advantage of the times it does show up.
Education
by DeGRAM
2
FOREXN1:SWING TRADING - MADE IT EASY - A GREAT STYLE OF TRADINGSwing trading is a style of trading that attempts to capture short- to medium-term gains in a stock (or any financial instrument) over a period of a few days to several weeks. Swing traders primarily use technical analysis to look for trading opportunities. Swing traders may utilize fundamental analysis in addition to analyzing price trends and patterns. Some general Rules before going in the Deep of the Strategy : - Swing trading involves taking trades that last a couple of days up to several months in order to profit from an anticipated price move. - Swing trading exposes a trader to overnight and weekend risk, where the price could gap and open the following session at a substantially different price. - Swing traders can take profits utilizing an established risk/reward ratio based on a stop loss and profit target, or they can take profits or losses based on a technical indicator or price action movements. Rules of entry : Swing trading means " Surfing the trend " Using the Swing points as an entry inside a trend. The Swing point is basically retracements inside an already-started trend. Let's see the picture below. I personally call the Swing point or retracements " V " points. Let's look together. . As you can see the retracement inside a trend looks like a " V " point. In a Bearish scenario, the " V " is upside down meanwhile inside a Bullish trend the " V " is on the correct side. Let's note, the " V " points can look also like " W " or generally is correct to call them a " Pullback " Area. In this example, EUR/USD we can see how the price used the " V " shape as Pullback to continue the downtrend. In the picture below I add the Moving averages, the 200 and the 50. This easy and simple technical indicator can help you to determine the direction of the trend. If the price is below 200, generally it means the price is in a Downtrend, and Vice-versa when the price is above, generally it means is in an Uptrend. The 50 Moving average can help you to understand if the price it's started to grow, and when the moving average crosses the 200, generally it means that the price is started a bullish impulse. You can use any kind of indicator to determine the direction of the main trend, the moving average is one of the most used in this style of trading. As you can see, the moving average, like the 50 in this case, in EUR/USD has been used from the price as a Pullback trigger to continue the downtrend. I explain better... The price inside a Pullback Area or " V " point, in a downtrend, below the 200 Moving average, has used the 50 Moving average as a dynamic resistance and rejected the price in the direction of the main trend. Swing trading as explained use technical analysis to look for trading opportunities. Look how conventional support and resistance can work in this, another clue to add to our idea of entry. Additionally, in our plan of action, we can add some technical indicators, look how the Stochastic indicator can give a clear overbought reversion signal. Not least, the use of the Fibonacci retracement can give the Swing trader a clear metric of entry and exit point with relative stop loss and take profit area. In This last example, we can add together all the previous clues given by the Technical indicators, the use of support and resistances, and adding also Fibonacci retracements as targets for Stop loss and take profits. Remember, Swing traders may utilize fundamental analysis in addition to analyzing price trends. Advantages and Disadvantages of Swing Trading Many swing traders assess trades on a risk/reward basis. By analyzing the chart of an asset they determine where they will enter, where they will place a stop loss, and then anticipate where they can get out with a profit. If they are risking $1 per share on a setup that could reasonably produce a $3 gain, that is a favorable risk/reward ratio. On the other hand, risking $1 only to make $0.75 isn't quite as favorable. Swing traders primarily use technical analysis, due to the short-term nature of the trades. That said, fundamental analysis can be used to enhance the analysis. For example, if a swing trader sees a bullish setup in a Forex pair, they may want to verify that the fundamentals of the asset look favorable or are improving also. Swing traders will often look for opportunities on the daily charts and may watch 1-hour or 15-minute charts to find a precise entry, stop loss, and take-profit levels. Pros It requires less time to trade than day trading. It maximizes short-term profit potential by capturing the bulk of market swings. Traders can rely exclusively on technical analysis, simplifying the trading process. Cons Trade positions are subject to overnight and weekend market risk. Abrupt market reversals can result in substantial losses. Swing traders often miss longer-term trends in favor of short-term market moves. Hope this guide can be useful for everybody.
