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Trading Under Pressure: Building Stress Resistance For SuccessStress in trading is a response of the nervous system triggered by high levels of uncertainty, risk, and the fear of losing money. It often begins with a sense of excitement but can gradually escalate into panic, leading to panic attacks and intense fear.
Some individuals thrive under stress, viewing it as a stimulating emotion. They consciously understand that they are not necessarily losing anything, having already accepted the possibility of loss. For these traders, trading is an adventure filled with excitement, impressions, and adrenaline. However, many of them may not be psychologically prepared for the realities of stress, and when it strikes, they can easily lose self-control.
📍 HOW STRESS CAN AFFECT YOUR PERFORMANCE
Traders frequently find themselves in situations where quick decision-making and emotional management are crucial for achieving positive outcomes. Stress can create a psychological state that often hampers a person's ability to make logical and sound decisions.
✦ Decreased Concentration and Attention. Elevated stress levels often lead to diminished concentration, resulting in errors caused by overlooking important details or additional factors.
✦ Deterioration of Memory. Under stress, it becomes challenging to recall similar past situations or remember key factors, which can negatively impact decision-making.
✦ Decreased Reaction Speed. Stress can hinder your ability to react swiftly to changing market conditions. This makes strategies like scalping, fundamental trading, and trading on M5-M15 timeframes particularly difficult.
✦ Changes in Emotional State. Stress can trigger a range of emotional reactions, including anxiety, nervousness, irritation, and panic. These feelings can cloud judgment and lead to impulsive decisions.
✦ Physical Manifestations. Stress may also result in physical symptoms such as back pain, headaches, and stomach issues. The nervous system is often the first to suffer, with its effects potentially reverberating throughout the entire body.
While many individuals experience negative effects from stress, some people demonstrate a unique response in which stress acts as a "sobering" force. For these individuals, a relaxed state may be characterized by laziness, lack of coordination, and a leisurely pace. However, when faced with stressful situations, they often shift into a heightened state of activity. In this altered state, their brains become more agile, allowing them to think more quickly and algorithmically, improving their capacity to respond effectively to challenges.
📍 EFFECTS OF STRESS IN TRADING
🔹 Increased Risk-Taking. Under stress, traders often become more inclined to make high-risk decisions in an effort to recover losses. Unfortunately, this behavior can lead to even greater losses.
🔹 Lack of Self-Control. Stress can impair your self-control, making it challenging to make well-considered decisions. Consequently, you may find yourself taking impulsive actions that deviate from your established trading strategy.
🔹 Closing Profitable Trades Too Early. In a state of anxiety, you might prematurely lock in profits due to a fear of losing them, which can prevent you from maximizing potential gains.
🔹 Holding Losing Trades for Too Long. Stress can hinder your ability to recognize mistakes, leading you to hold onto losing trades longer than necessary instead of cutting your losses.
📍 HOW TO DEAL WITH STRESS IN TRADING ?
1. Planning and Preparation. Creating a detailed trading plan in advance can significantly alleviate stress levels. Having a well-thought-out course of action ready for unexpected situations provides a sense of calm and direction.
2. Risk Management. Establishing a robust risk management system is essential for reducing the anxiety associated with potential losses. Implementing stop-loss orders ensures that your position is at least partially protected, which helps contain the emotional rollercoaster associated with trading.
3. Adhere to Your Daily Regimen. It's crucial to prioritize self-care by getting enough sleep, eating a balanced diet, and engaging in regular exercise. This timeless advice applies universally to all stressful situations and can greatly enhance your resilience.
4. Take Breaks. Avoid the temptation to stay glued to your screen. Taking breaks allows you to relax and recharge. Additionally, it gives your eyes a much-needed rest.
5. Relaxation and Meditation Techniques. Incorporating relaxation and meditation practices into your routine can significantly lower stress levels while improving concentration and emotional well-being. Techniques such as breathing exercises, yoga, and deep relaxation may seem unconventional to some, but many find them effective in managing stress.
6. Support and Communication. Sharing your emotions and challenges with fellow traders can help diffuse tension and provide you with valuable insights and encouragement. Building a network of support is vital.
7. Positive Thinking. Cultivating a positive mindset and fostering confidence in your abilities can significantly reduce stress levels and enhance your trading performance. A constructive attitude can empower you to face challenges with resilience.
📍 CONCLUSION
Remember, stress is a natural response of the body, but it can significantly hinder your ability to work effectively and make sound decisions. There are numerous strategies available to manage stress; however, their effectiveness largely depends on your personal perspective, the specific circumstances you face, and your willingness to address the issue.
It’s essential to identify and adopt individualized methods that resonate with your unique psychological makeup. By doing so, you can cultivate emotional resilience in challenging situations, enabling you to cope without relying on medication or professional therapy. Taking proactive steps to manage stress is key to maintaining both your trading performance and well-being.
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Mind Over Market: The Burden Of Continuous Chart WatchingNovice traders are often swayed by their emotions. Even when equipped with knowledge of technical and fundamental analysis, as well as risk management, individuals are invariably guided by psychological factors. This influence isn't limited to emotional extremes such as greed, excitement, or despair. It also encompasses feelings like curiosity, self-assertion, and the quest for validation of one’s decisions. While these feelings aren't inherently wrong, they do come with certain nuances.
One research agency conducted an analysis of a broker's database, choosing to keep the names confidential to avoid advertising. The agency itself noted that the research was intended for private insights rather than a comprehensive analysis. The primary objective was to identify the actions traders tend to take most frequently. The findings revealed that the most predictable action among traders is closing a position. Interestingly, market orders are closed twice as often as limit orders. This suggests that most traders tend to follow market trends and manually close their trades, which may conflict with established risk management principles. This fact has been termed the “Monitoring Effect”.
📍 WHAT IS THE MONITORING EFFECT?
The monitoring effect in trading describes a psychological phenomenon where excessive scrutiny of short-term market fluctuations leads to impulsive and often detrimental trading decisions. When a trader spends too much time staring at the chart, this constant observation distorts their perception of market movements. In essence, a trader who continuously monitors the chart may interpret the data differently than someone who examines it after a few hours of absence. This prolonged focus can create a skewed view of the market, resulting in rash choices that might not align with their overall trading strategy.
📍 NEGATIVE IMPACTS OF MONITORING EFFECTS ON TRADERS
• Overemphasizing Short-Term Information. Traders may place excessive importance on recent price movements or news events, leading them to make reactionary decisions. For instance, an impulsive urge to close a trade can arise from a fleeting negative signal, such as a false pattern or a false breakout, even if the overall trading strategy remains sound.
• False Perception of News. By constantly tracking news and events, traders can overestimate their significance, prompting rash decisions based on short-term fluctuations. This can lead to trades that are not aligned with long-term strategy or analysis.
• Frequent Position Changes. The urge to change positions often is exacerbated by constant monitoring. Traders may respond to momentary shifts in market direction, resulting in frequent reversals of positions. This behavior not only increases trading costs due to commissions and spreads but can also lead to overall reduced profitability. A trader may incur losses as they jump in and out of trades based on short-lived movements.
• Emotional Stress. Ongoing market observation can heighten emotional stress and lead to fatigue. As traders become more engrossed in monitoring, their ability to think clearly and make rational decisions diminishes. This emotional toll can distort judgment, further complicating the trading process.
• Increased Risk Appetite. Prolonged engagement with the market can result in an increased appetite for risk. As traders become accustomed to fluctuations, they may become more willing to take on higher-risk trades, often without a solid foundation in their analysis. This increased risk tolerance can lead to larger potential losses, especially if the market moves against them.
To watch the chart or not to watch the chart? The monitoring effect has some positive aspects. Firstly, you train your skills of instant reaction to an event. Secondly, you learn to quickly recognize patterns and find levels.
📍 TIPS TO MANAGE CHART MONITORING
1. Wait After News Releases
Avoid Immediate Reaction. It’s crucial to refrain from making quick trades immediately after major news releases due to potential volatility and false spikes. Prices may not reflect fair value during that time, leading to uncertain outcomes.
Trade After the Dust Settles. Waiting for 30-60 minutes allows the initial market reaction to stabilize, providing a clearer market direction and reducing the likelihood of entering a trade based on erratic price movements.
2. Develop Psychological Stability
Practice Mindfulness. Engage in mindfulness techniques such as meditation or deep breathing exercises to enhance emotional regulation.
Set Realistic Expectations. Understand that losses are a part of trading and work on accepting them without letting them influence your emotional state.
