Tutorial
Pyramiding How to earn 52000 with a risk of 5% from 10000 1partPyramiding. How to earn $ 52,000 with a risk of 5% from 10,000 1 part. LTC/USD Jobs in Long.
Money management by pyramiding or scaling.
When building a "Pyramid" from money using the pyramid method - your foundation of the pyramid is knowledge and experience.
One of the main features of this method is minimal risks with high rates of income.
In let's look at an example on the chart. LTC is a strong uptrend. Entering a transaction is not from the bottom of the price itself, but when the trend is confirmed. Trading only according to the trend, exit of the price for trend aisles - means exit from the position. Stop loss is always 5% below the uptrend line that you are trading. As the price rises, the stop loss pulls up. This is very similar to positional trading. But unlike position trading, you buy an asset as the trend develops, thereby increasing the position.
From the example, we see that $ 20,000 is allocated for the coin. They are broken into at least 3 parts. 1 entry is the largest at the beginning of the trend-$ 10,000. The next 2 entries as the uptrend develops for $ 5,000. Risk is absolutely always observed 5% of the position. Breaking the uptrend line means a complete exit from the long market position. If you are not sure that the trend has finally reversed, you can exit part of the position.
In this example, the profit was $ 52,000 + $ 32,000 net. I also want to emphasize, we did not buy at the very lowest prices and did not sell at the very peak of the price, 2 transactions were done quite already at an expensive price. The main thing is to follow the plan, understand what you are doing and what is happening. It is necessary to kill the “herd instinct” in oneself, try to buy the cheaper, sell the more expensive, buy for good luck, work without a strategy and plan. You work like everyone else - it will be like everyone else - nothing!
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Pyramid mechanics in numbers.
The amount allocated for this coin is $ 20,000. Broken into 3 parts $ 10,000, $ 5,000, $ 5,000.
Profit from purchase №1 of $ 10,000 + 225% = $ 32,500 (net $ 22,500).
Profit from purchase №2 5000 $ + 145% = $ 12,250 (net $ 7250).
Profit from purchase No. 3 of $ 5000 + 45% = $ 7250 (net $ 2250).
Total profit for all 3 purchases $ 52,000
Net profit $ 52,000-$ 20,000 = $ 32,000
The risk has always been 5%
Next, I will describe in more detail this method and all the nuances.
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Money management by pyramiding or scaling.
The pyramiding method of money management (scaling) today is very popular among traders with experience. The essence of this method is the sequential opening of several transactions on the trend. We increase our position as profit grows, not loss.
Pyramiding method of money management is perfectly combined with a positional trading strategy. Also, this method increases the deposit well when a trader trades in upward (long work) and downward channels (short work).
Pyramid trading is a strategy that involves adding a new position to an existing profitable position. In other words, these are purchases or sales in order to add to an existing position, after the market has developed movement in a profitable direction for you. You are increasing your position. At the same time, the size of each next transaction may change taking into account the result of the previous one, that is, the position increases when you make a profit in the previous transaction to increase the deposit at a faster pace or after receiving a loss to accelerate the exit from the drawdown.
This is the main advantage of using pyramiding in trading. If you did everything right, then do not expose your trading capital to additional risk. In fact, you reduce risk as the market moves in a profitable direction for you. The main thing is to correctly determine the trend and "sit" on it. The most difficult moment is to determine the beginning of a trend.
On a bull trend it is better to always work on the bull side; on a bearish trend, on a bearish side. Always follow the trend!
However, just as pyramiding can be profitable, it can also be dangerous if used improperly. The main thing is to determine the trend correctly.
Many experienced traders consider this method the only possible way to quickly disperse the "deposit". One well-defined trend lasting only 1-2 weeks can double, triple the deposit with the right approach. Moreover, the risk is only 2% -5%.
It is very important, do not confuse averaging and pyramiding, since these two approaches are completely different. Averaging occurs when the price goes against our position. And pyramiding is the other way around when the price is in your favor.
Pyramiding allows you to achieve a super effective profit / risk ratio by transferring stop loss as the trend moves in your favor.
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How to carry out a set of positions according to the trend, when to enter.
Another important issue in pyramiding is: when do you actually enter a deal, gain a position more? The answer to this question can be divided into several approaches. Each of them has its pros and cons and in different situations will give different results. Just who is comfortable and who is more used to what they trade.
Entrance to the transaction during the construction of the "pyramid":
1) On kickbacks.
2) On signs of continued movement. For example, it can be a powerful volume entry or a hammer candlestick pattern.
3) During the breakdown of important levels.
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How to use stop loss when building a "pyramid".
Naturally, with pyramiding, stop loss is used. It is recommended to use a separate stop for each entry (to buy the position). As the trend develops, it should be pulled up.