Education
by FOREXN1
33
STOCK MARKET AND FOREX CORRELATIONStocks and indices are often used for predicting the currency market. No wonder, in this world of trading, everything is interconnected in one way or another. There's a connection between stocks and currencies. Say, if you want to buy shares of a Japanese company on the Tokyo Stock Exchange, you can only do it in the local currency. As a result, your currency will have to be converted into yen (JPY), which naturally leads to an increased demand for it. The more stocks you buy on the Tokyo Stock Exchange, the more demand for the yen. Conversely, the more the currency is sold, for whatever purpose, the lower its value. When a country's stock market seems attractive, they start flooding it with money. Conversely, if a country's stock market is in shambles, investors run from it headlong, looking for more attractive places to invest. If one country's stock market performs better than another, capital will flow from one country to the other. This will have an immediate effect on their currencies. Where the money is, the currency is stronger, where the stock market is weak, the national currency weakens. A strong stock market causes a strong currency. A weak stock market - a weak currency. Key global indices Let's take a look at the key world indices that interest us. As you will notice, many of them correlate and complement each other. Dow Jones Index The oldest and the most famous index in the world. There are actually several of them, but the most popular one is called the Dow Jones Industrial Average (DJIA). It is the key U.S. stock index, which unites 30 companies with publicly available shares. By the way, despite the name, these companies are not particularly connected with the industry, because it is not in favor now. There are simply 30 of the largest companies in America. This index is closely watched by investors around the world. It is a great indicator of the entire state of the U.S. economy, reacting to local and foreign economic and political events. The index tracks incredibly wealthy companies, you've heard of most of them. McDonald's, Intel, Apple are all in there. S&P 500 Index The Standard & Poor 500 Index, also known as the S&P 500, is one of the best-known indices on the planet. It is a weighted average price index of the 500 largest U.S. companies. In fact, it is a key indicator of the entire U.S. economy and it is used to judge its performance. The S&P 500 Index (SPX) is the most traded index in the world after the Dow Jones Industrial Average. Nikkei The Nikkei index is like the Dow Jones Industrial Average, but for the Japanese. It averages the performance of the 225 largest companies in the Japanese stock market. Typical representatives of the Nikkei are Toyota, Mitsubishi, Fuji and others. DAX Deutscher Aktien Index is index of the German stock exchange, which includes 30 "blue chips" the largest companies whose shares are traded on the Frankfurt Stock Exchange. Germany is the most powerful economy in the EU, so if you are interested in the Euro, you should watch the DAX. The index includes companies like Adidas, Deutsche Bank, SAP, Daimler AG and Volkswagen. EURO STOXX 50 The Dow Jones Euro Stoxx 50 Index is one of the key indices in the eurozone, reflecting the success of major EU companies. The index includes 50 companies from 12 EU countries. FTSE Financial Times Stock Exchange, also known as footsie, an index of the largest companies listed on the London Stock Exchange. There are several variations of it (which is often the case with indices). Let's say the FTSE 100 includes 100 companies and the FTSE 250, respectively, includes the 250 largest companies in the UK. Hang Seng The Hang Seng Index (HSI) for the Hong Kong Exchange shows changes in the prices of companies listed on the Hong Kong Exchange. The index includes the 50 largest companies with a capitalization of 58% of the total volume of the Stock Exchange. The relationship between the stock market and the Forex Now let's see if we should take all these indices into account when working with currency pairs. Of course, you should to determine general market trends at higher timeframes (remember multiframe analysis). In general, when the stock market is on the rise, investors are more willing to invest in it, buying the national currency. Which leads, of course, to its strengthening. If, however, the stock market falls inconsolably, investors take their money, converting it back into their currency and the national currency weakens. However, there are two exceptions the U.S. and Japan. The economic growth of these countries often leads to the fact that their national currencies are weakening such a funny paradox, nevertheless, related to certain economic mechanisms. Let's look at how the Dow Jones Industrial Average interacts with the Nikkei. As you can see, the DJIA and the Nikkei 225 are following each other. Moreover, sometimes the movement of one index anticipates the movement of the other, which allows you to use such a miniature time machine for making predictions. Let's see other examples: USD/JPY and DJI USD/JPY and NI225 EURJPY and STOXX50 GBPJPY and FTSE100 Correlation can be regarded as an additional indicator of the global market trend. If the indicators of two interrelated assets diverge, it is much easier to determine the trends of each by methods of technical analysis. And you already know what to do with trend lines. Let's look at some popular correlations between commodities and currency pairs. Gold is up, the dollar is down. In economic crises, investors often buy gold for dollars, which is always up. Gold up, AUD/USD up. Australia is the second largest supplier of gold in the world, so the Australian dollar exchange rate is in no small part related to the demand for gold. Gold up, USD/CAD down. Canada is the 5th largest supplier of gold in the world. Therefore, if gold prices are going up, the USD/CAD pair is going down (because everybody is buying CAD). Gold is up, EUR/USD is up. Both gold and the euro are considered the "anti-dollar". Therefore, an increase in the price of gold often leads to an increase in the EUR/USD exchange rate. Oil is up; USD/CAD is down. Canada is the largest oil producer in the world, exporting more than 2 million barrels a day, mostly to the U.S. If oil goes up in price, the pair on the chart goes down. Bond yields are up/the national currency is up. It is quite clear: the higher the interest rates state bonds, the more they are purchased for the national currency. As the demand for bonds goes up, the exchange rate goes up. The DJIA is down, the Nikkei is down. The US and Japanese economies are very closely linked and go up as well as down. Nikkei is down, USD/JPY is down. Investors often choose the yen as a "safe haven" in times of economic trouble. The stock market, the state of which can be analyzed through indices, is directly correlated with currency pairs. Studying their interaction, you can often find situations when these data diverge so that one index acts as a "time machine" for the other. What is important is not only the correlation itself but also the fact that its polarity changes from positive to negative and vice versa.