Simulate Trading. Use demo accounts to practice trading strategies without real financial pressure, keeping emotions in check.
3. Focus on the Trading Process
Emphasize Strategy Over Outcomes. Concentrate on executing your trading plan and strategies instead of being fixated on profit and loss. This shift in mindset can reduce stress and enhance performance.
Track Your Progress. Regularly review your trades to identify patterns in behavior and decision-making, making adjustments as necessary without getting bogged down by the results of individual trades.
4. Avoid Unrealistic Goals
Set Achievable Milestones. Goals should be specific, measurable, and realistic based on your skill level and market conditions. Aim for gradual improvement rather than sudden leaps in performance.
Focus on Personal Growth. Compare your progress against your own benchmarks rather than against other traders, which can help foster a healthy mindset.
5. Use and Stick to a Trading Plan
Define Your Strategy. Clearly outline entry and exit strategies, risk management rules, and market conditions for trading. A well-structured plan reduces impulsive decisions.
Review and Adapt. Regularly review your trading plan to ensure it aligns with market conditions and your evolving trading style. Adjust it as needed, but avoid impulsive changes based on short-term outcomes.
To mitigate the effects of constant monitoring, traders are encouraged to develop a clear trading plan that includes well-defined rules for entering and exiting trades. Utilizing automatic stop losses and take-profit orders is essential for effective risk management. Additionally, setting specific time frames for checking trading positions can help avoid the pitfalls of incessantly watching the market. For instance, you might establish a schedule to check in on your trades five minutes after the start of each new hourly candle. The key is to cultivate the discipline to adhere to this schedule and resist the temptation to deviate from it.
📍 CONCLUSION
Everything is good in moderation. Long-term trading strategies do not require constant monitoring; instead, a quick five-minute check of the chart every few hours are often sufficient. Utilizing pending orders that align with your risk management guidelines can also enhance your trading approach. Taking breaks after each 1H candle can be beneficial. If there are no clear trading signals, allow yourself to step away from the chart for the duration of one hour. During this time, it's not necessary to search for signals on lower timeframes. Embracing this disciplined approach can help you maintain focus and improve your overall trading performance.
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why you should avoid trading after a trending marketHello traders,
I saw This learning post today in the London session(24-7-24).
you can go for 5 minutes to understand this concept better, you can see a clear pattern on the chart, trending -> sideways/choppy -> trending -> sideways/choppy.
in the trending market, you see fast movement; in the choppy market, you see lots of SL hunting and wicks.
try to avoid such a market so you can make money in trending.
Note : not a finance advice
What Is Yield Farming In Crypto? Yield farming can be likened to traditional bank deposits, where an investor puts in money and earns returns over time. However, in the world of cryptocurrencies, the concept takes on a more complex form. Yield farming is a broad term that encompasses various activities, including liquidity mining and staking. While these methods share similarities, they differ in their objectives, such as whether they involve issuing new tokens or not.
📍 HOW YIELD FARMING WORKS
Yield farming is a way for cryptocurrency holders to generate income by lending or providing liquidity to decentralized financial (DeFi) protocols. By contributing their assets, users can earn rewards in the form of additional tokens or interest income. This opportunity allows individuals to participate in the DeFi ecosystem and benefit from the growing demand for decentralized financial services.
📍 THE PROCESS:
1. Providing liquidity: Users deposit their cryptocurrency assets into liquidity pools on the DeFi platform, which facilitates various financial transactions such as token exchanges, lending, and borrowing.
2. Earning rewards: In return for providing liquidity, users receive rewards, including:
Commissions from transactions passing through the liquidity pool
Native tokens of the platform (e.g. management tokens)
Additional tokens through various incentive programs
📍 EXAMPLES OF DEFI PLATFORMS:
Uniswap: A decentralized exchange (DEX) where users deposit tokens into liquidity pools, earning commissions on each transaction made through these pools.
Compound: A lending platform where users can lend their cryptocurrencies and earn interest on their deposits. Borrowers pay interest on the use of these assets, providing a revenue stream for lenders.
Aave: A platform that allows users to earn interest on deposited assets and use them as collateral for loans, providing a dual income stream.
SushiSwap: A DEX similar to Uniswap, but with an additional twist - liquidity providers are rewarded with SUSHI tokens, providing an additional incentive to participate in the platform.
📍 MAKING PROFIT IN DEFI:
1. Analyze and Choose a Platform: Select a reputable platform with a stable income stream. Carefully review the terms and conditions of liquidity provision to ensure you understand the risks involved.
2. Diversify Your Assets: Spread your investments across multiple platforms and pools to minimize risks. This will help you ride out market fluctuations and potential platform-specific issues.
3. Optimize Your Strategy: Continuously compare different pools and platforms to find the best terms for your investments. Some platforms offer combination strategies that can help maximize returns.
4. Monitor and Adapt : Regularly review your investments and adjust your strategy as market conditions change. This will help you stay ahead of the game and mitigate potential losses.
📍 RISKS OF YIELD FARMING:
• Technical Risks: Smart contract vulnerabilities can lead to irreversible losses, compromising the security of your funds.
• Market Risks: Cryptocurrency price fluctuations can impact your income. In many cases, you're unable to withdraw your funds immediately, leaving you vulnerable to potential losses if token values decline.
• Liquidity Risks: Low liquidity in pools can result in significant spreads and reduced returns, limiting your earning potential.
• Platform Risks: The risk of platform hacking or closure can result in the loss of your invested funds, leaving you without access to your assets.
📍 CONCLUSION
While yield farming can be an attractive option for earning additional income, one of the most significant risks is the potential for a price drop and the inability to quickly withdraw your locked coins. However, for those who have a long-term perspective and plan to hold their cryptocurrency for at least a year or more, temporary drawdowns are unlikely to significantly impact their overall returns. On the other hand, yield farming offers the possibility of generating significant additional income, potentially exceeding 10-15% per year. By carefully weighing the risks and rewards, investors can make informed decisions about whether yield farming is a suitable strategy for their investment goals.
The Psychology of Trading:Identifying and Overcoming FrustrationFrustration in trading is an emotional state that traders experience as a result of unsuccessful trades, losing money, or being unable to follow their trading plan. It can be caused by a number of factors including unexpected changes in the market, errors in analysis or lack of discipline. Frustration occurs when expected results do not match reality or when a trader fails to achieve his or her goals.
Imagine this scenario: you've been eyeing a specific gift for your birthday, available exclusively at a single store. However, when the time finally arrives to make the purchase, you discover that the item is sold out – and there's no alternative option. This sense of disappointment, accompanied by feelings of annoyance and irritation, is a common experience known as frustration.
In the context of trading, frustration can manifest in similar ways. Imagine spending hours analyzing market trends, only to watch your carefully crafted trading plan fall apart due to unexpected market fluctuations. Or, picture yourself agonizing over a losing trade, unable to extricate yourself from a losing position despite your best efforts. In both cases, the emotional toll can be significant, leading to feelings of frustration that can compromise your decision-making and ultimately impact your overall performance.
📍 THE IMPACT OF FRUSTRATION IN TRADING:
➡️ Emotional Responses to Trading Challenges. Traders may experience a range of emotional responses to trading challenges, including irritation, anger, anxiety, and depression. Frustration can be particularly debilitating, as it can lead to feelings of dissatisfaction with oneself due to perceived missed opportunities or imperfect decisions.
➡️ Self-Doubt and Loss of Confidence. Frustration can also erode a trader's confidence in their abilities. A series of losing trades can lead to self-doubt, causing a trader to question their skills and judgment. This can have a negative impact on subsequent trades, ultimately resulting in significant losses.
➡️ Impulsive Decision-Making. Frustration can also prompt traders to re-evaluate their earlier decisions and seek changes to their strategies without sufficient analysis. This impulsive decision-making can lead to further mistakes and exacerbate the situation.
➡️ Loss of Motivation. As frustration builds, traders may experience a loss of motivation. The desire to achieve a goal or make progress in the market can fade, leaving them feeling disconnected from their trading activities. Without motivation, traders are less likely to make informed decisions or take calculated risks, which can hinder their long-term success.
Frustration in trading can have far-reaching consequences, extending beyond the trading arena to impact one's overall well-being. Prolonged frustration can lead to nervous system disorders, insomnia, depression, and even unhealthy habits. However, in the early stages, frustration can be leveraged as a motivating force. Its benefits include:
⚡️ Increased Motivation and Perseverance: Frustration can propel an individual to redouble their efforts and push harder to achieve their goals. Those who are initially unsuccessful may be more likely to give up, but those who persist despite setbacks can emerge stronger and more resilient.
