Get started

Tutorial

Pending orders: how to use it?What is a pending order? A pending order is a tool that allows you to open or close positions at the desired price automatically after the price reaches the set value. This is the main difference from a market order, which is executed at the current price immediately. At the same time, pending orders differ in that if the price has not reached the set value, the order will not be executed. Pending orders will help those who use technical analysis and do not want to constantly sit at the screen, waiting for the best entry price. With the help of pending orders, you can not only open, but also close positions. Stop Loss is an order that is placed in case the price does not go where the trader expected. When the price reaches this order, the position will be closed at a loss. Take Profit is an order that will automatically close a profitable position when the price level predicted by the trader is reached. Opening positions using limit orders A limit order is an order to open a position at the stated price or better. To make a purchase transaction, an order is placed below the current market price, and for sale – higher. Thus, limit orders are applied when the trader expects that the price will reach a certain level, and then turn away from it in the opposite direction. Such orders are used in situations when a trader expects a price rebound from strong levels. They are executed at a price no worse than the stated one. Execution is possible even at the best price if the value specified in the order falls into the price gap. Buy Limit Buy Limit is a pending order to buy (at the Ask price) below the current market price. This order is used by a trader when he expects the price to decrease to a certain value and wants to open a buy position there. For example, if the price of the GBP/USD currency pair is at 1.3880 and the trader wants to buy it from the 1.3800 level, he needs to set a Buy Limit order to this level (or maybe a little higher). Sell Limit Sell Limit is a pending sell order (at the Bid price) above the current market price. This order is applied if the trader expects the quotes to rise to a certain level and is going to open a sell position there. For example, if the quotes of the EUR/USD currency pair are now around 1.1750, and the trader wants to sell the asset when the price reaches the 1.1800 level, a Sell Limit order is placed at this level (or slightly lower). Opening a position on a stop order A stop order is a tool that allows you to open a position at the market price when the values specified in advance in the order are reached. A buy order is placed above the current price, and a sell order is placed below. Stop orders are used when a trader expects that the price, having reached a certain level, will continue to move in the same direction. Usually this type of orders is used in strategies based on the breakdown of levels. If there is an impulse in the market at the moment due to high volatility, there may be slippage and the order will open slightly worse than the value indicated by the trader. Buy Stop Buy Stop is an order to buy (at the Ask price) above the current market price. Activating an order and opening a buy position is triggered when the price rises to the specified value. Example: The quotes of the AUD/CAD pair are at 0.8940. The trader expects that the growth will continue if the price breaks through the resistance level of 0.8975. To do this, a pending Buy Stop order is placed just above this level (for example, at 0.8990). When the Ask price reaches 0.7160, a buy position will open. Sell Stop Sell Stop is a sell order (at the Bid price) below the current market price. When the price reaches the desired values, the order is automatically triggered and opens a sell position. Example: The quotes of the GBP/JPY pair are around 160.60. The trader expects that the pair will continue to decline if it breaks down the support level of 160. To do this, a pending Sell Stop order is placed slightly below this level (for example, at 159.85). When the Bid price reaches the value of 159.85, a sell position will open. Conclusion Thanks to pending orders, the trader has another, powerful tool that helps to use various strategies profitably, helping to increase the number of openings or closures of positions. It becomes possible not to monitor the market 24 hours every day, but to place orders in a planned place, with fixed risks. Trading becomes almost completely automatic.
Education
by Lingrid
9
BEFORE, ON TIME and AFTERHello everyone Today we will try to figure out what kind of thinking is correct during the opening, holding and closing of a deal. Any trader faces these three stages, but not everyone knows how to behave correctly and therefore mistakes are made. Go! Before opening a deal... Every time you find an entry point that matches the rules of your trading strategy, you should think about the following important points: • Determine the level to set the stop loss. It is not necessary to set a smaller stop loss due to greed. You should have a stop loss strategy that will be based on the highs or lows of the price, at the levels, because these values are really important and it will be much more difficult for the price to pass the level - this will protect your position and your stop loss from premature closure. • You must be able to accept losses. Before each trade, you should remind yourself that a trade can be unprofitable, since there is nothing 100% in the market. Remember this every day. Remember that setups don't always work, and then you won't lose more by rearranging the stop loss or not putting it at all in the hope that the setup will definitely work. • It takes time. The deal does not reach the goal in a minute. The market will move in different directions, and you should be able not to react to every movement and give the deal time. Many people forget about it, but due to the constant monitoring of the market and reactions to every movement, traders make mistakes, lose money. You need to be able to wait, understand this. Let the deal work and don't interfere. The position is open! The most interesting thing starts right here! And it is here that a huge number of unnecessary mistakes are made. • The market must prove you wrong. After opening a position, the set stop loss will be the level at which it will be clear that you were wrong. You should leave the open position alone and let the price prove you right or give you an erroneous opinion. Touching the take profit price will mean that you were right, there is no stop loss. • Constant monitoring of the situation. If you are still following every movement, most likely you will react to false price fluctuations and sooner or later you will close the position. You may just get tired of watching the price move and eventually make a mistake. You can check your deal once or twice a day, but no more. You must act according to your strategy, which gave the signal to open a position. Let the strategy work and don't interfere. Closing a position It does not matter whether the deal was profitable or not, it is important to rest after it, stop, put your thoughts in order. It is difficult, after closing a position, to return to the market for a new setup, especially if the transaction was profitable. After all, they lead to excessive self-confidence, which leads you to open bad deals in large numbers. After a losing trade, you always want to quickly return to the market to recoup. This is a big mistake. Opening deals that are based on the desire to win back what is lost is an abyss into the abyss. Emotionally, you run to open a deal, open on bad signals and lose even more, and so again and again. You have to understand that losing money in the market is normal, you don't have to run to win them back. Learn to accept losses. The only thing you should do after closing any position is to be disciplined and stick to the trading strategy. The easiest way is to just leave the market and get away from the chart for a while. It is very important to remember that you need to be able to save money. If you have earned something, withdraw some part at the end of the month, let it be your reward, which will give you self-confidence and you will become a calmer trader in the long run. Good luck!
Education
by DeGRAM
5
Dollar IndexHello everyone! There are many tools on the market to understand the general state of the economy or the company. As a rule, indexes are responsible for this. And today we will discuss the Dollar Index. A little history In 1973, the dollar Index (DXY) was invented and first introduced by JP Morgan. Level 100 is the base value of the index. If the instrument shows, for example, a value of 110, it means that the dollar has grown by 10% relative to the base value. As you may remember, in March 1973, the largest countries in the world introduced a floating exchange rate – this date was the beginning of the index. About the index With the help of the dollar index, analysts determine the strength of the dollar as a whole. This is a very simple analysis tool that almost every analyst uses and shows the index how strong or weak the dollar is relative to other world currencies. Method of calculating the dollar index The index consists of weighted components of the following currencies: euro (57.5%), Japanese yen (13.6%), British pound sterling (11.9%), Canadian dollar (9.1%), Swedish krona (4.2%) and Swiss franc (3.6%). As you can see, the currencies with which the dollar is compared are European countries, which is why DXY is called an "anti-European" index. Based on the number of currencies in the index, people believe that the US is compared with six European countries, which is incorrect, since the euro is officially the currency of 19 EU countries: Austria, Belgium, Germany, Greece, Ireland, Spain, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, Finland, France, Estonia. Add to this 5 more countries — Japan, Great Britain, Canada, Sweden and Switzerland and we get almost the entire civilized world. Although all countries are united by one currency, their economies are still different and therefore each currency of a separate country has a corresponding weight in the index. Dollar Smile One of the Morgan Stanley analysts noticed an interesting feature of the dollar – the dollar can strengthen in both bad and good economic conditions. This analyst was Stephen Jen and it was he who came up with the "dollar smile theory", the essence of which is that the dollar adheres to three scenarios: 1. "safe harbor" - investors believe that the economy is experiencing difficulties, so everyone is investing in less risky dollar assets. 2. When the US economy is weak, the dollar falls. The fall is strongly influenced by interest rates, as a result, everyone gets rid of the dollar, and the smile becomes wider. 3. Perhaps the easiest period to understand is the growth of the dollar due to the economic growth of the United States. People increasingly believe in the country and the currency, which contributes to a greater growth of the dollar. Thanks to this theory, it is easier to understand the market situation in general and the cyclical nature of the market. How to use the index The index is usually used to analyze currency pairs. The index helps to determine the relative strength of the currency relative to the dollar, at those moments when you trade currencies in which there is USD, for example, EURUSD, GBPUSD, USDCHF, etc. The index is also used to find discrepancies. If DXY falls and the dollar weakens, then you will see growth on the GBPUSD chart. If the dollar is the base currency, for example, USDJPY, then the index and the currency pair will move in the same direction. Often you will notice that the dollar index is growing, and the currency pair is standing still – this is the discrepancy, which is very profitable for an observant analyst. In addition to correlation with currency pairs, DXY correlates with oil. The fact is that the largest oil consumers are hedgers of dollar inflation. Hence the inverse correlation of these instruments. Professional analysts, before currency trading, look at the dollar index to understand the trend directions. Conclusions Thanks to the index, you can understand the state of the US economy. DXY is a great addition to your strategy, which helps you identify trends or find discrepancies on the charts. Using the index you will avoid mistakes and increase your profit.