For example, I use 2 stop loss. Regardless of how much I had as the trend of inputs on kickbacks grew. The first is the top, which is about 30% of the entire position. As a rule, it is equivalent to the stop loss level of the last entry (buy by trend). The second is 70% of the position, this is when the trend breaks. Both stop losses are tightened as the trend grows.
It is logical to use stop loss outside of some important levels. The trader as a whole should decide on the overall risk that he is ready to bear. For example, it is 3% -5%. Therefore, it is necessary to calculate the following positions in such a way that, taking into account the profit of the previous steps, compensate for the loss of the subsequent ones and keep within 3% -5%.
You need to understand that with the correct determination of the trend, and the correct scaling of the pyramid, a loss of 3-5% is purely arbitrary, as long as you have a stop knocked out, you can already double or triple the total profit. The main thing with the price increase is not to forget to tighten the stop loss. And so put so that they are not knocked ahead of time. As a rule, I go out when stop loss is touched, just two, as the first one can knock out, and the price can go up further.
It is also worth adding that sometimes on some coins due to their volatility, their feet are knocked out by 5%, so that this does not happen, the size of the stop is not so important as the moment of entry.
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Profit taking.
How to take profit when managing money using the pyramid method? There are several different methods of closing positions:
1) According to the planned profit. For example, you planned to take profit + 100% from this tool. You have reached your take profit. We left the position, took profit and forgot about this tool.
2) With a slowdown in profit growth . For example, you have already doubled the profit on this trend and this is quite enough for you. The trend has moved in a lateral movement, profit is not growing, or growing slowly. It is more advisable for you to close this profitable deal and transfer the profit to the trend that is emerging, thereby building a new "pyramid" on a more rapidly growing trend.
3) At the first sign of a trend reversal. Not breaking through important resistance levels, reversal patterns, breaking the trend line.
4) By tightening stop loss. Knocked out stop loss . Depending on which stop loss ordering technique you use, either single or fractional for each entry separately. Stopped, took profits and forgot about this trading tool. They began to search for a new instrument with a good entry point at the stage of trend emergence. Started the construction of a new "pyramid".
In my opinion, a reasonable solution is to partially take profit at some maximum levels with the trend growing. I am also part of the position about 30% aggressively trading increasing the asset. An important point at local maximums I sell these 30% almost completely, I already shop a large amount of assets from the support if I trade in an uptrend. As the trend progresses, I constantly pull up the lower stop loss (main position). 70% of the position is exited when the trend unfolds completely.
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Benefits of money management by pyramiding or scaling.
Pyramiding works well with strong steady trend movements.
The advantages of pyramiding:
1) the bistro is increasing the deposit.
2) minimal risks, and with the development of a trend, there are no risks.
3) psychologically comfortable trading due to the absence of great risks.
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Disadvantages of money management by pyramiding or scaling.
As you already understood, pyramiding works well in the trending market. If the market turns into a flat or a trend movement is accompanied by deep pullbacks, then the pyramid can be destroyed very quickly. On few liquid, weak instruments, this method does not work! On cryptocurrencies, this method only works on TOP. Coins such as BTC, LTC, ETH.
This method does not work:
1) In lateral flat movement.
2) With a weak trend.
3) In a trend with deep pullbacks, in which there will be uncertainty about further movement and they will knock out stops.
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To be continued...
BAT is at the bottom of its former channel Potential + 140% BAT is at the bottom of its former channel. The potential is up to the upper boundary of the horizontal channel + 140%. I have shown all the turning points and important support / resistance levels on the chart. The channel itself with a step of + 160% I’ve been trading it for more than a year.
Inside the channel, we see the formation of a “Cup with a handle” reversal pattern, which at the moment has become a reversal pattern after a downtrend. Now rollback after growth of + 111% which I predicted in past trading ideas for this coin in updates
Double bottom and entrance to the former accumulation channel.
And the result after 1 month
BAT There is a "Cup" Coin in the channel Option "Cup with handle
The result is two days later.
Impulse + 23%
A total profit of 111%.
All important areas if this pattern will work out I showed on the chart. The potential is from + 20% to + 111%. In more detail, I described everything on a large scale in this trading idea:
BAT Cup with handle Pivot points from +20 to 111% Channel bottom
A very important point (indicated in red) is the bottom of the horizontal channel. Breaking it and fixing under it will mean a bearish trend. _____________________________________________________________
Channel development potential + 140% The risk is minimal, as the price is almost at the bottom of the channel.
The potential for working out the “Cup with Handle” figure itself is from + 20% to + 111%, depending on which scenario we will go.
+ 20% -to the resistance of the cup, if we do not break through, then the figure is not confirmed.
+ 48% - still local high
+ 111% - full working out of the figure’s potential, as in the book.