⚡️ Creative Problem-Solving: Frustration can stimulate innovative thinking and inspire out-of-the-box solutions. When standard approaches fail, individuals may need to think creatively to overcome challenges, leading to novel and effective problem-solving strategies.
📍 MANAGING FRUSTRATION: A STEP-BY-STEP APPROACH
To effectively manage frustration, it's essential to first acknowledge and accept your emotions. Recognize when you're feeling frustrated and avoid denying the issue. Instead, focus on finding solutions.
🔹 Identify the Root Cause. To address the frustration, identify the specific trigger or event that led to it. This could be a particular action, situation, or decision. Once you understand the cause, you can develop a plan to address it.
🔹 Develop a Plan of Action. Create a plan that outlines potential solutions to the problem causing your frustration. This will help you feel more in control and empowered to take action.
🔹 Seek a Fresh Perspective. Talking to someone about your frustration can provide a valuable fresh perspective. They may help you see the situation from a different angle, and you may realize that the problem is not as severe as you thought.
🔹 Set Realistic Goals. When setting goals, aim for something achievable. Setting unrealistic expectations can lead to disappointment and further frustration. Instead, strive for a middle ground that is challenging yet attainable.
🔹 Work on Your Self-Esteem. Maintaining a healthy self-esteem is crucial for confidence and setting realistic goals. Avoid underestimating or overestimating your abilities, and focus on building a balanced sense of self-worth.
🔹 Emotional Management. Lastly, learn to manage your emotions by quickly shifting your focus away from negativity. Try to find something positive in the situation or practice mindfulness techniques to maintain a calm and centered state.
📍 CONCLUSION
In the realm of trading psychology, several emotions and thought patterns are common pitfalls that can hinder performance. Frustration, Fear of Missing Out, and rumination are all closely related to mistakes and failures, which can snowball into negative consequences if left unchecked. However, it is crucial to recognize that these psychological states can be transformed from liabilities into assets.
By acknowledging our mistakes, incorporating them into our learning process, and approaching challenges with creativity and resourcefulness, we can turn any psychological obstacle into an opportunity for growth. By doing so, we can break free from the cycle of negative thinking and cultivate a mindset that is resilient, adaptable, and ultimately successful.
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WHAT IS APY IN CRYPTO ?💹 APY (Annual Percentage Yield) is the amount of money an investor will earn in a year if the money is reinvested after each accrual period. The calculation formula is compound interest. In cryptocurrencies and decentralised finance (DeFi), APY is used to express the returns users can get from staking, liquidity mining and other types of income farming.
📍 UNDERSTANDING APY CALCULATION
APY allows users to understand what annual returns they can expect from their investments, taking into account reinvestment of interest earned. This helps to compare different investment opportunities in cryptocurrency startups:
➡️ Comparing the returns of different cryptocurrencies in staking, income farming on one exchange.
➡️ Comparing the yield of staking one coin on different exchanges.
The rate, which is calculated using the simple interest formula, only takes into account the initial investment amount. In comparison, APY gives a more accurate idea of how much an investor will earn, taking into account the re-investment of interest
📍 THE APY CALCULATION FORMULA IS:
APY is the Annual Percentage Yield
r is the interest rate per period (in decimal form, e.g. 0.05 for 5%)
n is the number of times interest is compounded per year
For example, if an investment has an annual interest rate of 5% compounded quarterly, the APY would be:
APY = (1 + 0.05/4)^(4) - 1 = 5.127%
This means that over a year, the investment would earn an effective annual return of 5.127%, taking into account the compounding effect. Note that this formula assumes that the interest is compounded at the end of each period, which is often referred to as "compounding frequency". The more frequently interest is compounded, the higher the APY will be.
📍 THREE CRUCIAL POINTS TO KEEP IN MIND ARE:
1️⃣ Frequency of interest accrual. The more frequently interest is accrued, the higher the APY will be, even if the nominal interest rate remains the same.
2️⃣ Reinvestment. APY assumes that all interest earned is reinvested, which increases the total return.
3️⃣ Transparency. APY provides a more accurate representation of potential returns compared to a simple interest rate.
APY is a forecast and actual returns may vary. It may be affected by market volatility, changes in interest rates, risks associated with a particular investment product. APY is specified for each product and each coin separately, you can find this information on the website of the cryptocurrency exchange. To understand the amount of earnings, you need to know the period of accrual of income. For example, accrual in staking can occur both every minute and every day.
In addition to APY, there is another key rate to consider: APR (Annual Percentage Rate). Similar to APY, APR is a rate that measures the yield of an investment, but it is calculated using the simple interest formula. While APR is commonly associated with the cost of borrowing at an interest rate, it can also be applied to investments. Like APY, APR is not a fixed value, as it can fluctuate based on network activity and other factors.
📍 CONCLUSION
APY is a critical parameter that represents the return on an asset with compound interest, taking into account the reinvestment of profits after each accrual. This metric is essential when evaluating the feasibility of staking or other income-generating opportunities. For instance, it can help you decide whether to stake Coin A or convert it to Coin B and stake it instead. By comparing APY rates for different coins and staking options, you can make informed decisions about where to allocate your assets to maximize your returns.
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Understanding Market Volatility and Its Impact on BitcoinIntroduction
Market volatility is a crucial aspect that every Bitcoin investor and trader must understand. In this section, we'll explore what market volatility is, how it affects Bitcoin, and strategies to manage it.
What is Market Volatility?
Market volatility refers to the rate at which the price of an asset, such as Bitcoin, increases or decreases for a given set of returns. High volatility means that the price of Bitcoin can change dramatically over a short period, both positively and negatively.
How Does Volatility Impact Bitcoin?
Price Swings:
Bitcoin is known for its significant price swings, which can be driven by various factors such as market sentiment, regulatory news, macroeconomic trends, and technological advancements.
Investor Behavior:
Volatility often influences investor behavior, leading to increased buying or selling pressure. This can result in rapid price movements, creating opportunities and risks.
Market Sentiment:
Positive news can lead to a surge in Bitcoin prices, while negative news can result in sharp declines. Understanding market sentiment is crucial for predicting these movements.
Managing Volatility
Diversification:
Spread your investments across different assets to reduce risk. Diversification can help cushion the impact of volatility on your portfolio.
Risk Management:
Use stop-loss orders to limit potential losses. Setting predetermined exit points can protect your investments during periods of high volatility.
Stay Informed:
Keep up with the latest news and trends in the cryptocurrency market. Being informed allows you to make timely decisions and react appropriately to market changes.
Long-term Perspective:
Focus on the long-term potential of Bitcoin rather than short-term price fluctuations. A long-term perspective can help you stay calm during volatile periods.
Conclusion
Understanding market volatility is essential for navigating the Bitcoin market. By recognizing how volatility impacts prices and adopting strategies to manage it, you can better position yourself to take advantage of opportunities while minimizing risks. Stay informed, diversify your investments, and maintain a long-term perspective to thrive in the ever-changing world of Bitcoin.
THE EMOTIONAL TRAP: UNDERSTANDING THE DANGERS OF TILT IN TRADINGAs everyone knows emotions are one of the main components of success in trading. And not only in trading, but also in life. And the problem is that everyone knows about the negative sides of excessive emotionality, but they still keep making the same mistakes. The mistake is that in the moment of calmness a person underestimates the harm that emotions can cause. They miss the moment when signs of leaving the state of calmness appear and then they have to deal with the consequences of actions made in an unbalanced state.
In trading, tilt is an equivalent of an ordinary argument. A situation in which a person goes out of the balanced state and actually loses control over what is happening. In legal terminology, this is called a "Heat of Passion". But if in law the legislation calls the heat of passion a mitigating circumstance, then in trading the market does not care about emotions - all the consequences fall on the trader.
📍 THE HIDDEN DANGERS OF TILT
The more emotion is eliminated from trading, the more logical and effective it becomes. However, emotions are an inherent part of human character, and it is impossible to completely eradicate them. Statistics reveal that traders between the ages of 20 and 30, as well as those above 50, are most susceptible to emotional influences. This can be attributed not only to their level of experience but also to their ability to manage themselves and remain objective. Young adults, just starting their careers, often exhibit a sense of recklessness, while the older generation tends to become complacent and lose their grip on their emotions.