Education
by DeGRAM
3
Hartley PatternsHello everyone Today we will talk about another method of analysis that will help you bring significant profits. Let's go! Introduction H.M. Hartley in 1935 in the book "Profit on the stock market" for the first time revealed Hartley's patterns. Gatli patterns are used in technical analysis and are based on Fibonacci values. The patterns are reversal patterns and have clear rules and an excellent profit-to-risk ratio. Hartley patterns work better than most well-known graphic formations, which also use different Fibonacci levels, but not as clearly as in Hartley patterns. Designations Hartley decided to designate waves with 5 letters for simplicity: The letter X - is the beginning of the trend; The letter A - is the end of the trend; The letter B - is the first pullback of the trend; The letter C - is a rollback correction (not breaking through the level of point A); The letter D - is the target of the letter C. The zones for the letters B, C, D are determined using the Fibonacci ratio between XA and AB. Patterns are divided into types and have their own names, in addition, patterns work for any direction of the market. Let's take a closer look at the patterns. Bat Pattern formation: the price reaches the maximum/minimum of the XA wave and forms a point B at the Fibonacci correction level from 38.2 to 50%. Using the XA points, you can find the value of the D point, which usually tends to the Fibonacci retracement level of 88.6% relative to XA. In this case, CD is most often longer than the segment AB. Butterfly When wave B finishes its formation at the Fibonacci retracement level of 78.68%, they talk about the formation of a Butterfly pattern. At the same time, the target for wave D will be values beyond XA and will be 1.27-1.618 XA. Crab This pattern is formed when the price touches and bounces off the maximum/minimum of the XA oscillation and forms a point B at the Fibonacci correction level from 38.2-61.8%. The goal of point D is outside the original segment XA and is 1,618 XA Simplifying pattern identification With careful study of patterns, it can be noticed that the formation of patterns depends on the location of wave B in relation to XA. Apart from the drivers and 5-0 patterns, there is an easier way to identify the remaining patterns. Let's divide the values of wave B by Fibonacci levels. 1) 38.2%: Bat, crab 2) 50%: Bat, crab 3) 61.8%: Bat, crab, AB = CD 4) 78.6%: Butterfly 5) 88.6%: Deep crab. If you see one of these values, you can understand which pattern is being formed. For example, if you see on the chart that the price reaches the level of 50%, then you can expect a Bat or crab figure. To calculate where the point C will be, you can use Fibonacci levels relative to the point AB: on 38,2%, 50%, 61,8%, 78,6 % and 88.6%. Now let's define goal D. 1) Bat: 88.6% Fibo HA or 2,618 BC 2) Alternative Bat: 113% Fibo XA (below X) OR 2.0 BC 3) Crab: 161.8% Fibo (below X) OR 3.14 BC 4) Hartley: 78.6% Fibo HA or 1.27 BC 5) Butterfly: 161.8% Fibo (below X) OR 1.618 BC 6) Deep Crab: 161.8% Fibo (below X) OR 2,618 BC. How to trade? It is necessary to open a position at the level, on a confirmation signal or on an impulse breakdown, using pending orders at Fibo levels. Confirmation – in this case, you should wait for the reversal candlestick pattern at the Fibonacci level. Breakdown – in this case, the price bounces off the Fibonacci level and breaks through the trend line in the expected direction. It is worth paying attention to the following clarifications: trading on wave B goes in the direction of the trend, but with a limited purpose (on the letter C). Wave C trading is counter-trend trading, but with a good profit-to-risk ratio (with a goal on the letter D). Trading on the letter D can be considered as trading in the direction of the trend (very close to the support and resistance levels) and also with a good profit-to-risk ratio (the target can be the top in an uptrend, the bottom in a downtrend or any Fibonacci level of the CD segment). These patterns are quite common, and the success rate is quite high. Use the patterns correctly and they will bring you a lot of profit. Good luck! 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
HOW TO SWING TRADE USING BB - MACD!Today im going to show you how to use Bolinger Bands and MACD together to understand where the price is going. So you can swing trade easily. By the way swing trade is holding assets for profit for more than a day. So this strategy is suitable for novice investors. But you will need practice before applying this to your trading strategy! First of all i do not recommend betting against the market. Do follow the trend when using this strategy. If the trend is upwards do not short the asset. But there can be breakout from the existing trend. Therefore we can also use trendlines to have better understanding of the market. Lets identify indicators that we are going to use then i will explain how to use them to swing trade. MACD measure specific EMAs and their relations. EMAs are mainly 12 period EMA and 26 period EMA. There are 2 lines and 1 histogram on MACD. They are called, MACD line, Signal line, Histogram. MACD line = 12 EMA - 26 EMA Signal line = 9 EMA of MACD line Histogram = Difference between MACD line and Signal line We use MACD to identify trends so we can trade accordingly. If the MACD line is above 0, we are in a uptrend. If the MACD line is below 0, we are in a downtrend. If the MACD line is above or crosses above signal line it is a buy signal. If the MACD line is below or crosses below signal line it is a sell signal. Longer histograms and being too far away from zero line means momentum of the trend is high. These are the basic of MACD. Bolinger Band is easier to grasp than MACD. There is an upper channel and lower channel calculated with volatility and 2 Standard Deviations from 20 Simple of MA line. Generally if the price is closer to the upper band, market is considered overbought and vice versa. If the market is highly volatile bands widen and if volatility is low bands contract. The most important thing about BB is 20MA. Generally price will test 20MA line after it hits the upper or lower band. If price breakout or rejceted from it, trend is established. So how can we combine both of them to swing trade successfully? 1- We have to identify the market trend. We can simply draw a trendline on the chart to identify it. 2- Use 20 MA as entry-exit 3- Look MACD histogram for momentum 4- Use lower - higher band as SL-TP Example; Look at the chart on the left! Feb 04 19, uptrend started and MACD signal buy. But there is no momentum. MACD far away from zero line and price far away from 20MA. Wait until price breakout from 20MA. 1- is the confirmation of trend with momentum rising and price breakout above 20MA line. BB start to widen meaning high volatility. You can enter long trade here since price and momentum rising with volatility. 2- is the upper band of BB. This is take profit levels. If you are seasoned enough you can open short position here with 20MA area TP. 3- Test of 20MA. You can enter short or long here with lower BB being SL - TP. But with MACD signaling sell and losing positive momentum in histogram, short seems to be the RIGHT CHOICE . 4-Price cant hold 20MA. Drop to the lower band. SL-TP zone. If you are seasoned enough, potential entry zone for long trade. TP being with 20 MA zone. Lets take a look at the chart on the right. Same chart, after a couple of weeks from chart 1. There is a clear uptrend that started 09 March 20. 1- At 20 April MACD signal buy but there is no momentum and price was still below MA20. It is logical to wait for confirmation which is the breakout of MA20. 2-Price breakout MA20 after a week. Between 27 April - 05 Oct, there are more than couple times that market offers good entry zones. Between this time, MACD momentum and lines are rising to the positive-buy zone. 3- Price is around upper band for a long time. Could be a TP zone. Price also lost %25 value 2 in weeks. Some people use here as TP zone. But MACD lines and histogram were positive. Price didnt test the 20MA. Also BB is still widening. Meaning high volatility in a bull market. Opening short is not logical here. 4- Last time price touched the upper band. Histogram started to lose momentum. Potential TP zone and short entry. To be honest this seems to be a good point for short trade but didnt work out. Price went up (2. ATH) couple of weeks later with MACD momentum nearly finished. Therefore always put SL-TP with your orders. 5- MACD signaling sell. Low negative momentum. If open short here, it could be like NO.3 on the chart. Wait for confirmation. 6- Price test MA20. After couple of weeks we broke down MA20. Bear confirmed. Momentum rapidly increase to the negative zone. Potential short entry. 7-Price cant hold MA20. Lower BB reached. Possible SL-TP area. So sign from MACD to enter a long trade just yet. 8- Possible long entry with MA20 breakout above. MACD signal buy with low momentum. Therefore wait for confirmation is logical. After a week momentum rises. Long entry seems logical. New ATH for BTC. So in short, Identify a trend! Check MACD for momentum and trend strength. Enter when price breakout MA20. Confirm the breakout before enter! TP-SL at the MA20 and Band limits.