Education
by DeGRAM
2
Overbought/Oversold Zones RSI + Moving AverageHello everyone! Today, using a simple but working strategy, we will analyze the GBPUSD. Technic It is quite simple to work with the indicator: 1. We are waiting for the price to enter the overbought /oversold zone; 2. We wait for the price to cross the moving average and only then open a position. History If you look at the history, you can see how on December 19, 2019, the price entered the overbought zone and the price crossed the moving average from top to bottom. If you had opened a position at this point, you could have caught a 13% drop. This movement lasted until the price entered the oversold zone. And when the price crossed the moving average, it was possible to open a position. You can close positions the way you want, but if you learn to identify a real reversal, you can catch a good movement. On March 2, 2021, the indicator again gave a good sell signal. This movement lasted for a long time and gave a 12% drop. It was possible to close the position when the indicator gave an ignal to buy. Now the price is rising, after the indicator gave a signal to grow and so far there has been no signal to sell, which means that the position can be held. Traders, if you liked this idea or if you have an opinion about it, write in the comments. I will be glad 👩💻
Long
by Lingrid
13
CURRENCY CORRELATIONSCorrelation only shows exactly how two assets move in relation to each other. In the case of currency correlation, it is exactly the same story. Forex pairs can move together, in different directions, or not interact at all. Keep in mind that we are not trading just currencies, we are trading a currency pair where each participant in the pair influences the other. Therefore, correlation can be a useful tool, and almost the only one if you want to successfully trade several currency pairs at once. Currency correlation is based on the so-called correlation coefficient, which is in a simple range between -1 and +1. • Perfect positive correlation (coefficient of +1) means that two currency pairs move in the same direction 100% of the time. • A perfect negative correlation (coefficient -1) implies exactly the opposite. Pairs constantly move in different directions. If the correlation is 0, then there is no correlation at all, it is zero and the pairs are not related in any way. The Risks of Currency Correlations If you trade several currency pairs at once, you must realize at once how much such trading is exposed to risk. Sometimes people choose several pairs at once in order to minimize their risks, but they forget about the positive correlation, when pairs go in the same direction. Let's assume that we took two pairs on the 4-hour timeframe, EUR/USD and GBP/USD. The correlation coefficient is 0.94, very nice. This means that both pairs are literally following each other. If we open trades on both pairs, we thereby immediately double our position and the risks. They increase. Because if you are wrong with the forecast, you will be doubly wrong at once, because the pairs are mirrored. You have put it up, the price went down, a double loss. So there is correlation. Also, it makes no sense to sell one instrument and buy another, because even with an accurate forecast one of them will bring you a loss. The volatility also differs. One pair might jump 200 pips, while the other might jump only 180 pips. That's why it's necessary to play with simultaneous trades on different pairs very carefully and without fanaticism, the correlation decides everything here. Now let's compare the opposite case, EUR/USD and USD/CHF. They have the opposite case, a strong inverse correlation, where the coefficient often reaches the absolute value of -1.00. The pairs are like two magnets with opposite poles, constantly pushing away from each other. If you open opposite trades on two pairs with a negative correlation, it will be the same as two identical trades on pairs with a positive correlation, again doubling your risk. The most reasonable thing is definitely to work with only one pair and not to play with the opposite pair trades, because you can quickly reach ugly values. Correlation coefficients Now let's see how we can look at the correlation coefficients. -1.0. Perfect inverse correlation. -0.8. Very strong inverse correlation. -0.6. Strong inverse correlation. -0.4. Moderate inverse correlation. -0.2. Weak inverse correlation 0. No correlation 0.2 Weak, slight correlation 0.4. Weak correlation 0.6. Moderate correlation 0.8. Strong correlation 1.0. Perfect correlation So what to do with the correlation, can it be used or not? 1. Eliminate risk If you like to open simultaneous trades on different pairs, knowing about their correlation will help you avoid getting into the described situation where you double your risk if two pairs go in the same direction. Or you bet in different directions, not realizing that the pairs have an inverse correlation and this again doubles your risk. 2. Doubling your profits or losses If you decide to play with simultaneous trades on different pairs, a successful trade on pairs that have a direct correlation will double your profits. Or losses, of course, if something went wrong and the forecast was wrong. 