📍 THE DANGERS OF TILTING IN TRADING ARE:
• Loss of emotional control, leading to impulsive decisions that are not guided by logic or a well-thought-out trading system.
• Emotions, whether negative (such as fear and anxiety) or positive (like euphoria and excitement), can take over, causing mistakes and irrational decisions.
• Emotional reaction to every emergency situation becomes a habit, making it challenging to separate rational thinking from emotional responses. This habit can be difficult to break and can lead to consistent mistakes in trading decisions.
• Tilting can also result in the violation of risk management rules, such as closing profitable trades prematurely or holding onto losing positions for too long, which can have severe consequences for one's trading account.
One common occurrence that can lead to tilt is when a trade almost reaches its target level, only to suddenly reverse, resulting in a loss or lost profit. This can be frustrating and demotivating.
Another scenario is when a trader opens a trade based on an obvious trend, only to see it turn unprofitable. When a trader is 100% certain of their forecast, but it proves to be incorrect, it can lead to an emotional outburst. This emotional response can cloud their judgment and lead to impulsive decisions that worsen the situation.
Interestingly, professionals in other fields, such as poker and chess, have identified similar causes of tilt. In these games, tilt is often categorized into distinct groups. Understanding these causes can help us develop strategies to recognize and manage our own tilt, ultimately improving a performance and overall trading experience.
📍 THE CAUSES OF TILT IN TRADING CAN BE ATTRIBUTED TO SEVERAL FACTORS
1. Bad luck: Despite probability theory suggesting that the outcome of positive or negative events is 50/50, a streak of bad luck can still occur. This is due to the variability in trading systems and the role of luck. A trading system may perform well on one occasion but poorly on another.
2. Unfairness: Unjust market practices, such as sudden spread widening, market maker manipulation from brokers, can evoke feelings of tilt. Cryptocurrency markets, in particular, are susceptible to market maker games. While it's challenging to combat broker injustice, acknowledging and accepting market unpredictability can help manage tilt.
3. Fear of loss: Defeat is an inherent part of trading, but not everyone is willing to accept it. The way individuals perceive loss can significantly impact their emotional response. Some people learn from their mistakes, while others become overwhelmed by emotions.
4. Mistakes: Regrettable mistakes, especially those caused by inattention or failure to acknowledge a correct prediction, can lead to tilt. It's essential to recognize that mistakes are inevitable and develop strategies for addressing them without allowing emotions to dictate decision-making.
5. Uncertainty: Doubts about the accuracy of a signal or fear of loss can prevent traders from taking action, even when they're confident in their forecast. Developing intuition, trusting oneself, and practicing self-awareness through demo accounts or small accounts can help alleviate this type of tilt.
6. The desire to win back losses: The urge to recoup losses at all costs can lead to impulsive decisions and further losses.
7. Despair: This emotional state is characterized by a complete breakdown in judgment, leading to reckless decisions and potentially resulting in the loss of one's deposit and abandonment of trading altogether.
📍 THE CONSEQUENCES OF TILT IN TRADING CAN BE SEVERE AND FAR-REACHING
Some common consequences include:
1. Impulsive and reckless trading decisions, often characterized by haphazardly opening trades without a clear plan or strategy.
2. Emotional fear can lead to premature exits from the market, even when the exit signal is not supported by technical or fundamental factors. This can result in missed opportunities and lost profits.
3. Doubts about the correctness of one's actions can lead to chaotic decision-making, causing traders to hastily change trade volumes, pending orders, and other settings.
4. When a stop-loss is triggered, emotional traders may impulsively open a trade in the opposite direction, often due to a local pullback on a strong trend or market maker manipulation. This is a classic example of emotional decision-making.
5. In an attempt to salvage a large loss, traders may decide to "wait it out" in the hope that the price will eventually break even. However, this approach often ends in a stop-out, as the loss continues to grow.
6. Greed can also be a consequence of tilt, as traders become obsessed with maximizing their profits and take excessive risks. This can lead to devastating losses and damage to the trading account.
Tilt in trading is often more prevalent after a losing trade, rather than after a profitable one. This is because the emotional impact of a loss can be more significant and lingering, whereas a winning trade may prompt a sense of relief and complacency.
However, this second type of tilt, which occurs after a winning trade, can be particularly dangerous. When a trader experiences a series of profitable trades, they may start to relax and let their guard down, leading to a loss of control and discipline. This can quickly snowball into a desire to win back their profits, which can spiral out of control and ultimately lead to emotional exhaustion and burnout.
This phenomenon can be attributed to the psychological principle of "relapse," where individuals who have made significant progress in overcoming their biases or impulses may revert to old habits when faced with success. In the context of trading, this can manifest as reckless behavior, impulsive decisions, and an inability to distinguish between rational and emotional decisions.
📍 CONCLUSION
Ultimately, the responsibility for our actions and emotional state lies solely with ourselves. The key to maintaining emotional control is to stick to our system, regardless of the outcome. This means resisting the temptation to deviate from our strategy, even when we're experiencing a streak of success or facing a series of losses.
It's crucial to recognize that emotions can be unpredictable and potentially destructive forces. When we feel the urge to take action outside of our predetermined plan, whether due to elation or frustration, we must take a step back and reassess. If we're experiencing a series of successful trades, it's essential to take a break before we become complacent and let our emotions get the better of us. Similarly, if we're on a losing streak, taking a break can help us clear our minds and approach our trading with a clearer head.
The ability to control ourselves is often the deciding factor between success and failure in any endeavor. By acknowledging this and prioritizing emotional regulation, we can develop the discipline necessary to maintain a consistent and profitable trading strategy. Remember, self-control is not about suppressing our emotions, but about acknowledging them and making conscious decisions that align with our goals.
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ADVANTAGES OF DEX: A New Era in Cryptocurrency TradingDecentralized exchanges, or DEXs, revolutionize the way we conduct transactions by empowering counterparties to directly interact with each other without the need for a central authority. In contrast to traditional centralized exchanges (CEXs), where all transactions are controlled by a single entity, DEXs operate on the principles of smart contracts, ensuring the autonomy and decentralization of the transaction process. This decentralized approach eliminates the risk of a single point of failure, promoting a more secure, transparent, and community-driven trading experience.
Binance, the world's largest centralized exchange by capitalization and trading volume, is a prime example of a traditional centralized exchange. With a clear chain of command, ownership, and management structure, this type of exchange operates under the oversight of its administrators. In contrast to DEXs, Binance requires users to undergo mandatory verification procedures, including facial recognition and recording, and stores user funds in its own accounts. This level of control and oversight makes it a prime target for regulatory bodies, which are increasingly seeking to establish clear guidelines and standards for the global crypto market.
💡 DIFFERENCES BETWEEN DEX AND CEX
🗝️ THE KEY POINTS OF CEXs:
➡️ Centralized Exchanges operate under the umbrella of a centralized organization, where a clear chain of command and management structure governs all operations. This means that the exchange has direct control over user assets, with specific individuals responsible for overseeing day-to-day activities.
➡️ The registration process for CEXs typically involves verification of identity (KYC) and compliance with regulatory requirements. While some exceptions may be made for marketing purposes, such as allowing withdrawals up to a certain amount without verification, this is not the norm. As a result, exchanges may be compelled to disclose transaction data and customer account information to tax authorities, courts, or other parties upon request.
➡️ In terms of ease of use, CEXs often feature a familiar interface and rapid transaction processing times. They can also act as intermediaries, providing a guarantee for transactions and blocking funds until the trade is complete.
➡️However, this centralized approach also introduces security risks. With user assets stored on the exchange, CEXs are vulnerable to hacking attacks, which are unfortunately all too common. The hacking of centralized exchanges has become a frequent occurrence, making it essential for users to prioritize security when choosing a platform.
One notable example of a centralized exchange is FTX, which was once among the top 5 largest exchanges by capitalization. However, its collapse serves as a stark reminder of the risks associated with centralized exchanges. The exchange's management was accused of misusing funds, leading to its eventual bankruptcy. In a devastating blow to users, their assets were locked, leaving them without access to their money.
This incident highlights the importance of regulatory oversight and accountability in the cryptocurrency space. Centralized exchanges, like FTX, are often touted for their ease of use and security features, but they also concentrate user assets, making them vulnerable to mismanagement or even theft. The collapse of FTX is a cautionary tale for investors and users alike, emphasizing the need for due diligence when choosing a platform and the importance of transparency and accountability in the crypto industry.