Stop loss under the red zone. The lower boundary of the global horizontal channel. Or depending on the trading strategy that you use ______________________________________________________________
It does not matter if you are right or wrong. The only important thing is how much money you earn when you're right, and how much money you lose when you're wrong.
George Soros.
BAT Cup with handle Pivot points from +20 to 111% Channel bottom BAT Figure "Cup with handle." Now "handle" is being drawn. Pivot points on which the confirmation of the figure depends, I depicted on the chart. After this growth, the coin is now at the very bottom of the previous horizontal channel. Very important red zone. This is the lower boundary of the channel. The movement of the coin for several months depends on this zone. Either the coin will go on a bullish path and will be traded in a horizontal channel with a step of + 160% as before , or it will go on a bearish path. I adhere to the first option more.
The development potential of the “Cup with Handle” figure itself is from + 20% to + 111%.
+ 20% - until the resistance of the "cup", if we do not break through, then the formation is not confirmed.
+ 48% - previous local high
+ 111% - full development of the figure’s potential, as in a book.
Stop loss - under the red zone. The lower boundary of the global horizontal channel.
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The "Cup with handle" ("Mug") figure is a figure of the continuation of the trend. It is very reminiscent of the Saucer reversal pattern, but without the handle. One of the main features of this figure is that it is a continuation figure precisely on an uptrend. There is also a variant of this figure in mirror image on a downtrend: "Inverted cup with a handle."
The name of the figure was due to the external similarity with the shape of the cup.
The "Cup with handle" figure (Mug) consists of two parts:
1) Bowls.
2) handle.
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The stages of the formation of the figure and the Take Profit
1) The very first condition for the formation of this figure model is an uptrend. How is it a pattern of continuing the uptrend. Ideally, the trend should be strong enough and long enough, but not too "old". Otherwise, the potential for further growth and confirmation of the figure is sharply reduced.
2) "Bowl" - should have a smooth concave bottom. In an ideal "Cup with a handle" ("Mug"), the maximums of the glass (edges on the sides) will be at the same level (general resistance), but this is not a requirement. But, the more "ideal" the form of the "Bowl", the stronger the signal. More rounded shape of the figure "guarantee" a fairly good consolidation and is a more reliable sign with strong levels of support and resistance.
3) After the formation of the "Bowl", the second obligatory component of the figure is formed - this is the "handle". After the maximum is formed on the right side of the "Cup", a small rollback occurs, which is formed to the right of it and which forms the "Handle". It may look different and take different shapes and shapes: flag, pennant, triangle ... Also, these shapes meet with the “Pen” without tilt, but with horizontal movement. Usually, the handle in height does not occupy more than 1/3 of the height of the glass.
It is believed that the smaller the “handle”, the stronger the breakthrough and further movement will be. The edges of the handle are approximately flush with the edges of the glass, which once again confirms the resistance of the figure. "handle" is the last step before the final formation of the figure and the subsequent breakthrough of resistance. The breakout level of the figure is located at the level of the edges of the "cup" or slightly lower if the "Handle" is tilted down (at the level of resistance of the "Handle").
4) The timeframe is of great importance. The longer the formation takes, the more reliable the signal is considered. The larger the time frame, the more reliable the signal.
5) As a rule, at the bottom of the "Cup" the volumes have a minimum value. Then, the volume indicators during the formation of the second part of the "Cup" should gradually increase. On the rollback, prices during the formation of the "Handle" should go down. At the breakout of the resistance of the "Handle" have a maximum value. When the resistance of the figure breaks through.
6) The goal of working out the figure is the distance between the minimum and maximum of the figure (resistance). Overlaid is the distance from the resistance breakout zone. But when setting goals, you need to consider global and local levels. They greatly depend on how the goals in the figure work out.
USDJPY One Day's Time FrameUSDJPY One Day's Time Frame
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DNT / BTC Perhaps a shape will be formed Bowl +200DNT / BTC It is possible that a Bowl shape will be formed (Saucer, Rounded Bottom) + 200% Price at historical minimum. 3 months in sideways movement. Price begins to rise slowly. It seems that we are at the beginning of the 3rd phase of the formation of the "Bowl" figure.
The goal is the zone of the resistance level of the "Bowl". Further on the situation, how the price will fix.
Stop Loss - the level of support of the "Bowl".
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I will describe this figure a bit:
The Saucer shape, or as it is often called the Chalice, the Rounded bottom is a long-term figure that predicts long-term growth that looks like a concave arc. The figure is found on large timeframes. In most cases, on weeks, but on instruments that quickly go through their cycle (cryptocurrency), they can occur on a daily timeframe.
The rounded bottom is quite rare, but very reliable bullish pattern. Typically, a pattern is formed at the end of a long-term “bearish trend” and usually gives a signal of a market reversal.