3. Risk Diversification Market risks can be divided into two currency pairs. If you certainly understand what you are doing and if the correlation between pairs is not perfect. To do so, we take pairs with a direct correlation around 0.7 (or higher), say EUR/USD and GBP/USD. Let's say you bet on USD going up. Instead of two bets on EUR/USD going down, you could bet on EUR/USD going down and GBP/USD going up. If the dollar falls, the euro will be less affected than the pound. 4. Risk Hedging This method is already used in forex, where it is taken into account that each currency pair has its own pip value. If you have an upside position in EUR/USD and the price moves against you, a downside position in an opposite pair, such as USD/CHF, can help. You should not forget about the different pip value in forex. For example, the EUR/USD and USD/CHF have a nearly perfect correlation, except that when trading a $1000 mini lot, one pip of the EUR/USD costs $1, while USD/CHF costs $0.93. As a result, buying a EUR/USD minilot allows you to hedge your risks while simultaneously buying a USD/CHF minilot. If the EUR/USD falls 10 pips, you lose $10. However, the return on the USD/CHF will be $9.30. So instead of $10, you would only lose 70 cents, fine. Hedging in forex looks great, but there are plenty of drawbacks as well. For when EUR/USD rises frantically, you simultaneously lose money on USD/CHF. Also, the correlation is rarely perfect, it's constantly floating, so instead of hedging you could lose everything. 5. Correlation, Breakouts and False Breaks Correlation can also be used to predict price behavior at significant levels. Let's assume that the EUR/USD is testing a significant support level. We have studied it and decided to enter upon its breakout. Since EUR/USD is positively correlated with GBP/USD and negatively correlated with USD/CHF and USD/JPY, we should check if the other three pairs are moving in the same volatility as EUR/USD. Most likely, GBP/USD is also near resistance levels, and USD/CHF and USD/JPY are near key resistance levels too. All this means that the USD move the market and there are all the indications for a breakout of the EUR/USD, because all the three pairs are moving synchronously. We have to wait for the breakout. And now let's assume that these three pairs do not move synchronously with EUR/USD. GBP/USD has no intention to fall, USD/JPY does not increase, and USD/CHF does not show any signs of sideways movement. What does this mean? The only thing that the fall of EUR/USD is not connected with the dollar and is obviously caused by negative news from the Eurozone. The price can be below the key support level, but if the three correlated pairs do not move synchronously enough with EUR/USD, we should not expect a breakout. Moreover, it can be a false break of resistance. Yes, you can still enter the breakout without a correlation confirmation, but then make a smaller trade volume, because you need to reduce your risks. Correlation: pros and cons Here everything is obvious. The cons are your risks are doubled if you open trades for two mirrored correlated pairs. In addition, the correlation changes regularly at different time intervals, which should be taken into account in your work. The pros are correlation allows you to diversify risks, hedge your trades. Also remember that: ratios are calculated based on daily closing prices; a positive coefficient means that two pairs move in the same direction; negative in opposite directions; the closer the coefficient is to values +1 and -1, the stronger the correlation. Examples of pairs that move synchronously: EUR/USD and GBP/USD; EUR/USD and AUD/USD; EUR/USD and NZD/USD; USD/CHF and USD/JPY; AUD/USD and NZD/USD. Pairs with negative correlation: EUR/USD and USD/CHF; GBP/USD and USD/JPY; USD/CAD and AUD/USD; USD/JPY and AUD/USD; GBP/USD and USD/CHF. Do not forget to use all that you have learned, keep in mind the risk management, and then the currency pairs correlation may become a valuable tool in your trading arsenal. And most importantly, it will allow you to avoid mistakes when you trade two pairs at once and don't even realize that you are doubling your risks if there is a complete synchronous correlation between the selected pairs.