BITSTAMP:BTCUSDEducation
by thegreatwall38
ERRORS ON PIN-BARSThere are a large number of technical analysis figures, there are many different patterns, but as you know, they do not work 100% of the time. No matter what you trade, you should always pay attention to the market context and the pin bar is no exception. Pin bar is a very profitable pattern, provided that you trade it correctly. Beginners often make mistakes trying to trade every pin bar that is formed in the market. Today we will try to analyze the most common mistakes of beginners when trading a pin bar. 1. Trading pin bars in trending markets To begin with, every beginner should learn how to trade a pin bar in trending markets, because any pattern will work itself out if it trades in the direction of the trend. The trend is still our friend and we should use its strength to open positions. Look for an entry point on the pin bar in the direction of the trend and avoid losses. 2. Pin bar on daily charts A trader should be able to trade a pin bar on daily charts, because a daily chart is the best chart for trading. This is a fact. If you do not know how to trade a pattern on a daily chart, then you will not be able to trade it on smaller timeframes. As you know, the market is full of trading noise on low timeframes. That is why patterns are most difficult to work out there. In such noise, false signals appear that confuse beginners, but an experienced trader will be able to determine a really profitable entry point. 3. Market conditions It is very important to understand where to expect the right pin bar, which will bring profit. Pin bars can be found anywhere in the market, but this does not mean that each of them will bring you profit. No. The strongest signals occur near strong levels, it is at such points that it is worth looking for an entrance. 4. Stop loss Very often, traders trade a reversal pin bar, hoping to catch a trend change. If you catch such a movement, you can earn a lot, but it's difficult to do it. The price rarely immediately reverses after the pin bar, the market will fluctuate and if you put a stop loss too close to the position opening point, you may be knocked out. It is most correct to put a stop loss where the closing of the position will be correct, perhaps a little further than the opening point. No one wants to be knocked out of position ahead of time and watch the price go where we wanted, but without us. Conclusion The strongest signals simply cannot appear everywhere on the chart. You need to be able to filter out the signals correctly and use the most profitable ones. To do this, first study the theory, gain experience on older timeframes and only then practice more. Take your time. Good luck! 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
THE MAGIC OF COMPOUND INTERESTEach of us wants to get rich in order to fulfill our dreams: to fly around the world, buy a car or a house, and maybe even buy a plane. Investing can help make a dream come true, but not everyone has enough knowledge to make money trading. And what to do? Capitalization magic increases numbers to high values very quickly. Naturally, it also works with money, but a little slower. This is called compound interest, and that's what we can use now, no matter how deeply you understand investments. The most frequent advice in the financial sphere is to accumulate your funds and invest them as early as possible. When you start accumulating as early as possible, time is on your side, and the accrual of compound interest plays a big role in this. The best way to demonstrate compound interest in action is the following example. There is Louis and Jen, both 20 years old. They are given the opportunity to make a long-term investment with a starting capital of $ 5,000 at 10% per annum for the next 45 years. And they have to make a choice: 1. Annually collect the earned interest or 2. Reinvest interest income annually. Louis likes to get paid. He already has ideas on how to spend the first interest payment. However, Jen is looking to the future. She decides to reinvest them. Louis invests his funds and receives the same income of $500 every year. Louis is happy to take his $500 every year. After 45 years, nothing changes for him. He still has his original $5,000 and 45 years of interest spent. The power of capitalization Jen is obsessed with savings. She knows that over time, interest will bring her much more money. The first few years of capitalization are pretty boring, but Jen waits patiently, because every year her interest income is higher than in the previous one. Little by little, but the snowball effect is gaining momentum. Around the ninth year, the picture becomes fascinating. Jen gets enough interest income to double her first deposit. Soon, the interest income exceeds her initial investment amount of $5,000. And she gets a percentage of her interest. This is the power of compound interest. Imagine what Jen could have done if she had invested $5,000 in work every year for the same period of time. Currently, 10% look too optimistic, but let's take, for example, that she earned 6% annually on this money. At this interest rate, Jen's total income would be $1,196,363 (by the way, at a rate of 10%, her total income would be $4,318,429). Rule 72 Rule 72 is a simple way to estimate the time required to double an investment based on a fixed rate of return. If you divide 72 by the rate of return, you get an approximate number of years during which the investment will double. For example: if you invested $ 1000 at 4% per annum, then in order to turn your investment into $ 2000, you will need about 18 years (72/4 = 18). Using this formula, you can also determine the rate of return needed to double your money in 10 years: divide 72 by the number of years, 72/10 = 7.2%. Regardless of the investment instrument, whether it's bond yields or dividends, Rule 72 gives you an idea of how long it takes to double your money at a given interest rate. Don't let it work against you! No matter how good capitalization looks, there are 4 factors that weaken it and work against you: • Inflation. There are ways to avoid or reduce this risk; • Taxes. Taxes eat up profits, so use tax-advantaged accounts like IRA and 401k's; • Expenses. For example, taxes, fees and commissions also eat up profits. The less you pay them, the better; • Time. The longer you wait, the less profit is accrued to you under the compound interest system. The basics of mathematics do funny things with money over time. In the early stages, compound interest acts slowly and brings little income, and this is probably why many people ignore it in the early stages. But once it starts, it speeds up exponentially the longer you let it go. If you don't have a billion dollar idea in your mind, then compound interest is the best thing you can use to increase your funds and achieve wealth. Don't waste your time, be patient and use compound interest correctly.
Education
by DeGRAM
3
How to determine the real value of the national currency?The National Regulator openly manipulates the exchange rate to the benefit of the economy, undervaluing it when there is a trade deficit, thereby helping exports, and overvaluing it when there is a surplus, so that citizens and businesses can buy more imported goods. The real exchange rate of a nation's currency is determined by its purchasing power abroad. In theory, it is calculated through a sample of identical goods. It is enough to estimate how much a certain conditional consumer basket costs in the home country, and compare the amount spent in another country. --- --- --- Why do we need to know the exchange rate regime and the real value of the national currencies? If a country has a fixed or transitional exchange rate, a currency trader can determine the entry points with a guaranteed profit. For example, the yuan is strictly "locked" in the corridor of 2% on the stock exchange, which allows you to enter at the maximum deviations, knowing exactly what intervention of the People's Bank will soon follow. The peculiarities of such trading are described in our article about USDCNH trading. Knowing the pricing mode, you can determine the entry strategy on the border of the basket value. Examples of trading such currency pairs using currency corridors are presented below. Trading on the Boundaries of the Nominal Value of National Currencies in Fixed and Transition Modes UAE Dirham (AED) The USDAED currency pair is the easiest to trade because of its strongest peg to the dollar - the national central bank kept the exchange rate at 3.6725 dirham even during the 2008 crisis. As a result the UAE national currency chart looks like a series of candles with long tails, above and below which pending orders should be placed. The figure shows a weekly candlestick chart, where you can see the possible deal levels at a glance, but there are some subtleties in this kind of trading. Firstly, there are only two brokers who are ready to provide access to the USDAED pair; secondly, they ask for a minimum deposit of $10,000; thirdly, the maximum leverage for this currency is 1 to 5. --- --- --- Models for determining the real exchange rate There is no single ideal model in the Forex market that works out 100% of the signals for the differences between the nominal value of the currency. Just like any indicators, the presented formulas need a historical check, they are suitable for certain currency pairs with different accuracy and work in combination with each other. This is why we will try to examine the basic models and theories of exchange rates. The purchasing power of the national currency against any other currency is determined in four ways, which we will talk about below. --- --- --- The law of one price - comparing the cost of the same good in different countries The current price of a commodity in national currency units = The exchange rate of the currency pair* The current price of a commodity in a foreign currency. --- --- --- Absolute Purchasing Power Parity In the formula of absolute parity instead of the price of one product, the average price level of the same basket of goods for different countries is used as expressed in national currencies or minimum subsistence values. For example, in Australia the living wage was 600 AUD for 2017, while in the European Union it is equal to: in Germany - 1240 euros, in France - 1254, in Italy - 855. The euro is a common currency for 26 states, so the three largest EU economies were chosen to use the average value of (1240+1255+855)/3= 1117 in the formula. If 1117 is the average EU living wage and 600 is Australia's living wage, then solving this expression, we get 1117/600 = 1.86. In 2017, the EURAUD exchange rate was 1.38. As you can see from the graph of the currency pair, the arbitrage correctly predicted the trend of strengthening of the euro. --- --- --- Relative trade parity. Economists in their calculations use economic indicators that show the relative change in consumer prices. The difference between the current indicator value from the economic calendar and previous data is substituted into the formula. For example, the U.S. Consumer Price Index was 119.4 in 2012 and rose to 121 by 2013. During this period, the EU CPI showed values of 118.3 and 120.1. The EURUSD exchange rate changed from 1.30 to 1.36. Using the formula, let's calculate the real euro exchange rate by taking the 2012 value of 1.30, successively multiplying it by a fraction of the relative values of the U.S. CPI 121/119.4 and the European CPI 120.1/118.3: 1,3* (121/119,4) *(120,1/118,3) = 1,3374. As you can see from the formula, the euro was undervalued, which led to the collapse in 2014, where parity was equalized due to monetary measures taken by the ECB and the Fed. The consumer price index is essentially an indicator of inflation, which is the primary focus of central banks when making decisions on the size of the discount rate. In economic statistics, it is rare to see this indicator published in relative units; everywhere there is a percentage change, which can also be used in another model. --- --- --- Relative Inflation Parity When calculating the real value of national money relative to the currency of another country, a slightly modified formula is used. The current rate of a currency pair can be represented as equal to (1 + annual inflation of one country/1 + annual inflation of another country) * the current rate of the pair at the Forex market. Let's calculate the EURUSD exchange rate in 2015. At the end of that period, U.S. inflation was 0.73%, while in the Eurozone it was 0.08%. The real EURUSD exchange rate at the end of 2015 = (1 +0.0083)/(1+0.073)*1.0565= 0.992. EURUSD quotes at the beginning of 2016 were undervalued, and the rate hike policy adopted by the Fed did not immediately save the situation - the market saw values close to 1.02 before the value of the European currency began to rise. This formula can be used to forecast the exchange rate by fitting it with the future inflation that central banks calculate in the reports they publish at every monthly meeting. --- --- --- Sincerely R. Linda!