🗝️ KEY POINTS OF DEXs:
⚡️ Decentralized exchanges, on the other hand, operate on a different principle. Transactions are facilitated by smart contracts, which ensures that users retain full control over their assets at all times. Unlike centralized exchanges, there is no management or authority figure that can exert influence or control over the platform. Instead, developers work alongside the cryptocurrency community to maintain and improve the operation of the exchange.
⚡️ One of the significant benefits of decentralized exchanges is the lack of need for identity verification. Users can trade directly with their cryptocurrency wallets, ensuring complete anonymity and privacy. Additionally, decentralized exchanges do not require users to register an account, making it a more convenient and secure option.
⚡️ Transparency is another key advantage of decentralized exchanges. All transactions are recorded on the blockchain, providing a public ledger of all activity. While it may be challenging for average users to access this information, it at least ensures that there is no room for abuse or manipulation.
⚡️ However, decentralized exchanges are not without their risks. Since users retain control over their assets, the risk of hacking is significantly reduced. However, vulnerabilities in smart contracts can still pose a threat to the security of the platform. Despite this, decentralized exchanges offer a more secure and transparent alternative to traditional centralized exchanges.
💡 ADVANTAGES OF DEXs
📍 One of the most significant advantages of decentralized exchanges is asset control. Unlike traditional centralized exchanges, users maintain full control over their funds, storing them securely in their own wallets. This means that users are not reliant on a third-party exchange to manage their assets, reducing the risk of hacking or theft.
📍 Another major benefit is the enhanced security offered by decentralized exchanges. Since there is no central storage of funds, the risk of an exchange being hacked is significantly reduced. This provides an added layer of protection for users, giving them greater peace of mind when trading.
📍 Decentralized exchanges also offer unparalleled anonymity. Users can trade without having to provide personal information, allowing for a level of privacy that is not typically found with centralized exchanges.
📍 Furthermore, decentralized exchanges offer a unique advantage when it comes to geographical restrictions. With no central authority, there are no restrictions on countries or regions for users, making it accessible to a global audience.
📍 Finally, decentralized exchanges provide a range of tools for earning money. While they may not offer the same breadth of options as centralized exchanges (such as margin trading, bi-currency investments, and liquid staking), they do provide a platform for buying and selling cryptocurrencies, giving users a way to engage with the market and potentially generate returns.
💡 DISADVANTAGES OF DEXs
📍 While decentralized exchanges offer many benefits, they also come with some drawbacks. One of the main limitations is speed and scalability. Due to the load on the blockchain, transactions can be slower and more expensive, which can be frustrating for users who need quick and seamless transactions.
📍 Another challenge is the interface. Decentralized exchanges often have a more complex interface compared to centralized exchanges, which can be overwhelming for new users. This may require a steeper learning curve and more technical knowledge to navigate.
📍Liquidity is also an issue with decentralized exchanges. Often, the liquidity is lower compared to centralized exchanges, resulting in higher spreads and less attractive prices for users. This can make it harder for users to find the best deals and execute trades efficiently.
📍 Furthermore, decentralized exchanges require a certain level of technical expertise from users. To use these platforms effectively, users need to have a basic understanding of cryptocurrency wallets, how they interact with the blockchain, and other technical aspects of decentralized finance. This can be a barrier to entry for those who are new to the space.
📍 Finally, decentralized exchanges are not immune to vulnerabilities. Smart contracts, which power these platforms, can be vulnerable to errors in their code. This means that risks are associated with possible errors in the code, which could compromise the security and integrity of the platform. While developers work hard to ensure the security of these contracts, it's essential for users to remain vigilant and aware of potential risks.
✅ CONCLUSION
Decentralized exchanges are often referred to as "shadow exchanges," but they don't belong to the gray market category. As the cryptocurrency community continues to grow, there is a growing trend towards adopting DEXs, which operate through wallets. The benefits of this approach are numerous. For one, users don't have to worry about regulatory interference, as there is no centralized authority to govern their transactions. Secondly, users are free from the risk of their accounts being blocked or their money being refused by the exchange.
On the other hand, DEXs can act as an arbitrator in disputes that may arise during transactions, providing an added layer of security and trust. However, it's essential to note that transactions conducted through DEXs are fully the responsibility of the participants involved, and any errors or frauds would fall on the shoulders of the individual parties.
Ultimately, using DEXs requires a higher level of technical expertise and responsibility from users. It also means that users must take steps to withdraw their funds to instruments controlled by regulators, such as banks or other financial institutions. Despite these added complexities, the appeal of DEXs lies in their ability to offer a decentralized, secure, and transparent way to buy and sell cryptocurrencies. As the cryptocurrency market continues to evolve, it's likely that DEXs will play an increasingly important role in shaping its future.
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How to Get into an Entry after the setup is passedIn the world of investing, it is not uncommon to come across a missed trade setup that tempts investors to make impulsive decisions. However, it is important to remain disciplined and avoid falling into the trap of #FOMO (Fear Of Missing Out). For instance, if an investor misses a trade setup on Ethereum ( CRYPTOCAP:ETH ), instead of rushing in with a full position, a more prudent approach would be to enter with half the intended position. This allows the investor to participate in the trade while minimizing the risk of committing too much capital at once.
Once the initial entry is made, it is crucial to implement a strategy known as Dollar Cost Averaging (#DCA). This involves gradually increasing the position size by buying more ETH over time. By using DCA, investors can mitigate the impact of short-term market volatility and avoid making rash decisions based solely on emotions.
To effectively implement DCA, it is important to maintain the original stop loss level. This means that even if the price of ETH decreases after the initial entry, the stop loss order should remain at the predetermined level. By sticking to this plan, investors can ensure that their risk management strategy remains intact and that they do not expose themselves to unnecessary losses.
In summary, when faced with a missed trade setup on ETH, it is crucial to resist the urge to FOMO in with a full position. Instead, entering with half the intended position and utilizing Dollar Cost Averaging can provide a more measured and disciplined approach. By maintaining the original stop loss level throughout the process, investors can enhance their risk management and increase their chances of success in the long run.
BTC/USD Halving 518 When will be the cycle price low and high.Main trend. Time frame 1 month.
This idea is almost a clone (in meaning, not visualization) of my previous idea published 1.3 years ago:
BTC/USD Secondary trend cycles and halvings.
For great visualization and clarity I added leap years (pre-pump, pre-distribution), this applies to all markets, not just the “young” cryptocurrency market... That is, after it, just the price is in the zone of distribution (sales), which is identical with the price highs of the secondary trend.
Bitcoin cycle 4 years:
Year 1 - birth of a new bullish trend (leap year).
By the way the next year 2024 is exactly like that. But, read carefully to understand the point.
For some time the price moves sideways or with a small rise.
Positive/negative alternates. Negative dominates.
There is no interest in the crypto market. The traffic of stupid money is minimal.
The volatility of the price of instruments is usually minimal.
This phase of the market is also called "participation" (more relevant to the second part).
In the final phase—active movement to the distribution zone (the zone of sales by large market participants—small).
In a given year (or near this time zone in the previous year), there is typically a second dump (second price low) with more aggressive dynamics by a large %.
Dump -60.66% 03 2020.
On the chart as an example of past dump at -60.66% (magnet) at the start of Corona 03 2020 (taking advantage of the world situation) before pumping the market in the future. Always keep this kind of thing in mind and be prepared for it, even if you are sure it is unlikely. Observe mani management.
Training idea/work 02 2020:
Trading by trends and important areas using the example of BTC
Something like a big triangle like 2020 is forming now.
BTC/USD Main trend (3 years) Channels Triangle 09 2023
Altcoins in this time zone cycle .
Altcoins tend to be in their accumulation channels. Alternately, from time to time, some are “firing” (usually of lower liquidity). Some produce “takeouts” under the dial zones.
The essence of this time zone for alts is to gain as much as possible % of positions from the market. The price is not important (the average price of a set is taken into account), alts typically follow the general market trend, which is logical and tactful from the position of long-term prospects of earning in cycles.
Year 2 - Bull Market. Trend price maximum and distribution zone .
Resetting positions by large market participants. That is, the smart money sells to the dumb at the market high.
The 17 weeks post-halving ( 518 days, gematria ) zone of perfect selling in crypto asset allocation. Roughly speaking it's a zone near price highs, at least that's always been the case in past cycles of bitcoin and the crypto market as a projection of it.