Education
by DeGRAM
5
FACTORS THAT PUSH THE PRICEHello everybody! Today I want to discuss with you a serious question - What factors are pushing the price? As you know, there is fundamental and technical analysis. Each trader himself gives preference to what to use in the analysis. And we will try to understand what pushes the price. NEWS The first thing that comes to mind is NEWS . News affects OUR WHOLE LIFE . The news pushes crowds of people to one point and forces them to flee from another. News is a strong factor. If the central bank decides something, it will be in the news and it will definitely push the market. If the president of the country has decided something, it is shown on the news and it pushes the market. If a person who decided the fate of an entire industry was fired, it will push the market and the price. Therefore, it is IMPORTANT to follow the news and, more importantly, correctly interpret the news and be able to predict the future mood and future actions of the crowd based on them. PATTERNS All traders see the same chart, but everyone perceives it differently. There are many reasons for this: someone knows more patterns, someone has more experience, someone understands better than another, someone has better discipline. And when one or another pattern appears on the chart, people start trading and push the price. You may have noticed that if no special picture is visible on the market, then the market is sluggish. As soon as a pattern emerges, movement begins. People entered the market. Can we say that patterns move the price? Or maybe someone is creating patterns on the chart to move the price? EMOTIONS We have already touched on this topic above, but it is worth noting separately. Emotions play an important role in everything. If the crowd is happy, the market is growing. The crowd is afraid - the market is falling. The crowd can be angry at the company or the country, close positions and thereby push the price down because of their bias.. The one who knows how to understand other people's emotions is able to predict the future actions of the crowd and make money on it. Think about it... SUPPLY AND DEMAND Classical works on economics teach us that the market is controlled by supply and demand. more precisely, the difference between supply and demand. If the demand is large, the price rises, if the demand is small, the price falls. The logic is simple: if people buy a lot, someone will start raising the price before selling, why not, because people buy. When people don't want to buy, the one who needs to sell will lower the price to lure the buyer, because you need to sell something. At the same time, it is important that there should always be both a buyer and a seller, otherwise the price will stand still or move slowly. When there is both a buyer and a seller on the market and a lot of transactions are made, the price moves quickly, volumes increase, so even strong jumps (GAPS) are possible. MANIPULATION Manipulation is the darkest, most hidden action from prying eyes. No one can say for sure whether it was manipulation or not. Can someone push the market? You often observe that the price reaches your stop, after which it immediately goes in the right direction, but without you. Many traders believe that manipulation can be observed in the market . Someone thinks that every movement is manipulation. What do you think? Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
10
Why Is The Price Reversing After Hitting Stop Loss?Hello, my fellow Forex traders! Today we will discuss one, one might say, rhetorical question that often arises among beginners and quite experienced traders. This question is as follows: "Why, as soon as my stop is hit, the price reverses?" Why does it happen? Does the market see where you put your orders and why does it kick them out to spite you, immediately reversing in the original direction? Let's try to figure out what is the prerequisite for this situation, where most market participants put their stop losses, what to do about it and how to deal with it. The basic idea Let's assume you have detected the " Engulfing" pattern on the chart and concluded that the price will go up in the future. It does not matter whether the signal was shown by the indicator or the trading system. The question is, where would you place a stop loss here? Most likely, either under the candlestick or near the last local low. Everything seems to be fine, but then the price knocks out your stop loss and goes, as expected, up. I think you can give many such examples from your own practice or from observations of other traders. Why does this happen? The fact is that in addition to other traders like you and me, there are big players in the market: hedge funds, banks, various institutional investors. They open rather large positions, i.e. positions of very large volume, for opening which they need a sufficient level of liquidity. If one tries to open such a position in the middle of a trend, high volume can move the price in the direction of the position, but after that the price is likely to roll back leaving the trader at a disadvantage. Imagine this if you, for example, come to the market to buy potatoes, but not 1 kilogram, but a whole truck. It would seem that you should get a more favorable price as a wholesale buyer, but in fact the more favorable price will be received by the one, who came to buy 1 kg. So, the big players have to cheat and look for places with a lot of liquidity to sell in order to buy profitably and vice versa. Actually, your stop-loss for a buy position is nothing but a sell order. Accordingly, it is profitable for a large player to take exactly this liquidity in the form of stop-loss and pending sell stop orders, and thus gain his own position without moving the market price much. You're probably wondering how such a big player could be interested in such small positions. But the fact is that approximately 95% of traders place orders in approximately the same places. Accordingly, since people think alike, the big players don't need to see all the insider information about exactly where your stop loss is, it's obvious enough. After the liquidity has been absorbed, the market goes in its own direction, but without you. Most market participants place their stop losses at one of these locations: Local lows/highs; Support/resistance levels; Round levels; Borders of channels, rectangles and other consolidation patterns. Where do I place a stop loss? 1) The first thing that comes to mind is not to put a stop in principle, no stop - no problem. However, this practice will not suit everyone. If you are new to the market, it is dangerous to work without a stop-loss, that is, to keep it in mind, or to use a virtual one without placing it directly in the market, and such practice often leads to large losses or loss of the entire deposit. 2) Some use various technical tricks, applying the so-called virtual stop-loss. That is, the order will be closed, but it will be closed by an Expert Advisor, not by an automatic market order. But, in fact, it does not matter whether the stop is in the market or not the behavior of the big players will not change from this. 3) The next logical solution is to put a stop loss with a larger margin (at a farther distance). This solution is not the worst and has the right to live. The reserve, however, should not be too large, otherwise you just increase the risk for nothing. This option will not help in all cases, but in general it is not a bad compromise. 4) The opposite solution a very short stop. If it is hit, you can not worry too much and then re-enter the market. This solution also has the right to life, but most often it implies a re-entry. At the same time, if the stop was hit, you need to understand why it happened, and only after analyzing the situation, enter for the second time. 5) You can enter in the same way after a false-break. If you have received confirmation of a false-break, it is possible to use this situation to your own advantage. That is, to enter the market, when the stops of other participants have been knocked out. 6) To calculate the size of a stop loss, you can use not only the chart itself, but also other tools such as the ATR indicator. The ATR readings are usually multiplied by a multiplier, such as 2 or 3. In this case, we have a daily chart and the ATR values are large enough, so a multiplier of 2 will be sufficient. The indicator shows 112 points, so we set a stop loss at a distance of 224 points (112 * 2) from the entry point. In general, as the tests show, this is probably one of the most correct ways to set a stop loss. Conclusion You are free to apply any of the listed solutions. Perhaps you will find your own solution to the problem some use fibo, some use ATR. The best solution is the Average True Range indicator. This is a sure way to avoid frequent stop triggering situations with a subsequent price reversal. The main thing is try to think differently than everyone else, keep in mind the big players and their methods of position taking and you will be fine!