Education
by RLinda
14
Bitcoin Short Term Analysis with Curved Trend Line!Today i will be showing you how to use Curved Trend Line indicator. This indicator contains 21 period ema which is red line and 20 period sma which is yellow line. This 2 averages together work like a trendline. So if the prices are below both lines we are in a downtrend and vice a versa. If price is in the green are which between the 2 lines, that means price is in a area of indecision. Just like regular trendline, this curved trendline shows us resistance and support areas. Let me show you with an example. There is an uptrend that formed in the late January. Price tested that trend line 1 month later and price went 45k area quickly. Last week we tested that trendline again and held. Price can go to the 45k area again. It can retest trendline before going up. Or it can go up without testing it again. This also correspond with my Curved Trend Line indicator! We are trying to break above Trend Indicator at 40k! Right now we are testing CTL to go higher. If we can manage to stay above price action will be to the upside of 45k. Also, for a month CTL act as a resistance. Everytime price test the CTL and try to breakout above it got rejected. This is an indicator that works as an support - resistance of a price! You can also use this CTL to validate your formations, SL-TP points! Use this CTL with daily or higher timeframes for more accurate decisions! If you want to try that %100 free indicator just message me! Important Daily Support 38k 35k Important Daily Resistance 40k 41k 45k
BITSTAMP:BTCUSDEducation
by thegreatwall38
Divergences + Oscillator Confirmation: A Simple System.This will be a tutorial using divergences and oscillator confirmation buy/sell signals. Hello. Here I present a simple system that is very profitable but along side this system I will present a risk management system that is easy on emotions and robust on capital. I predominantly use the 1hr and the 4hr to look for both REGULAR divergences and HIDDEN divergences. The reason I use the 1hr and 4hr is because I find them easiest to trade. We can spot great and powerful divergences in the weekly or daily time frame but how do you enter into positions on such large time frames? We can't unless we use huge stops and tiny sizes. Therefore we can look for better opportunities in the 1hr and 4hr timeframes where those divergences are reliable and risk is easier to manage. I do not recommend moving any lower than the 1hr time frame because oscillators just generate noise and bad trades. REGULAR DIVERGENCE is perhaps easier to identify but more difficult to trade because they most often happen at trend changes when volatility tends to rise. I associate less risk with REGULAR DIVERGENCE specifically smaller positions and wider stops because tops or bottoms are difficult to time. If you are an inexperienced trader it is best for you to start looking at hidden divergences which trade with the trend. HIDDEN DIVERGENCE is easiest to trade but possibly more difficult to identify. HIDDEN DIVERGENCE tends to be a continuation of the trend confirmation. This for me tends to be easier to trade because you are buying a dip in the trend which tends to be less volatile (of course this is not always the case and you can see for yourself if you start trading divergences) REGULAR BULLISH DIVERGENCE: Regular bullish divergence is when the price action makes a lower low while an oscillator like The RSI or the Stochastic makes a higher low. REGULAR BEARISH DIVERGENCE Regular bearish divergence is when the price action makes a higher high but the oscillator makes a lower high HIDDEN BULLISH DIVERGENCE Hidden bullish divergence is when price action makes a higher low and the oscillator makes a lower low. HIDDEN BEARISH DIVERGENCE Hidden bearish divergence is when price action makes a lower high while the oscillator makes a Higher high. The method I use is simple. STEP ONE: IDENTIFY THE TREND: I use the 200EMA in the 1hr or 4hr time frame and take trades corresponding with the trend. The 200EMA simply acts as a method to gauge if the price action is bullish or bearish. If the price action is above the 4hr EMA then I look for a bullish set up. If the price action is below the 4hr 200EMA then I look for a bearish set up. ( I must admit I do not always follow my advice here as today I went short and long but with experience comes flexibility). If you are an unprofitable trader I highly recommend sticking to this part of the system to prevent overtrading and take the most probable trades possible. STEP TWO: IDENTIFY REGULAR OR HIDDEN DIVERGENCE. This step will get easier with practice. As you see in this chart, We see both REGULAR DIVERGENCE which IMO is easier to spot and we have also HIDDEN DIVERGENCE which is more difficult to spot as it is across days. So now that we have identified divergences in the Stochastic RSI we are looking for a confirmation of the divergences we just found. The Stochastic RSI is simple to use when used with divergences. With out divergences the Stochastic RSI gives too many signals and sometimes wrong signals therefore we should only use the Stochastic RSI (or your oscillator of choice) when combined with divergences. If it is a perfect set up such as the morning trade where I found regular negative divergence I waited for the 1hr Stochastic RSI oscillator to confirm a sell signal by crossing the 70% line DOWNWARDS. I set the correct stop of 1% (more on risk management later) and waited for the oscillator to turn down to oversold where amazingly enough it fell and created HIDDEN BULLISH DIVERGENCE when we plotted a line from previous days' Stochastic history. Once the Stochastic turned upward on the 20% line this was my signal to exit the trade...AND because the Stochastic had now created HIDDEN BULLISH DIVERGENCE I took the long side which was an even better trade. Days like today do not happen often if ever but if you read my previous posts I had been anticipating such scenarios based on other factors I will not go into here. Read them posts if you want to know how I suspected this kind of price action was going to happen. STEP THREE: Is not a step, like I mentioned this is an incredibly simple system but no system is complete without robust RISK MANAGEMENT. The risk management comes from the great traders at Guerrilla Trading. I am not affiliated in any way but I was with them for two months and I highly highly recommend them. You will learn price action like no one else. Here I borrow on their money management ideas (I will not share all their ideas that would be unfair to them). It is simple. We will use only 1% risk by setting our stops accordingly. In the trade short in the morning on the micro Nasdaq I took a stop of 80 points. But I calculated my size according to my total capital meaning that if the Nasdaq moved against me 80 points I would only lose 1% of total capital. That's great! If the trade goes against me I would have only lost 1%. But as I have flexible stops, I also have no fixed targets and I let the oscillator let me know when to get out. In the case of the morning trade I took around 206 points. I did not know where the exit would be I just knew the oscillator would tell me. But as you can see by risking a psychologically manageable amount of risk I was comfortable in leaving the trade on until the oscillator told me when to exit. Similarly on the lunch trade where I found HIDDEN BULLISH DIVERGENCE and the Stochastic RSI confirmation crossing the 20% line I took the trade and I am still in the trade because neither the 1hr Stochastic RSI oscillator nor the 4hr oscillator have signalled a sell signal yet. And this is my own personal strengthening of the system. I try to take the 1hr trade over to the 4hr trade where I find I can remove as much of the noise from the lower timeframes as possible and capture almost an entire move. Shwing Trading baby! Well that is it. A simple system using divergences and oscillators to create great trading opportunities. This coupled with a 1% risk management and we have a powerful system that protects capital and maximizes rewards. Included here are several different examples of divergences I have posted on different time frames to get you started on your journey of using divergences.