Altcoins in this time zone of the cycle.
Inadequate altcoin pumping. Typically, "old" cryptocurrencies are showing 5-10x (+500-1000%) of previous dialing zones. The average profit accumulation/distribution of almost any cryptocurrency is 5-8X, with the range of lows and highs (for hamsters) usually twice as large.
A huge amount of all sorts of crypto speculative garbage "promising cryptocurrencies" and "bitcoin killers" is created ... Pumped at the most inadequate interest with holding the reset zone for a long period of time due to the huge traffic of "stupid money".
It should be separately emphasized that in this time zone of the cycle huge traffic of “stupid money”, who want to get rich without understanding anything about it.
The crowd is not afraid to buy. This is key. The media is all about the positive.
A huge number of newly-formed crypto experts are young kids, whose expertise will disappear when the market turns around in the next sub-cycle....
Anyone can make money ("sitting on the trend"), even buying and holding anything for a while, of course, except for "promising high-tech crypto garbage" on inadequate pumps and with the same news positive accompaniment.
Absolutely all alts including high capitalization never repeat their price highs to bitcoin.
Year 3 Bear Market. Market dumps from area of distribution (selling) price highs to area of set (buying).
Price typically drops about -70%-80% on bitcoin
Typically, when a distribution support zone is broken, many scare tales or real negative news stories are created to scare and trigger a “crypto depression”. Subsequently, a mostly negative news backdrop dominates, usually of a made up fairy tale nature in “three lines” for the true fools.
Holders of “promising crypto” are bleeding, hope for the price to return to the previous value and "faith in projects" are gradually fading away. The final phase is dominated by the view that it's all a “crypto scam”. Bitcoin will "die." Toward the end of the phase, there is always a “bloody month” (price minimum)—before the formation of the dialing zone.
Altcoins in this time zone of the cycle.
Altcoins are declining from pumping highs before stopping the decline and moving sideways (set zones):
Highly liquid 80-90%
Medium liquid 90-96%
Low liquid (extinction candidates) from -95% and below % conditional on such "crypto trash on the verge of life and death".
Year 4 is the sideways zone, i.e. the accumulation zone. .
In this time zone after a significant dump (more than a year) there is a corrective price recovery movement. This is the so-called "intermediate bitcoin pumping cycle". We are just in it at the moment.
Altcoins in this time zone of the cycle.
Altcoins of high and medium liquidity depreciate, as a rule, by -90-93%. Once this % depreciation is reached, horizontal accumulation channels (1 major zone) of position set for the next cycle are usually formed.
"Cryptocurrency holders" who bought at or near price highs in the last cycle tend to all sell at a large loss in "tired of waiting" accumulation zones for their "promised bags of money".
Low-liquid altcoins depreciate in price by -95% or lower.
It is worth recalling that -95% from the previous -90% is -50%. That is another reduction of the deposit of the “grief trader” in two times.
A part of altcoins, which with a small "community of believers in the wrapper" - “dies”.
Often, the creators crypto run out of money for all sorts of marketing tricks. Then they pour the rest of their crypto phantom on the market, inventing some tale of hacking or something similar.... After that - "to the islands", until the next bull cycle. The sect of "deceived MMM depositors" scatters. The wrapper dies definitively....
Altcoins, including HYIP ones, which were created in the last cycle, are all depreciating. Out of the top 100 of the previous capitalization ranking, they depreciate beyond the top 1000. Never recover in capitalization and price not only to bitcoin, but also to the dollar in the future in the next cycle.
This is what bitcoin trend cyclicality looks like on a linear price chart
BTC/USD Secondary trend cycles and halvings.The graph shows the main trend of bitcoin. Logarithmic chart. Timeframe 1 month. The main liquidity zone.
The graph is linear (without “market noise”, i.e., without squeezes of minima and maxima for hamsters).
The channel and all values are set according to it. Everything is extremely accurate (potentially accurate).
All the same parameters, but candlestick chart.
Pay attention to the timing of the halving and the evolution of the cycle . There are super resets before halvings, which are completely invisible on a large timeframe on a line chart after a short time.
Pay attention to 17( 518 ) + 18( 547 ) and the treasured 1400.
I am sure that in 1 year everyone will be very interested in the cryptocurrency and bitcoin market, in 2-3 years ( 123 ) up to 6 0% of market participants will no longer be interested (they will have completely different problems). In 6 years there will be no more than 6 0%.
Secondary trend decline in the super cycle (the main, long-term trend), on a line chart, 1 month timeframe:
1) -81%
2) -75%
3) -67% (as of publication).
#1 Super reset -44% after 1 cycle , already in the alignment zone (sideways, accumulation) the before BTC halving.
Candlestick chart. Timeframe 1 month.
All the same and the same “fear”, but on a line chart
#2 Super reset -67 % (13). 2 cycle . Border closes, start of COD619 carnival, (hematria) 1.8 months before bitcoin halving and subsequent growth over +880 % (not from lows).
From “fear hamsters” lows over + 1440 % (not liquid). Candlestick chart.
Same on a line chart. Greed begets poverty.
Focus on that part of the price chart of the cycle. The chart doesn't matter, what matters is what I can "silently" convey to you with it. It's important to understand what's important to you, what you want to guess, I'm not interested in that at all. It can't be a secret what's already been. It is simply reality. You don't have to understand the last paragraph. If you don't understand it, skip it and focus on the text above, the logical TA (probability game).
Apple Next Target is Channel TopNow Apple Successfully Breakout above the Resistance level and Trading Within the Channel. Apple Next Target is the Channel Top.
Refer this image, Before Breakout the Resistance level.
I shared the Same Channel Pattern on TradingView for Bitcoin. Refer to this Images, showing Before and After the Target was Achieved.
The Channel is used to identified the Next Target (or) Next Impulse. Refer below
I want to help people Make Profit all over the "World". Additionally, I am Eager to Receive Money form Worldwide because of my Potential. Thank you
NEW TOKEN LISTING: A Double-Edged Sword for Investors💡 The cryptocurrency market is a realm of endless opportunities, where prices can fluctuate wildly, shooting up 5-10% in a single day in either direction. This volatility can be both exhilarating and intimidating, as it can either wipe out investors or leave them with a quick windfall. However, not everyone is suited to navigate this fast-paced landscape. For those seeking more conservative returns, there are other options available.
On the other hand, there are those who are willing to take greater risks in pursuit of substantial profits. One such strategy is to buy coins during the pre-sale period and sell them at their initial listing on the exchange. This approach can be lucrative, as savvy investors can capitalize on the initial hype and sell their coins at a significant markup.
To generate buzz and attract attention, many new projects offer their coins for free in exchange for performing simple tasks or purchasing them at a discounted rate. When these coins are listed on the exchange, their value tends to plummet due to oversupply and subsequent sales. However, for those who manage to get in early and sell their coins before the price drops, the potential for significant returns – even 100% or more – is very real.
📍 PRE-LISTING INVESTMENT
Recently, a new earning opportunity emerged in the online space, with BINANCE:NOTUSDT being the center of attention. The project's developers cleverly leveraged their marketing expertise to create a buzz around the coin. As a result, it gained widespread visibility, with numerous media outlets and cryptocurrency channels promoting the project. The idea was to generate revenue by simply tapping on your smartphone screen, with active users potentially earning around $300-$400. However, as soon as the coin listed on Binance, its price took a drastic dip. The price recovered after a few weeks, though.
In a recent analysis of cryptocurrency tokens listed on Binance, it was found that a staggering 80% of new tokens have lost significant value over the past six months. The notable exceptions to this trend are a few meme coins, including BINANCE:MEMEUSDT and BINANCE:WIFUSDT , as well as tokens associated with the Solana protocol.
📍 THE STUDY HIGHLIGHTS THE FOLLOWING KEY REASONS
1️⃣ Firstly, developers often artificially inflate the cost of their tokens by issuing them at an undervalued price, which creates a surge in demand. Simultaneously, they sell their own share of the tokens, reaping the benefits.
2️⃣ Moreover, many coins lack a genuine long-term investor base and a strong community backing. This lack of support can be a red flag, indicating that these coins may be pre-destined to fail as a potential scam.
3️⃣ Furthermore, listed coins often lack growth potential, failing to meet the criteria for a sound investment instrument. Instead, they tend to attract attention from insiders and retail buyers who are willing to take risks and gamble on their investment.