Education
by DeGRAM
3
Is BTC profitable?The price of bitcoin is falling. At the same time, the price of mining is growing. How does this affect the market? History In December 2017 , the price of bitcoin was greatly inflated. And mining was a very profitable business. At that time, mining one bitcoin cost around $840 , and bitcoin cost $18700 on the market. It was a really good deal, everyone started mining. As we remember, the market and market prices tend to balance and soon in December 2018 , bitcoin fell to a price equal to the price of mining. After that, the lateral movement began. As we know, positions usually accumulate at this time. Manners, who did not stop mining, accumulated bitcoin on their wallets, because the price was unattractive for sale. Soon, the price went up again, reaching inflated values, after which it again headed to equilibrium and fell to the real mining price. All these are rough numbers, but I think you've caught the logic. Now the price of bitcoin has fallen below what mining costs. Recent news has shown that now it has become as difficult as possible to engage in mining. New York became the first federal state of the United States to adopt a law temporarily prohibiting the mining of cryptocurrencies within its borders. Now that everything has become so difficult and unprofitable, all newcomers are likely to flee the market. And when everyone runs away, what should I do? And what do you think about cryptocurrency now? Is it worth buying? or is it worth selling?
by UnknownUnicorn15614419
20
HOW THE INTEREST RATE AFFECTS THE FOREXGood day, fellow traders! The topic of interest rates often appears on the agenda of various media and many are aware that it is closely connected with the global economy and finance and somehow affects the processes taking place in the foreign exchange markets. But what do interest rates really mean and why do they influence Forex trends? The interest rate is the rate at which the central bank lends to commercial banks. They, in turn, lend to commercial companies based on this official rate. If the rates are high, then the loans are more expensive and so are the goods on the markets, and therefore less competitive. The demand for loans falls, inflation slows down and, consequently, the currency becomes more expensive. Conversely, if rates are low, then commercial banks and then companies take loans at lower interest rates (sometimes negative), which allows you to sell goods cheaper, the Central Bank prints more money and inflation accelerates the currency becomes cheaper. Monetary policy: why and how rates are regulated Rates can be high or low. However, these values are always relative, so it is important to consider the historical trend and the rise/decline in relation to their own historical values. The central bank raises the rate to prevent the economy from overheating. This happens when there is no room for growth in the economy and prices begin to rise outside of real increases in the production of goods and services, which leads to accelerated inflation and a depreciation in the trade rate of the currency. A rate hike slows inflation and makes the currency more attractive in the eyes of investors, and commercial banks deposit investor funds at a higher interest rate. In contrast, a rate cut is stimulative and serves to accelerate economic processes, cheap credit for business, low taxes, lower unemployment, and increase business activity. This accelerates inflation and lowers the trade rate of the currency. When and how often interest rates are changed Central banks independently determine the timing of interest rate reviews. In the U.S., for example, rates are regulated by the Federal Open Market Committee (FOMC). And needless to say, the whole world is watching their meetings. Usually, special committees of national central banks adopt a particular monetary rate at the beginning of the fiscal year, but, if necessary, they can change it later. In the EU, the refinancing rate is regulated by the European Central Bank. In the United Kingdom, it is the Bank of England. In Japan it is the Bank of Japan and so on. The markets also take into account the rates of Switzerland, Canada, RBA, Norway, China, India, Korea and some European countries such as France, Italy, Germany, Spain and others. What happens in the forex market? If you opened the economic calendar and found that the officials of a national Central Bank are meeting to decide on interest rates then the rates may change and change the trend, depending on whether they are going down or up. Or rates can remain at the same level, and then the trend will be determined on the basis of the current dynamics: if last time rates were cut then the trend will be bearish, and if they were raised it will be bullish. As a rule, the prospects for rising or falling rates are repeatedly announced for a long period before they are changed. Long-term investors and position traders take advantage of this to take profits or to avoid risks. Conclusion • Watching interest rates is important to understand the global currency trend; • A decrease in interest rates stimulates the economy and an increase in interest rates cools economic growth; • If interest rates rise, the currency strengthens; if they fall, it weakens.