CME_MINI:MNQ1!Education
by Sinex
1
Bites Of Trading Knowledge For New TOP Traders #11 (short read)Bites Of Trading Knowledge For New TOP Traders #11 ---------------------------------------------------------------- What is Fundamental Analysis? - Fundamental analysis is a method of determining a market’s “real value” or "fair market" value through the collection and examination of financial and economic information. Information gathered may include financial metrics which identify business drivers of the market, and could involve financial modeling of the market. Fundamental analysts search for markets that are currently trading at prices that are higher or lower than what is expected to be their fair market value. If the fair market value is calculated to be higher than the market price, the market is deemed to be undervalued and could be considered to be bought. Conversely, if the fair market value is calculated to be lower than the market price, the market is deemed to be overvalued and could be considered to be sold. What is Technical Analysis? - Technical analysis is a method employed to evaluate a market and identify trading opportunities with a focus on inputs that include price and/or volume. Various financially based calculations and statistical models are commonly employed to derive price trends and patterns based upon which trading decisions are made. Technical analysts believe past trading activity and price changes of a market could be valuable indicators of a market’s future price movements. RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS - Common application of financial market instruments for managing risk and opportunities. Portfolio Diversification Portfolio diversification is the process of investing your money in different asset classes and securities in order to minimize the overall risk of the portfolio. For both corporate and individual investors, having access to markets that enable the building of a diversified portfolio is an important consideration when managing futures focused accounts. Similar to managing risk, the market to trade would be a key variable to clearly state and support with reasons for trading or investing. Reasons for selecting one market over another could include price volatility, liquidity, daily volume traded, size of the minimum price increment, and value of the minimum price increment. Comparing these variables between markets will help decide the suitability and/or risk of each. For example, the parameters for a price driven strategy may be designed to be applied to any market whether it be index equity futures or forex futures. However, the signals for entry may not always trigger if a trader were just to focus on a single index equity futures such as the Micro MSCI Europe Index futures. Having access to other futures markets, such as the Mini Onshore Renminbi/US Dollar Futures, can introduce both a foreign currency and Asian element to a portfolio. This allows for the creation of a diversified portfolio with varying entry and exit points, or the ability for more trading oriented investors, increased opportunities to execute price driven strategies more often across a range of futures markets. 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
Bites Of Trading Knowledge For New TOP Traders #10 (short read)Bites Of Trading Knowledge For New TOP Traders #10 ---------------------------------------------------------------- What is the Notional Value of a Futures Contract? - Notional value of a futures contract is how much total value the contract theoretically controls. Contract Size * Underlying Price = Notional Value Mini US Dollar Index® Futures (SDX) for example has a contract size of $200 x Index value and assuming the SDX price is 98.000, the notional value of the futures contract is $19,600.00. What is the difference between Margin and Leverage? - Margin is the amount of money deposited with the broker to control a futures contract. It is determined by the futures exchange and maybe adjusted by the broker to manage risk to their clients. Leverage is the ability to use less money to theoretically control 1 futures contract compared with buying the product underlying the contract outright which amounts to the notional value of the futures contract. To calculate how much leverage a futures contract gives, divide the notional value of the contract by the margin. The SDX example above had a notional value of $19,600.00 and with a margin requirement of $380, is equal to approximately 51 times leverage on our money ($19,600.00 / $380 = 51). What is a Point and a Tick? - Point is the smallest price increment that can occur on the left side of the decimal point. (Example. 90.000) Tick is the price movement that occurs on the right side of the decimal when looking at the price of a futures contract and is the smallest possible price change measured by markets. A Point is composed of Ticks. (Example. 90.000) Mini US Dollar Index® Futures (SDX) has a minimum price fluctuation of $0.005 representing one tick and would move from 90.000 to 90.005. It takes 200 ticks to make one point or a move from 90.000 to 91.000. RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS - Common application of financial market instruments for managing risk and opportunities. Hedging Portfolio Risk Hedging spot Australian Dollar (AUD) exposure with the Mini US Dollar Index® Futures (SDX) 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 AUD 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. In the chart (Figure 1), if AUD is expected to weaken as it nears the resistance areas, the hedger may plan to enter into a long futures position using the Mini US Dollar Index® Futures (SDX) contract at or under the price levels of $0.7560 or $0.7460 to lock in the value of their underlying AUD position. 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
Bites Of Trading Knowledge For New TOP Traders #9 (short read)Bites Of Trading Knowledge For New TOP Traders #9 --------------------------------------------------------------- What is Hedging? - Hedging is the action taken through the use of a financial instrument to minimize the loss or risk of the loss of value of an asset due to adverse asset price movements. Who are Hedgers? - Hedgers are market participants such as commodity producers who want to lock in selling prices of commodities they produce, or food manufacturers who want to lock in buying prices of raw materials purchased. Market participants also include financial institutions handling financial assets and use derivative products such as futures to manage the risk of a portfolio of financial assets. What is the difference between Physically Delivered vs Cash Settled Futures Contracts? - Physical delivery is a term in a futures contract which requires the actual underlying asset to be “physically delivered” upon the specified delivery date, rather than being traded out with an offsetting contract. Cash settled futures on the other hand allows for the net cash amount to be paid or received on the settlement date of the futures contract. Futures exchanges may offer both types of contracts to market participants who have different purposes for trading futures contracts. RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS - Common application of financial market instruments for managing risk and opportunities. Risk management is the responsibility of market participants designed to limit risk exposures that specifically applies to the participants financial profile in the market. The financial profile of a participant may include their role in the financial market or the amount of capital under their responsibility to be managed in the market, and therefore the risk variables that each would need to identify may be unique. For both corporate and individual investors, the market to trade would be a key variable to clearly state and support with reasons for trading or investing. Reasons for selecting one market over another could include price volatility, liquidity, daily volume traded, size of the minimum price increment, and value of the minimum price increment. Comparing these variables between markets will help decide the suitability and/or risk of each. For example, if Mini-Brent Crude Oil futures (BM) moves around $2.00 per day (or 2 points) and a point is worth $100, a trader might experience a $200 fluctuation in their account balance for one day. Another example is the U.S Dollar / Singapore Dollar (USDSGD), which could move 70 pips or more per day and trading a standard lot size with each pip worth $10, a $700 fluctuation could be expected for one day. Market participants may also manage their risk through the size of their positions. The larger their position size, the greater is their exposure and the smaller their position size their exposure is lower. Investors should determine the risk that would result from various position sizes and select the size that ensures that their risk limit is not exceeded. Finally, setting stops with a specified loss amount provides protection if the market does not move in the desired direction. It helps to prevent creating a loss scenario which is larger than an account can handle. 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
Wyckoff trading using the example of ADA/BTC Accumulation schemePay attention to the phases and letter designations on the graph that I showed on the ADA / BTC pair. (Cardano). A diagram of the accumulation phases is shown. Which are relevant for trading now. Several trading methods are combined on the chart: 1) Trading by the Wyckoff method. 2) Trade in horizontal channels. 3) Trade from important areas (price reversal points). 4) Trading in secondary local trends. Now the price is at the important zone of the mirror level which, from the development of the situation, can act as support or resistance. Channel pitch 30%. You can work in two directions. _________________________________ About Wyckoff's trading method. The forerunner of volume analysis (VSA) is Richard Wyckoff. Roughly speaking, the whole point of the method can be expressed - trade for a major market player. The creator of this technique himself was a man who had a system-forming influence on stock trading. It was not a poor theorist who got rich after publishing books! He was a very successful trader and earned impressive capital in his day. The very method that he was allowed to achieve and the entire 40 years of experience in trading, he published in his book in the public domain is already closer to his death Wall Street Ventures and Adventures Through Forty Years. At the end of his life's journey, Wyckoff became more altruistic, and decided to share the knowledge that led him to wealth. He died in 1934. The Wyckoff trading method was developed in the early 1930s. It consists of a number of principles and strategies originally developed for traders and investors. Wyckoff devoted much of his life experience to studying market behavior, and his work still has an impact on much of modern technical analysis (TA). Currently, the Wyckoff method is applied to all types of financial markets, although initially it was focused only on stocks. During the creation of his work, Wyckoff was inspired by the trading methods of other successful traders (especially Jesse Livermore). Today, he enjoys the same respect as other key figures such as Charles Dow and Ralph Nelson Elliott . But for example, unlike Elliot’s theory, which is good in theory, but not always applicable in practice, the Wyckoff method is many times more effective for making money not in theory, but in practice. _________________________________________ According to Richard Wyckoff's trading method, there are 3 laws: 1) The law of supply and demand . 2) The law of causation. 3) The law of communication efforts and results. The first law states that the value of assets begins to rise when demand exceeds supply, and accordingly falls in the reverse order. This is one of the most basic principles in the financial markets, which does not exclude Wyckoff in his work. We can represent the first law in the form of three simple equations: 1) Demand> supply = price increases. 2) Demand <offer = price falls. 