A portfolio comprising newly listed coins suffered an 18% decline in value over the past six months, while the market's blue-chip coins enjoyed significant gains during the same period. This stark contrast has led analysts to sound the alarm, warning that such a phenomenon can have far-reaching implications for the market's integrity.
When investors, serving as the primary source of liquidity, inject their funds into poorly performing projects, they become disillusioned with the entire market. As a result, their money migrates towards established coins, leaving new initiatives struggling to secure funding and ultimately forcing them to shut down. Even innovative ideas with great potential are stifled by a lack of interest and resources.
The solution to this problem lies in stricter regulation by cryptocurrency exchanges, which currently allow unscrupulous projects to exploit the market. However, exchanges are driven by profit, so this issue remains unresolved for now.
📍 CONCLUSION
Identifying a token with potential for significant profit after listing can be a challenging and high-risk endeavor. The key factor in determining success is the interest of investors. If a coin is solely speculative, it is likely to experience a decline in value after listing. Conversely, if a token is backed by developers and has inherent value, it may have a chance to grow. However, with the vast majority of new tokens being scams, the risk of loss is significantly higher than the potential gain from a successful investment. From a risk perspective, this investment model appears unreasonable compared to long-term investments in established coins like BINANCE:BTCUSDT or top-tier cryptocurrencies.
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Optimizing Returns: Position Sizing, Leverage and Spot TradingWhomever told you "Size doesn't matter" in trading, has never had a big "size" and probably just borrowed someone elses.
In the dynamic landscape of trading, where fortunes can be made and lost in the blink of an eye, various strategies vie for attention. Position sizing, leverage trading, and spot trading each offer distinct approaches to navigating the volatile markets. Understanding the nuances and risks associated with each is essential for traders seeking to optimize their returns while managing risk effectively.
Position Sizing: A Prudent Approach
Position sizing is a strategy that emphasizes determining the appropriate amount of capital to allocate to a trade relative to one's overall portfolio. Rather than relying on borrowed funds to amplify gains, position sizing focuses on prudent allocation and risk management.
Consider this scenario:
Here is something that happened to me recently:
Over a week ago I invested just $80 in #Bitcoin and the price moved 12% since
My return: $11.75
A few days ago I invested $1,000 in Bitcoin and the price moved only 3%
My return: +$26.00
Despite the smaller percentage gain in the first scenario, the return on investment is substantially lower due to the smaller position size.
This highlights a fundamental principle: the size of one's position significantly impacts the magnitude of returns. While the absolute gains may seem modest in the examples provided, they demonstrate the potential for consistent growth without the need for excessive risk-taking.
Leverage Trading: Temptation and Risk
Leverage trading offers the allure of magnified returns by allowing traders to control positions larger than their initial capital. However, this comes with inherent risks, including fees associated with borrowing and the potential for significant losses.
Many traders are drawn to leverage trading in pursuit of exponential gains. Yet, they often overlook the substantial risks involved. Despite the promise of greater returns, the reality is that losses can mount swiftly, eroding profits and even leading to negative balances.
Furthermore, the psychological toll of leverage trading can be significant. Constantly chasing high-risk, high-reward opportunities can result in emotional exhaustion and impulsive decision-making, fueling a cycle of loss and frustration.
Spot Trading: Proceed with Caution
Spot trading stands as a stalwart option for those seeking to invest without the complexities of leverage. However, even in this seemingly straightforward arena, there are nuances to be wary of, particularly when it comes to leveraging spot positions.
Spot trading entails purchasing and holding an asset with the expectation of long-term appreciation. Unlike leverage trading, where borrowed funds amplify gains and losses, spot trading relies solely on the investor's own capital. This approach is often favored for its simplicity and reduced risk exposure.
However, the temptation to employ leverage in spot trading can lead to unforeseen consequences. Leveraging spot positions increases the potential for losses, as the borrowed funds magnify both gains and losses. Moreover, the dynamics of unrealized and realized profit and loss (PnL) can confound inexperienced traders.
Finding Balance: The Art of Risk Management
The key to successful trading lies in finding the balance between risk and reward. While leverage trading offers the potential for rapid growth, it requires a disciplined approach to risk management. Instead of fixating on borrowed size, traders should focus on optimizing position size relative to their available capital.
Understanding the interplay between unrealized and realized PnL is crucial for making informed trading decisions in both leverage and spot trading. By exercising prudence and restraint, traders can optimize their returns while safeguarding against undue exposure to market volatility.
In the end, what truly matters is finding a harmonious balance between these strategies. Whether it's careful position sizing, navigating the highs and lows of leverage trading, or sticking to the grounded principles of spot trading, it's all about embracing a method that resonates with your risk tolerance and goals. With a keen understanding of the intricacies involved and a disciplined mindset guiding your every move, you'll be well-equipped to chart your course through the markets and seize every opportunity that comes your way.
FLOATING SPREAD VS FIXED SPREAD🌐 The trading conditions of any account specify the type of spread: floating or fixed. As a rule, the value of a fixed spread is larger, but a floating spread has an insidious wording “from...” in the terms and conditions. This means that the floating spread may well be greater than the fixed one. Nevertheless, it is considered better. What are its advantages and disadvantages, what spread to choose?
📍 ADVANTAGES AND DISADVANTAGES OF FLOATING SPREAD
▶️ FIXED SPREAD
The difference between the buy and sell price of an asset is constant. This indicates that the broker works according to Straight Through Processing (STP) model - directly with a specific liquidity provider, the size of the spread with which is pre-agreed. The broker charges its commission (markup) and the trader sees the final difference. The fixed spread is only theoretical. Often in the offer there is a clause that the broker can unilaterally change it. And broker does it at the moment of news release, when volatility increases sharply.
▶️ FLOATING SPREAD
The difference between price/offer is formed by the market. The broker only adds its small commission, that's why there are no zero spreads.
Floating spreads are set on ECN accounts, where orders are not placed to a specific liquidity provider, but to the general market. Such accounts have a high entry threshold and a fixed commission for each lot placed on the account.
📍 THE FLOATING SPREAD DEPENDS ON:
🔘 Market Liquidity. During the vacation season, on the eve of vacations, at the moment of flat trading activity decreases. The smaller the volumes and the fewer traders, the bigger the gap between Bid and Ask prices.
🔘 Currency Liquidity. Or investors' interest. The FX:EURUSD pair is liquid, the pair of the US dollar with the South African rand is called exotic and the spread on it is one of the largest.
🔘 Volatility. Or the speed of trend movement. If after the news release the imbalance of bids in the direction of buyers or sellers sharply increases, the spread will also grow.
🔘 Time of day. Or the period of activity of traders of this or that region.
📍 ADVANTAGES OF A FLOATING SPREAD:
➡️ Most of the time it is less than the fixed spread.
➡️ No requotes - the transaction is executed in any case.
➡️ Floating spread is more profitable than fixed spread for liquid currencies. Fixed spread is more profitable for “exotics”.
➡️ It is favorable for scalping, where every tenth of a point is important for profit.
📍 DISADVANTAGES OF FLOATING SPREAD:
➡️ There are slippages at the moment of sharp spread widening.
➡️ It is necessary to constantly monitor its change.
➡️ It can sharply increase when a fundamental factor appears.
➡️ There is still a risk of artificial spread widening by the broker (it is not easy to prove).
➡️ Increases emotional tension. With a fixed spread a trader always knows the amount of expenses. Expansion of a floating spread can turn a profitable trade into a losing one.
If you open a new account with a broker, pay attention to the following points. In what cases the broker has the right to change the fixed spread. What quotes we are talking about. Outdated data on the website may turn out to be conditions for 4-digit quotes.
Compare spreads at different brokers on a demo account; install a script showing the current spread. Run it on one asset, watch how and when the floating spread might widen.
📍 CONCLUSION
The choice between a fixed spread and a floating spread depends on several factors, including market liquidity, currency pair, volatility, and time of day. While fixed spreads offer a set and predictable price difference, floating spreads can be more competitive and profitable, especially for scalping strategies. However, floating spreads also come with risks, such as slippage and the need to constantly monitor spread changes. When opening a new account with a broker, it's essential to pay attention to the terms and conditions, clarify quotes, compare spreads across different brokers, and test the floating spread on a demo account.
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Divergence - asset price directionDivergence is the discrepancy between the direction of an asset's price and the readings of an indicator. There are three types of divergences: classical, extended, and hidden. The first two can be used to gauge market sentiment and to trade in the opposite direction. Hidden divergence, however, is more significant and can serve as a powerful supplementary factor in determining the price direction and opening positions.