Education
by DeGRAM
9
GREED and FEAR in BTCFEAR and GREED are familiar feelings to everyone. Non-professional traders trade according to these emotions. As you know, emotions only get in the way, but we can use other people's mistakes for our own purposes. Chart To analyze emotions, let's take the indicator of FEAR and GREED . From December 2019 to February 2020, the indicator was in the zone of EXTREME FEAR. It was a time when BITCOIN, after a lot of growth, fell for a long time and people stopped believing in the good and began to be afraid. It was in this zone that smart money began to accumulate its positions and soon the price went up strongly. As the price moves up, people have started to believe in BITCOIN again. Just at this time, the indicator entered the zone of EXTREME GREED. Everyone started buying BITCOIN regardless of the price. People just thought that BITCOIN would grow indefinitely - greed was growing. By the end of this zone, the price, though not immediately, began to fall. Many were closed by margin call. People began to be afraid again. The fear was growing. The indicator entered the zone of EXTREME FEAR, after which growth began. I think you have understood the logic and noticed a pattern. As you know, when fear prevails in the market, you need to buy. When greed prevails in the market, you need to sell. This is an old rule of professionals. Professionals not only don't make their own mistakes, but also use other people's mistakes to make money. There are no emotions here, there is only calculation. Learn to control your emotions, otherwise they will control you and you will become a victim. And how do you deal with emotions and do you use the FEAR and GREED index?
Long
by UnknownUnicorn15614419
14
FALSE BREAKOUTHow predict a false breakout? Predicting a false or true breakout is complicated by the fact that the currency rate takes into account everything. The release of news or any unforeseen events, or insider information can make big traders give up their intentions to reverse price or breakout levels. In most cases currency rates behavior near important lines will show if the breakout is true or false. High volatility is associated with the actions of a large trader, who is "pushing through" the currency rate in order to gather stop-losses and reverse quotes. High volatility and large candles on the approach to the level is a sign of an upcoming false-break. A true breakout is defined by low volatility, especially in case of a sharp transition to a sideways trend after a strong trend. The phenomenon of volatility narrowing before the resumption of a trend movement is described in details in the literature and in the strategies of various indicators. False breakdouts usually occur when market volatility is low you will notice that the range of candles becomes small. False Breakdown Trading Strategies If we talk about the general approach to strategies for catching reversals from important levels, it is worth highlighting two tactical techniques. 1. Entry after the price returns beyond the key level The first one is aggressive and the most efficient way to enter by pending order, which is executed after the candle closes behind the level. The break in the resistance level gives the opportunity to place the Sell Stop. The indent of the pending order may be larger or smaller depending on the pair type, timeframe and volatility. The order will be triggered only upon reversal of prices. The trader should protect the trade with a stop loss, which is placed behind the maximum of a false breakout. Take Profit can be set at the closest support level if the situation with a false breakdown is considered in the growth of the currency market. In case of the fall the trader places the Buy Stop order. The size of the stop loss is determined by the minimum of a false breakdown candle. After the rebound and the activation of the order, it is necessary to set a take profit at the nearest resistance. The trader should understand that high volatility is able to activate the pending order without the long tail of the candle and continue the trend movement in the direction of the breakout. Quotes may also fail to reach the take because of low liquidity or an incorrectly chosen level. However, in general, a false breakout is a profitable strategy and can be explained by the logic of the market. So, the rules in brief: - After the formation of a breakout level, which we consider to be false, we place a pending Sell Stop order slightly below the level that was broken through; - We set a Stop Loss order for the maximum of a false breakout; - Take Profit to the nearest opposite level. For sell trades, everything is the same. 2. Waiting for a pullback to the key level. The second method is more conservative, as it requires waiting for a false breakout signal. The tactics requires to wait not only for the quotes return after the price has passed the level, but also for the first correction. This pullback should confirm the resistance/support and breakout falsity. Once this confirmation is obtained, the trader can enter using a pending order or the market, placing a stop loss after the breakout candlestick and take the order at the nearest support/resistance. The trading tactics in this case does not differ from the considered plan of actions in the first example. Conclusion The mechanism of a false-break involves the removal of stop-losses of most traders, which increases the probability of a rebound, i.e. the profit of the trader who caught the reversal. In this case, the first method, aggressive trading, is more justified. As with any strategy, breakout trading requires the user to fine-tune the strategy by adding additional indicators, testing indents for placing pending orders, developing methods for determining resistance and support lines.