3) Demand = supply = no significant price change (low volatility ). The second law states that the differences between supply and demand are not a coincidence. Instead, they reflect preparatory actions resulting from certain events. In Wyckoff's terminology, the accumulation period (cause) ultimately leads to an uptrend (consequence). In turn, the distribution period (cause) provokes the development of a downtrend (consequence). Wyckoff’s third law states that price changes are the result of common efforts that are displayed on the trading volume . In the case when the growth in the value of the asset corresponds to a high volume of trading, there is a high probability that the trend will continue to move. But if volumes are too small at a high price, growth is likely to stop and the trend may change direction. _____________________________________ Wyckoff Price Cycles. According to Wyckoff, the market can be understood and predicted using a detailed analysis of supply and demand . This can be done based on price action, volume and timeframe. By observing the behavior of large groups of investors, Wyckoff was able to learn to notice certain points during which preparations were made before a large price move. These moments were called accumulation (before the upward movement of prices) and distribution (before the fall of prices). _____________________________________ “Composite person” (major player) and phases. Wyckoff created the idea of ​​a “composite man” (from the English composite man, composite operator), which embodies the imaginary personality of the market. He invited all investors and traders to study the stock market from the point of view if it were controlled by one subject, as this could facilitate their further following the trends. At its core, the composite person represents the largest players (market makers), wealthy people and institutional investors. The behavior of a composite person is the opposite of most investors and traders that Wyckoff often observed, given their financial losses. This is the opposite of crowd action. The cycle described in the Wyckoff method consists of four main phases: 1) Accumulation (accumulation). 2) Impulse or uptrend. 3) Distribution. 4) Markdown (correction, downtrend). 1 phase. Accumulation. A composite person accumulates assets before most investors and traders begin to do so. This phase is usually marked by lateral movement. Accumulation occurs in a gradual manner to avoid significant price changes. 2 phase. Impulse or uptrend. When a composite person takes possession of a sufficient amount of assets, while the sales force is depleted, he begins to push the market upward, forming an emerging trend that gradually attracts more and more new investors, which subsequently leads to an increase in demand. 3 phase. Distribution. Then the “composite person” distributes the purchased assets. He begins to sell his profitable positions to those who enter the market at a late stage (“hamsters”). 4 phase. Markdown (correction, downtrend). Shortly after the distribution phase, the market begins to fall. In other words, after the composite person has completed the sale of a significant amount of his position, he begins to push the market down. To repeat the cycle again. The hamster is not a mammoth - it will not die out. In the end, supply becomes much larger than demand, and a downtrend will follow. _________________________________________ Approach to the Wyckoff market in five steps. Wyckoff also developed a five-step approach to the market based on numerous principles and methods. Simply put, such an approach can be considered as the procedure for applying his work in practice. Step one: identify the current trend. The primary task is to determine the current trend and a superficial assumption where and how far it can go, in connection with which the following questions arise: "what is the current trend?", "What is the relationship between supply and demand?". Step two: determine the strength of the asset. How strong is the asset in relation to the market? Does its value move with the market or the opposite of it? Step three: find an asset with a reason for further growth. Are there enough reasons to open a position? Is the reason good enough for the potential benefit (consequence) to justify the possible risks in the future? Fourth step: determine the likelihood of cost increases. Is the asset ready for the intended move? What is its position relative to the current trend? Does the price and volume of trades correspond to possible growth? This step often includes Wyckoff tests for the purchase and sale of the selected asset. Step Five: Your Login Time. The last step contains all the timing information. For the most part, this is due to the analysis of a trading instrument to compare their behavior with the main market. In cryptocurrency, for example, with bitcoin . __________________________________________ Wyckoff Trading Schemes. Accumulation and distribution schemes are the most popular part of Wyckoff’s work, at least among cryptocurrency communities. This model breaks down these two schemes into smaller sections of five phases (from A to E), as well as several events that are briefly described below. Pay attention to the phases and letter designations on the graph that I showed on the ADA / BTC pair. A diagram of the accumulation phases is shown. Which are relevant for trading now ACCUMULATION DIAGRAM PS - preliminary support (initial support) the first resistance - appears after a significant decrease in the price, the volume increases, and the price accelerates the decrease over time. SC - the culmination of sales - there is a sharp drop in prices for large volumes. AR - automatic rally (automatic upward movement) appears because there are very few sellers in the market, and buyers quickly raise the price up. ST- secondary test (repeated test) - occurs to check the forces of supply and demand . There may be several ST and SC . ST can even slightly break the price level set by SC . Spring - does not always occur, in the late stages of accumulation. The logic of false breakdown. Test - Occurs after Spring is formed and should be on a small volume . Usually above the low at a lower level. SOS - a sign of strength (signs of strength) the price begins to rise and stands out from the price range TR (trading range) with an increased volume . LPS - the last support point, the last resistance level , occurs after a breakdown (SOS), this is a return of prices in the vicinity of TR with low volume and low price dynamics. BU (back up) - the return of prices to the accumulation channel, which follows the realization of the profit of short-term investors and is a demand test. It does not always happen, for obvious reasons. Phase A. The strength of sales decreases and the downtrend begins to slow down. This stage is usually marked by an increase in trading volume . Preliminary support (from the English preliminary support, abbr. PS) indicates that new customers are starting to appear, but this is still not enough to stop the downward movement. The culmination of sales (from the English selling climax, abbr. SC ) is formed through intense activity aimed at selling assets, as a result of which investors begin to capitulate. This often manifests itself as the highest point of volatility , when panic sales form high candles and wicks. A strong drop quickly develops into a jump or automatic rally (AR), due to the fact that buyers begin to absorb excess supply. Thus, the trading range ( TR ) of the accumulation scheme is determined as the distance between the minimum culmination of sales and the maximum of automatic rally. A secondary test ( ST ) occurs when a drop in market prices crosses the sales climax ( SC ) to verify the validity of a downtrend. In this case, trading volume and market volatility are usually lower than usual. While the second test often forms a higher minimum relative to the culmination of sales, this does not always happen according to plan. Phase B. Based on the Wyckoff law of causation, phase B can be considered as a cause that leads to a certain effect. Phase B is the consolidation phase in which a composite person accumulates the largest amount of assets. At this stage, the market tends to test various levels of resistance and support in the area of ​​its trading range. Numerous secondary tests ( STs ) may occur during phase B. In some cases, they show higher highs (bull traps) and lows (bear traps) with respect to the culmination of sales and the automatic rally, like phase A. Phase C. This phase is a typical period of asset accumulation. It is often the last bear trap before the market begins to show higher lows. During phase C, the composite person provides a small proposal, and in fact, those who were supposed to sell their assets have already done so. During this phase, support levels begin to break through to stop traders and mislead investors. We can describe this as the last attempt to buy an asset at a lower price before the start of an uptrend. Thus, the bear trap encourages small investors to abandon the holding of their assets. However, in some cases, support levels can be maintained, and the "spring" simply does not begin. In other words, there may be another accumulation scheme, which includes slightly different elements, but not “spring”. However, the overall structure of the circuit remains valid. Phase D. Phase D represents the transition between cause and effect. It is located between the accumulation zone (phase C) and the breakout of the trading range (phase E). Typically, a significant increase in trading volume and volatility occurs during phase D. Usually it assumes the last point of support (from the English last point support, abbr. LPS ), demonstrating a lower minimum before the market begins to move up. LPS often precedes breakthrough resistance levels, which in turn creates higher highs. This indicates the manifestation of signs of strength (from the English. Signs of strength, abbr. SOS), as the previous resistance levels become new levels of support. Despite a somewhat confusing terminology, there may be several last points of support during this phase. They often increase trading volume when testing new zones. In some cases, the price may create a small consolidation zone before effectively breaking through a larger trading range and moving on to phase E. Phase E. Phase E is the last step in the accumulation pattern. It is marked by a clear penetration of the trading range due to increased demand in the market, which indicates the beginning of an uptrend. __________________________________________ Volume in separate phases (VSA). A key element in the analysis of the Wyckoff method is the preservation of volume at the individual stages of accumulation / distribution. Phase A. In this phase, dynamic movements of prices with an increased volume occur. We have new highs / lows and climax points, followed by automatic price rallies in the opposite direction, and then retest on a smaller volume . This phase forms the border of the TR (trading range) channel, in which the price will consolidate until the rebound in phase D and E Stage B. Here, large investors get rid of their last position from the previous trend and prepare for its reversal. Phase C. This is a very important phase, because in phase C it comes to the end of the current trend. Weak players leave the market for Spring (accumulation) or UTAD (distribution). If these formations do not exist, then we are dealing with LPS , where the inability to continue the current trend is visible, the price practically does not move. Phase D. With signs of weakness in the current trend from phase C, the time comes to show the strength of the adversary. The price breaks the level in the expected direction, with high dynamics and increased volume . Phase E. Confirmation of our assumptions and completion of the accumulation / distribution process. Price accelerates in the expected direction. If we were unable to join the movement during phase D, then further problems may already arise with this. And this deal will be less profitable. ______________________________ Conclusion on the Wyckoff trading method. Almost a hundred years have passed since the publication of the work, but the Wyckoff method is still in demand to this day. By nature, the market does not always exactly follow similar trading patterns. In practice, accumulation and distribution patterns can occur in different ways. For example, in some cases, phase B can last much longer than expected. For this reason, spring, UTAD and other tests may simply be absent. However, Wyckoff's work offers a wide range of reliable trading techniques that are based on numerous theories and principles. His work is certainly valuable to thousands of investors, traders and analysts around the world. The accumulation and distribution schemes described in this article may be suitable for understanding the general order of cycles in financial markets. But recently, due to the widespread introduction of algorithmic trading and the use of it by large players, it has become increasingly difficult to notice a large player on highly liquid instruments, but it is possible. According to three schemes of dialing / resetting by the position algorithm. This analysis method is more relevant for medium-liquid instruments, where fewer algorithms and highly professional traders are clearly hard to see. One person can hide his real work, and do fake trade for dozens of people. It is clear that with good preparation, it is possible to calculate and understand what will happen next, but naturally this is not an analysis of the schedule. Analysis of the schedule in the work of a truly successful trader in fact takes no more than 20-30% of the work. __________________________________ It is impossible to describe everything in one article. The Wyckoff method at first glance seems complicated, but it is not. The main thing is to understand the essence of the work and practice trading tools. To start, start trading with a symbolic amount. Always remember, a theory without practice is zero. Once again, the Wyckoff method works well on medium-liquid instruments such as cryptocurrencies, but not lower than the top 100.