The use of extended divergence is not necessary, as it rarely occurs and forms at equal highs or lows. In such cases, an indicator is not needed to gauge market sentiment; the chart itself will suffice.
Classical Divergence
Classical divergence indicates a potential trend reversal or the beginning of a correction. Bullish classical divergence is identified when a lower low (LL) forms on the chart while a higher low (HL) appears on the indicator.
The masses buy when classical bullish divergence appears, anticipating significant growth. An upward price movement may begin, but after short-term liquidity for buying is exhausted and the price rebalances, a reversal will occur, and the decline will continue. Long positions opened during the correction will become unprofitable. In a bear market, classical bullish divergence typically appears before the start of a correction.
Bearish classical divergence is identified when a higher high (HH) forms on the chart while a lower high (LH) appears on the indicator.
The masses sell when classical bearish divergence appears, expecting a significant decline. A downward price movement may begin, but after short-term liquidity for selling is exhausted and the price rebalances, a reversal will occur, and the growth will continue. Short positions opened during the correction will become unprofitable. In a bull market, classical bearish divergence typically appears before the start of a correction.
The formation of multiple divergences is common. The masses will seize every opportunity to open their positions, leading to unprofitable outcomes. The number of divergences before the start of a correction is not limited. It is recommended to wait for the price to react after reaching the resistance zone. In the example above, the correction began after partially filling the imbalance on the 1D timeframe within the imbalance on the 1W timeframe.
Hidden Divergence
Hidden divergence serves as a confirmation of trend continuation.
Bullish hidden divergence is identified when a higher low (HL) forms on the chart and a lower low (LL) appears on the indicator.
In an uptrend, hidden bullish divergence may form before the continuation of growth, acting as a strong supplementary factor in determining the future price direction and considering positions.
Bearish hidden divergence is identified when a lower high (LH) forms on the chart and a higher high (HH) appears on the indicator.
In a downtrend, hidden bearish divergence may form before the continuation of the decline, acting as a strong supplementary factor in determining the future price direction and considering positions.
Notes
- The RSI (Relative Strength Index) indicator is used to identify divergences.
- RSI is plotted without considering candle shadows.
- Divergence should be viewed as an additional factor to your analysis, not a standalone tool.
- Divergence below the chart will always be bullish, while divergence above the chart will always be bearish.
TYPES OF MARKET ANALYSIS1) Fundamental analysis.
fundamental analysis focus mainly on micro and macro event that will control market situations in the present and in the future. it includes various events in economic calendar like PPI CPI NonFarm Payroll, Interest rate decisions, and geopolitical senarios like election war climate issues etc
2) Technical analysis.
Technical analysis mainly focus on indicators chart analysis volume analysis, various analysis like following candle stick pattern, trading strategies based on indicators
3) Market sentiments
Market sentiments focus mainly on how the crowd anticipate wheich direction will market go, like when xauusd reached at its all time top everyone believed it will have a retracement from that zone
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EXPLAINING LIQUIDITY IN SIMPLE WORDSLiquidity plays a vital role in shaping market prices, particularly among large market players such as banks, hedge funds, and other influential entities. These entities, often referred to as market makers, manipulators, and others, are driven by their pursuit of liquidity. In fact, liquidity is the foundation upon which successful trading is built, and it's where traders should begin their journey.
In the context of Smart Money Concepts (SMC), liquidity refers to the levels of asset price where multiple market participants have placed limit orders, stop orders, and liquidations. Stop orders are essentially reverse orders designed to mitigate losses by buying back positions that have gone against a trader's expectations. When a trader sets a Stop-Loss order, they're essentially trying to limit potential losses if the market moves against them.
The concentration of stop orders creates a gravitational effect, making it attractive for larger players to gain an advantage. By identifying areas with high concentrations of stop orders, big players can exploit these liquidity zones to collect profits from retail traders who are unaware of these market dynamics. As a result, the movement of prices from one liquidity zone to another is driven by the actions of these powerful entities, ultimately shaping the market landscape.
❓ HOW TO IDENTIFY LIQUIDITY ON THE PRICE CHART?
Before we dive into trading and trades, we must first identify obvious liquidity pools. These will be our closest target for the price to converge upon.
There are several types of liquidity in the market:
Equal highs and lows (EQH/EQL), which mark significant turning points
Swing structural points, including notable highs and lows that can be significant drivers of market activity
Boundaries in sideways price movement, such as ranges or sideways trends, where liquidity is concentrated
Trend movement, where liquidity tends to accumulate below or above the trendline
📊 SIGNIFICANT PRICE HIGHS AND LOWS
The SMC features six key extrema that significantly impact trading:
• The previous month's high and low values
• The previous week's high and low values
• The previous day's high and low values
• The current trading day's high and low values
• Equal highs and lows, which can be particularly significant in determining market trends
📈 Equal Highs (EQH) or Equal Lows (EQL) 📉
The double bottom or double top candlestick formation is a common indicator of a potential price reversal. When the price reaches these formations, it typically signals a change in direction, with the price moving in the opposite direction. For retail traders, equal highs and lows are crucial levels of support and resistance, prompting them to place stop orders at these levels. These levels act as a gravitational force, attracting large capital flows and creating a significant amount of liquidity.
When the price approaches these levels in reverse, it's not uncommon to see a cluster of stop orders forming, as traders anticipating a bounce from the level wait for the price to react. However, large players often take advantage of this expectation by executing stop-loss orders through a false breakout, ultimately triggering a price reversal.
💲 SIGNS OF A SUCCESSFUL LIQUIDITY GRAB
Let's consider a buy scenario as an example. Traders identify a strong low price, and large capital players recognize an obvious accumulation of liquidity at this point. When the price returns to this low and breaks it, but without forming a full candle, the price closes above the broken low. To better understand this concept, let's examine the schematic representation of liquidity grab in buying scenario.
Liquidity is a top priority for big players, known as “smart money”. A significant player is actively seeking to find it to secure their position. The reason is that if they were to open trades without sufficient liquidity, they would be exposed to price slippage, as there may not be enough buy or sell orders in the market to execute their trades efficiently.
🔎 IS IT A LIQUIDITY GRAB OR NOT?
Distinguishing between a liquidity grab and a breakout of market structure is crucial, as they share similarities. In the case of a liquidity grab, the price fails to close at an important structural highs or lows, instead takes liquidity forming long tailed candles.
In contrast, a breakout of the structure sees the price breaks and closes above or below new level. Notably, liquidity grab often precedes a price reversal, whereas breakout of the level typically perpetuates the underlying trend.
📍 TREND LIQUIDITY
In a clear trending market, liquidity forms in both directions, at the lows and highs. Let's take a closer look at a downward trend movement. When we see the price moving downwards, we initially take liquidity at the lows, which has been building up since the price reached its maximum. Then, we take liquidity at the minimum, creating a natural flow.
At the highs, we deliberately leave liquidity on purpose, allowing it to build up and eventually be taken away naturally. The liquidity at the lows acts as a price magnet, attracting a large player who begins to accumulate their position. In some cases, the price may form equal lows, known as a double bottom in technical analysis. This signals to traders that it's time to enter a trade, and they place stop losses above these levels. At this point, a major player manipulates the price, taking this liquidity and reversing the trend. The first target is then the trend highs, where liquidity is located – it was left earlier to be taken away.
📝 HOW TO WORK WITH LIQUIDITY?
When working with liquidity, it can be a valuable tool for entering a trade, as well as helping to set a stop loss by avoiding arbitrary price levels. Instead, you can use liquidity to guide your trading decisions and create more informed stop-loss strategies. Moreover, take profits can also be placed on liquidity levels, as the price is constantly moving between these levels, making it essential to take profits before they're taken away.
💎 CONCLUSION
The benefits of liquidity analysis extend to any time frame, whether it's weekly, daily, or even 1-minute charts. This means that liquidity can be effectively applied to analyze forex market, indices, cryptocurrencies and shares of companies for investment purposes, making it a versatile tool for traders and investors alike.
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All Roads Leads to RomeIf you wish to analyze the index using traditional Japanese candles and Heikin-Ashi candles, and compare that using Bollinger Bands, Elliott Waves, Fibonacci series, and Ichimoku Kinko Hyo indicators. And you want to conduct the analysis on various time frames including daily, hourly, and every five minutes to discover the confluence between these indicators, you will find what pleases you in this tutorial video.
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