Education
by DeGRAM
8
FOREX & COMMODITIES CORRELATIONHello everyone! Today we will discuss the correlation for some currencies and commodities. GOLD GROWTH Recently, gold has risen sharply. Not everyone knows why and what may happen next. But if you disassemble gold, then historically, it turned out that in difficult economic moments or in a crisis, dollars are exchanged for gold, since GOLD has historically been considered a rescue tool from inflation. As you know, inflation eats up the value of the dollar and gold is an excellent tool for saving money. According to the above, the DOLLAR and GOLD have an inverse correlation, that is, when the DOLLAR falls, GOLD rises and vice versa. In addition, gold can be an indicator of the future crisis and or acceleration of inflation. Maybe that's why GOLD is growing now? CANADIAN DOLLAR AND OIL Canada occupies one of the first places in the world in oil production. And, of course, oil plays an important role in the country's economy. As soon as oil prices rise, the CANADIAN DOLLAR becomes stronger. Conversely, the fall in the cost of oil has a bad effect on the currency. SWISS FRANC Switzerland is historically famous for its economy and its banks. Trillions of dollars are stored in Swiss bank accounts. We will not talk about how they get there, where and why, but the main thing is that everyone knows that many people keep money there. Switzerland is a time-tested country, people trust their country and consider it very reliable. Do not forget that 25% of Switzerland's reserves are secured by gold. The currency is very strongly linked to gold and therefore when gold falls, the currency falls too, and when gold grows, the currency grows. Everything is simple. There are many correlations of currencies with other assets in the world. There is also a correlation between currencies. An attentive trader will be able to identify a pattern and make money on it. Thanks! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
9
TRADE FROM ACCUMULATION ZONESHello everyone! Today I want to analyze a very useful topic - how to trade from accumulation zones . Accumulation Surely you have noticed that the price first makes an impulse, then stops, after which it makes an impulse again. This is the simplest scheme of price movement. Each stage can be disassembled and a good trader should be able to trade at each stage. Accumulation is the stage at which the price moves sideways, that is, accumulates. This stage exists due to the fact that the price cannot constantly move up or down, there are moments when the strength of sellers or buyers ends and you need to take a break, gain a new position and push the price. Trading is possible inside the accumulation, but using a different technique, today we will discuss how to trade when the price has left the accumulation zone. beginning First , you should note the resistance and support levels between which the price moves in the accumulation zone. They are usually easy to identify. If you can't identify them, don't trade, wait for a situation that will be clear to you. Exit At the moment when the price goes beyond the accumulation limits, we start looking for an entry point. Most often, if the price has broken through the accumulation zone down, the price will continue to go down. But there are times when the price makes a false breakout and goes in the other direction. Such moments occur and you should not forget about them. It is impossible to always know where the price will go. If the price has broken through the zone down, you can go straight into the short - it will be an aggressive entry. It is aggressive because there is a possibility that this is a false breakdown and the price will go further up. A conservative entry will be when the price rolls back to the zone and begins a reversal from it. A reversal means that the price cannot go higher back into the zone and will fall down. Similarly, long trades are opened only in the other direction. As you can see on the chart, accumulation zones appear not only during the reversal, but also during the continuation of the trend. In situations where the price after the accumulation zone went further towards the previous trend, it means that the trend is strong enough, although there was resistance on the other side. Positions are always opened the same way: 1. Identify the area of the field. 2. Waiting for the breakdown. 3. Looking for an entry point (aggressive entry or conservative). This technique is very simple and it works quite well . The main thing is to follow the rules and don't risk too much. In addition, the direction on the higher timeframe is important. And don't forget the most important rule: the trend is your friend . Thanks! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
11
is BTC an indicator of the S&P500?The S&P 500 is up 10%! Finally, a reversal and the end of the bear market! Or not? Bitcoin formed a double top on April 5 and November 8 . There were 217 days between the two peaks. After that, the price fell for a long time and has already fallen by 70% . What happened to the S&P500 at that time? The index did not fall on November 8 , but went sideways. This sideways movement lasted for 49 days , after which a bearish trend began, which we are still in. That is, we had 49 days to understand that there would be a fall soon. By the time the DOUBLE TOP pattern formed on the bitcoin chart and the price had already gone down 30% and it was clear that there would be a fall, it was possible to understand that there would be a fall on the S&P500 . During this time, we could open good positions at a good point and catch a 25% drop in the S&P500 ! I won't burden you with history, you can look at the charts yourself, but bitcoin starts its movement before the S&P500 . Now the world is screaming that the S&P500 has turned around, and bitcoin , on the contrary, continues to fall . Think about it... Draw your own conclusions and do not forget to share your opinion in the comments.
Short
by UnknownUnicorn15614419
14