Education
by SpartaBTC
4
The analysis of the behavior of major player Part 3Today i want to proceed my sharing of my knowlege about the behavior of large players in the market, how to notice them and how to use it. So on this example of BTC we can see the candle that activated those stops of the major players that we talked about in the previous two parts of this tutorial. This candle staying on the circled zone that we talked about last time. Look! It is Amazing. So after this candle we can be sure that the next target is the pump, becouse all stops of the major players it is = BIGGEST BUYS in the market. Have a good mood
Education
by MiriamRapoport
6
How to study indicators?Hello everyone Today I want to talk about indicators. Every trader has used indicators at least once in his trading, but not everyone knows how they work and why they should be used at all. The best way to understand something is to look for answers to questions yourself. Below I will give you some questions that you will have to answer in order to understand the operation of the indicator. Problem Most beginners start their way of studying indicators with books or articles on the Internet, where it is told: buy here when this line crosses this one, when the indicator enters this zone, and so on. With such a study, the trader does not understand how the indicator actually works, which indicators are similar to each other and why the indicator gives these signals. By answering these and other questions, the trader will be able to understand for himself whether he needs this indicator. Our task is as follows: 1) find out how the indicator is calculated; 2) understand how this indicator reacts to changes in parameters; 3) to understand what all this means in the context of market data. Find answers to the questions If you really want to get into the essence of the work of this or that indicator, do the following: 1. To begin with, you can start by studying the history of this indicator. It is best to look for the original source to understand what the creator of the indicator put into this tool. Any information will be useful for understanding the tasks that were set before the indicator at the time. 2. How can the indicator help us or why is it more useful for us to use the indicator than just looking at the chart? 3. Which indicators are similar to this one? Of course, it will not be possible to study all the indicators, but it is not necessary. It is enough to observe and understand where the indicators give the same signals. Thus, we will remove unnecessary repetition of signals on the chart. 4. What exactly is taken into account when the indicator is working? For this work, you need to be able to calculate or program at least in general terms. You can use third-party special programs. The main goal is to understand the details of the indicator calculation. 5. Change the data tracked by the indicator to see how it reacts to controlled price changes. Examples are: a market in flat, where a trend begins to emerge, and then a second return to flat occurs; a game on trend strength; a flat with one subsequent large price jump; "ladder" markets; stable long-term trends and their reversals; fluctuations (for example, sinusoidal) with different periods. 6. Take the knowledge you have gained and look at the indicator on the price charts. Notice how it reacts to price spikes. Analyze this stage of information collection. Your goal is to see how this indicator works on a large amount of data, and not to dig deep. 7. Now find out how you can test what you see in paragraph 6. Is it possible to test this indicator manually, or will a software algorithm be required to test it. 8. Having received all the data and understood the work of the indicator, you should understand whether this indicator is needed in your strategy? It will be difficult to answer all the questions, but the benefits will be tangible. You may spend several days or weeks searching for answers, on the other hand, you will learn something that most traders do not know. You will be able to really understand the signals of the indicators and be able to use the right indicator at the right time – which most do not know at all. If you do not learn how to understand and use trading tools correctly, you simply will not be able to trade in a plus. Good luck! 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
6
BTC: Real Life channel trading! 3 tips for beginners95% of beginners don't understand why patterns don't work as it shown in the books. That's why losses, stress, and worries appear. The point is that only practice and personal experience will help you understand how to use it correctly. I will give you a few secrets how to trade in the channel successfully: 1. after testing the borders of the channel, wait for a false breakout or liquidity collection. At point 3 and point 5, there was a large collection of liquidity, after which you can open a LONG. You can see the result by yourself (+28%). 2. Pay attention to the key levels and value zones - combine instruments. 2.1. At point 4 there is a large value zone of $46-47k, which became a resistance. Combined with the upper boundary of the channel, it was a strong resistance zone, which means price is sure to bounce off. We saw a 20% drop! 2.2. At point 5, there was a large value zone of $37.5-40k from which the price also bounced off. The lower boundary of the channel+value zone was a major support for price. Not bad? 3. The middle of the channel. On the chart, we can see that it is often tested as resistance/support. An additional opportunity to open a trade. Be crafty, use trading tools in combination with each other and you will notice results immediately. Friends, press the "like" button, write comments and share with your friends - it will be the best THANK YOU. P.S. Personally, I open an entry if the price shows it according to my strategy. Always do your analysis before making a trade.
Education
by Yuriy_Bishko
20
Economic data that a trader should be able to understand.Part 3. Turnover or retail volumes, orders and inventories This type of data measures retail trade turnover. As a rule, the retail business is, in simple words, a place where you and I go to shop to buy basic necessities and luxury goods. It is important because it is an excellent indicator of consumer demand within a particular economy. In certain countries, especially in the G8 countries, retail trade volumes may account for two-thirds of all consumer spending. They are a key indicator of consumer confidence. If consumers are confident in their economic situation, additional demand for goods and services is created. Economists track the growth of trade turnover – it helps to determine whether the economy is doing well. If the trade turnover falls, things are bad in the economy. Turnover or volume of wholesale trade, orders and stocks This type of data measures the turnover of wholesale businesses. It is important because it is an indicator of consumer demand – which, as we know, is a serious thing. A decrease in wholesale sales or inventories may imply or confirm a decrease in business activity and retail demand. This means that there are free resources that are not currently being used, but they will be used if demand increases again. This type of data is not as important as retail trade volumes, but most economists believe that it is still worth keeping an eye on. Import of goods and services In this type of data, purchases of domestic companies from companies from abroad are measured. If, for example, you are a Canadian company that buys raw materials from China, then this is considered an import of goods to Canada. This type of data is important, since imports may eventually replace domestic production, which may cause tension in financial resources. For example, if everyone in the United States starts buying only German car brands, such as BMW and Audi, this will lead to a lack of demand for cars manufactured in the United States, such as Ford and GM. Which will have a negative impact on domestic car manufacturers in the United States. As a rule, a country imports those goods and services that it is not able to produce on its own. But, of course, this is not always the case. Often people and companies buy abroad because prices are lower there. Another reason is that there may be goods of the desired quality abroad that are not available at home. For example, if you live in the United States and have a strong desire to drive around in a Rolls Royce or Bentley that has just rolled off the assembly line, you will have to buy your car in the UK. Oil is often not taken into account in the US data, as it has developed that the states are always forced to import it – the country does not produce enough oil to meet domestic demand. However, thanks to the new drilling technology in the US, oil production is growing – there are chances that over time it will be enough to cover the demand. You may have to do a little independent research on this topic – it depends on when you read this material. Export of goods and services This type of data measures the country's trade turnover with other countries around the world. Simply put, this is the direct opposite of importing goods and services. It is important because exports generate an influx of foreign currency, which can have a good effect on economic growth. It happens that a foreign currency is more valuable than a local one – this creates additional profit in the balance sheet of a local company. For example, if a company from Canada sells its product to the UK, it receives British pounds as payment. This is a very attractive deal, since (at the time of writing this article) 1 pound can be exchanged for 1 Canadian dollar 75 cents. Export growth can boost GDP, which will have a positive impact on the economy. The higher the ratio of a country's exports to its GDP, the faster its economic output will grow. Trade balance, the balance of trade in goods In this type of data, the balance or the difference between all exported goods and all imported goods for a certain time period is measured. The main question is – what is more in the country, exports or imports? It is important because it is an indicator of a country's fundamental trading position in relation to other countries. Obviously, most countries prefer their exports to be higher than imports. A large foreign trade deficit may suggest to economists that there are difficulties with the supply – companies are unable to meet the demand coming from abroad. The trade balance reflects the ratio between national savings and investments of citizens and companies of the country in question. The deficit is an indicator that investments exceed savings in their volumes, and the use of real monetary resources exceeds the overall economic result of the country. Index of export and import prices, unit price of the product This type of data measures the prices of goods that one country trades with others. It is important because it is an indicator of pressure on prices, possible problems with the exchange rate and changes in competition. Economists compare export prices with price indicators on the domestic market to get an idea of the pressure on prices for foreign buyers exerted by domestic producers. Economists also monitor import prices to determine the level of external pressure on prices and evaluate these indicators. Manufacturer's prices and wholesale prices In this type of data, factory prices are measured – that is, how much it costs the manufacturer to manufacture goods without adding extra charges. It is important because it can be used as a leading indicator of price pressure affecting domestic production volumes. It should be borne in mind that during a recession, the industrial Price Index (Producer Price Index, PPI) may exaggerate the pressure on prices. On the other hand, during periods of inflation, PPI can downplay prices, because contracts and purchases of raw materials are usually negotiated in advance long before production and release of products. Price expectations: surveys The purpose of these surveys is to study the opinion of manufacturing companies regarding inflation. In simple words, this type of data sums up what company directors think about the impact of inflation on their business at the moment and in the near future. It is important because it allows you to look into the heads of people working in the trenches of production. It can serve as a warning about possible changes in prices. Economists, as a rule, track changes in the trend of this indicator in order to predict a possible increase or decrease in pressure on prices. Wages, labor income, labor costs Salaries and labor incomes give us an idea of how much people earn from their jobs. Labor costs are how much the labor of workers costs the manufacturer. All these indicators reflect labor costs and the impact on consumer incomes. They are important because they reflect the pressure on prices and demand within the economy. Salaries and incomes are closely related to the current phase of the economic cycle. If incomes are growing faster than consumer price inflation, it means that real spending is growing, which is an indicator of the health of the economy. Unit labor costs In this type of data, the cost of labor per unit of output is measured. In other words, how much the labor costs for the production of one unit of goods cost the manufacturer. It is important because it is an indicator of the competitiveness of businesses and pressure on prices within the country. For example, if a company is engaged in production in a country with cheap labor, and sells its goods abroad, these are large potential profits. Conversely, if a company's production is located in a country with expensive labor, then it probably will not be able to withstand competition with foreign companies using cheaper labor. This is a key indicator of labor efficiency. If unit labor costs decrease, it means that the same amount of products can be produced for less money, since manufacturers will need to pay their workers less for the output of each unit of production. Which, of course, makes the manufacturer more competitive. If labor costs start to rise, then this can pose a threat to the viability of companies, because the production of products will start to cost them too much. Obviously, companies need to earn money to stay in business, so cheap labor is always preferable. Consumer or retail prices This type of data measures the price of a basket of goods and services consumed by an ordinary family to maintain the current standard of living. It includes clothing, food, rent, transportation expenses, and so on. In general, everything you need for food, sleep and earning enough money to survive. It is important because it reflects the inflation experienced by a typical family of a particular country. Here you need to ask yourself this question – are ordinary goods in general more expensive or cheaper for consumers? Will the consumer have more money in his pocket at the end of this year than at the end of the previous one? The answer can tell us a lot about whether the standard of living is rising or falling and what part of the economic cycle we are in now. Conclusion As you can see, when it comes to publishing fundamental economic data, many key concepts have to be taken into account. If you have difficulty assimilating or remembering all this information – try not to overload yourself! Use all the information and then you will earn more than the rest! Good luck!
Education
by DeGRAM
29
📌 Different 'trading Styles' ❗❗ 🤔-Trading encompasses four main styles: scalping, day trading, swing trading, and position trading. The differences among the styles are based on the lengths of time that trades are held. Scalping trades are held for only a few seconds, or at most a few minutes. Day trades are held for a few seconds to a couple of hours. Swing trades may be held for a few days. Position trades are held from a few days to several years. Novice traders can have trouble choosing the trading style that best suits their personality, but you must do so to achieve long-term success as a professional trader. If you are a trader and do not yet feel as though you have found your trading style, you still can. Here are some of the personality traits that go with the different styles of trading. 1.Scalping Scalping is a very rapid trading style. Scalpers often make trades within just a few seconds of each other, and often in opposite directions. That means they may go long one minute but short the next. Scalping is best suited to active traders who can make instant decisions and act on them with no hesitation. Impatient people often make the best scalpers, because they expect their trades to make a profit right away. They will exit the trade quickly if it goes against them. To succeed as a scalper requires focus and concentration. It is not a suitable trading style for anyone who is easily distracted or prone to daydreaming. So if you've been thinking about something else while reading this, then scalping might not be for you. 2.Day Trading Day trading suits traders who prefer to start and complete a task on the same day. That's you if you are the type who starts to paint your kitchen and won't go to bed until the job is finished, even if that means staying up until 3 a.m. Many day traders would never make swing or position trades. They would not be able to sleep at night knowing they had an active trade that could be affected by price movements during the night. 3.Swing Trading Swing trading is good for people who have the patience to wait for a trade, but want a quick profit soon after they enter it. Swing traders almost always hold their trades overnight. So if you'd be nervous holding a trade while away from a computer, this is not the style for you. Swing trading generally requires a larger stop-loss than day trading. The ability to keep calm when a trade is against you is vital. 4.Position Trading Position trading is the longest term trading of all. It often involves trades that last for several years. Thus, position trading is only suited to the most patient and least excitable traders. Its targets are often several thousand ticks. If your heart starts beating rapidly when a trade is at 25 ticks in profit, position trading is probably not for you. Position traders must be able to ignore popular opinion. A single position trade will often hold through both bull and bear markets. For instance, a long position trade may need to be held through a full year when the general public is convinced that the economy is in a recession. If other people can easily sway you, then position trading will be a challenge for you. >>Choosing a trading style requires the flexibility to know when a trading style is not working for you. It also requires the consistency to stick with the right style, even when its performance lags. One of the biggest mistakes that new traders make is to change trading styles (and trading systems) at the first sign of trouble. Constantly changing your trading style or trading system is a sure way to catch every losing streak. Once you are comfortable with a trading style, remain faithful to it. The loyalty will reward you with results in the long run. Sources:thebalance.com
COINBASE:BTCUSDEducation
by PRO_SMART_Trader
2
📌What is a 'TRADING PLAN' ; and Why ❕❓There is an old expression in business that, if you fail to plan, you plan to fail. CONCEPT OF TRADING PLAN What is a Trading Plan? In business school, you are taught that to start a business you need a business plan. Trading is a business. Therefore, every time you trade you must be trading according to a well-thought-out and calculated plan. A trading plan is a comprehensive framework that guides your decision-making in any trading activity you undertake. A trading plan is to and what a business plan is to a business. As the adage goes, ‘if you fail to plan, you plan to fail’. This is especially true in where risk is ever-present in the markets. A trading plan is not merely a trading strategy. A trading strategy will guide how you will enter and exit trades in the markets in a manner that enhances profitability and reduces risk exposure. A trading strategy can be based on technical analysis or fundamental analysis. A trading strategy is just one component of your overall trading plan, which goes beyond that to also capture your overall trading goals and motivation, your trading journal , as well as your trading psychology. GOALS of a TRADING PLAN Setting goals can help, but often novice traders set the wrong type of goals. As a novice trader your initial goals should help you eventually make money and more important than that is when you achieve goals , but making money should not be your main goal. Instead, opt to make your initial goals about the process and emulating traits of professional traders. Initially, traders want to make goals about numbers: "I will make 1% per day on my $30,000 capital," or "I will make 30% per year." While it seems simple, to actually get to a certain percentage or to reach dollar targets, you will need to refine your market approach and hone your discipline. By plunging into the market and expecting to make a certain amount of money, the goal becomes almost impossible to reach over the long term. These types of goals require the trader to truly understand the capabilities (and limitations) of the trading plan they are employing, not just think they understand. Based on the method being used, it may be impossible to reach a dollar or percentage goal, but it still could be valid and provide a good return. Therefore, the trader must either abandon the strategy or deviate from it in an attempt to find more yields. For many traders, this becomes an endless cycle of abandoning strategy after strategy. STRUCTURE OF TRADING PLAN ‬‏ There are seven easy steps to follow when creating a successful trading plan: 1-Outline your motivation and desire. 2-consider money management rules and determine how to minimize your risks and maximize profit . 3-Define your (short-term ,mid-term & long-term) goals. 4-Define your trading style ( scalper- day trader - swing trader - position trader- options) 5-Decide how much capital you have for trading. 6-choose your market(stocks-forex- crypto-..) and products and Assess your market knowledge. 7- improve your trading psychology and start a trading diary. Strategies of Trading Plan How do you develop a trading strategy plan? Follow these steps to forming your first trading strategy: Step 1: choose Your analysis approach whether is price action , harmonic patterns , Elliot waves or with indicators .... Step 2: analyze your market situation and predict all possible scenarios Step 3: Choose A Trading Time Frame. ... Step 4: Choose A Tool To Determine The Trend (Or Lack Of) ... Step 5: Define Your Entry Trigger. ... Step 6: Plan Your Exit Trigger. STEP 7: Take a proper position size STEP 8: DEFINE YOUR RISK and Choose a risk-reward ratio STEP 9: BACKTEST and DEVELOP YOUR TRADING STRATEGY the most trading strategies will fall under 4 main categories: breakouts, trend-following, counter-trend and market reversals. So if you look at your strategy, you want to be able to see which category it falls under so that you can better understand, what are the strengths and weakness of each strategy. FINAL THOUGHT: SO Why is Having a Trading Plan Important? The ultimate aim for any investor or trader is to achieve consistent profitability in the markets. A trading plan is a guide that ensures you will stay on track on your journey to your desired destination. It does so by: -Making Trading Simpler It is easier to do something when you know what must and should be done. A trading plan lays out all the criteria that must be met before any trading decision is made. It will always point you in the right direction no matter the distractions present. -Enhancing Objective Decision Making Trading is about decisions. Good decisions will make you money, while bad decisions will cost you money. Having a trading plan ensures that you will make objective decisions at all times; and not subjective decisions that are driven by emotions which can eventually cost you a lot and put your trades and capital at risk. -Building Trading Discipline Trading is a marathon, not a sprint. It is important to build a solid trading plan and following it with religious discipline throughout your entire trading activity. This is the only path to long-term, consistent profitability in the markets. While traders will generally follow the daily financial news, , such as the , , or , and to pinpoint potential trading opportunities, sticking to your trading plan is of utmost importance. -Highlighting Areas that Require Improvement One of the side effect and core components of a trading plan is improving the trading journal, which is essentially a diary or record of your trading activity. Journalling your trading activity will help you to assess the performance of your trading strategies as well as other factors of your trading plan, such as risk management and trading psychology. This will, over time, highlight the areas where improvements can be made to help you become a better trader. sources: investopedia.com tradingsetupsreview.com avatrade.com This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate
COINBASE:BTCUSDEducation
by PRO_SMART_Trader