It should be noted that the ideal symmetry of the figure is not a prerequisite. The main thing is the presence of its key components: the descent of the price, the bottom, the rise in price and the breaking of resistance.
Ideally, the formation of the “Saucer” pattern usually occurs in a narrow price range, in a calm market with the least volatility, when a trend reversal occurs smoothly, without strong price spikes. If, however, price spikes occur, then very soon the price will return to its usual range. The figure signals the long-term nature of the formation of a trend movement. The longer the figure forms in time, the stronger the signal is considered. The most reliable are the figures formed on weekly charts for at least several months. The older the time frame, the more reliable the signal. The rounded bottom is a long-term figure, and can stretch on the chart for a long period.
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Stages of the formation of the figure.
The Saucer figure consists of the following steps:
1) The descent of the price is the first phase of the figure. Price decline trend with a gradual slowdown. In the classical case, it should be a smooth arc, but in practice its shape can be flat or contain, on the contrary, correction minima and maxima. The main condition in this case is the gradually decelerating pace of price reduction.
2) The bottom is the lowest point of prices. It is the geometric center of the figure. It should be located on a gentle bottom (smooth bottom, without peaks). Although sometimes such a formation as the "Thorn" down or closed squeezes comes across at the bottom. The main thing is that these local formations do not violate the overall picture of the figure and movement in the global. If the lower point of the price forms the so-called platform on the chart, then the trading volumes gradually decrease, and at the moment of the price jump up sharply increase. Another surge in prices may be a signal to buy if the maximum of current prices is higher than the previous maximum.
3) Ascent of the price - after the minimum follows the ascent, which should ideally be symmetrical to the descent, and should last as long as the first phase (the descent of the price). There is a tendency to increase prices with a gradual acceleration.
4) The intersection of the resistance formed by the upper boundary of the whole figure (passes through the maximum point of the figure at the beginning of the period of its formation) is an additional confirmation of the rounded bottom and the final phase of the formation of the figure. After breaking through and fixing the price, the resistance level turns into a support level.
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Setting sales targets when working with a figure.
At the expense of selling goals, there is no exact opinion among traders. You need to understand that this is a long-playing figure and has a pronounced bullish character. In most cases, phase 3 (price rise) ends with phase 4 breaking through resistance and fixing the price above it. Thus fully confirming this figure of technical analysis. But you need to understand that this does not always happen! There are exceptions.
It is also important if the price is being traded in your favor, and according to the plan you should already fix the profit, then it is advisable to stay in position while you get additional profit instead of the planned one.
There should be a strategy and plan. At the same time, your strategy and plan should be plastic from market situations.
I trade such formations like that. As a rule, I enter the 2nd phase on the “Day”, but then when the trading volume starts to increase (the beginning of the 3rd phase is the ascent). It is very important not to "stay at the bottom" for a long time. Time is money.
I leave the position in 2 stages according to the situation:
a) I sell a large part of the position at about 70% just before the resistance (before the start of phase 4).
b) if the price failed to break through or gain a foothold, I will sell the remaining 30% of the market.
c) if the price was able to break through the resistance and consolidate. Resistance has become support. I buy back at the pullback prices the same 70% that I sold in advance before the resistance. Very often the price differs by a couple%. The confirmed new support gives great potential for further growth. It is very important that there is not a big gap between the sale and the purchase. If the price after confirmation of support has gone high - I trade the remaining 30% of the position.
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You related ideas see more ideas where such figures are also formed
BAT There is a "Cup" Coin in the channel Option "Cup with handleAfter the breakdown of the horizontal channel, the figure "double bottom" appeared on the chart of the coin. This was in the previous trading idea for this coin in the update. Profit amounted to + 76%
The situation is now.
At the moment, we have the shape of a cup (saucer, rounded bottom) which, at the 4th stage (breaking through the resistance of the "bowl"), can go up to the indicated resistance. Another option - a downward channel can be drawn, which will act as the "Handle" of the "Cup with handle" figure . It is very important that if we follow the second scenario, the red zone is important, which will act as a support for the global channel. Roughly speaking, a successful retest of it will give a signal in growth over the entire width of the channel, and this is + 160%. But if support breaks through, then in the near future it will be better to forget about trading this coin. This is a very unlikely scenario. But this must always be remembered.
At the expense of the coin, the coin is very strong fundamentally , this is one of those coins that I constantly trade and increase my position. I’ve been trading for almost a year and a half BAT.
For example, this trading idea for trading BAT / BTC in a horizontal channel for November 2018.
I showed all three options on the chart. The most likely is the "Cup with handle."
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A bit about the figures on the charts
Saucer shape (Bowl, Rounded bottom).
The Saucer shape, or as it is often called the Chalice, the Rounded bottom is a long-term figure that predicts long-term growth that looks like a concave arc. The figure is found on large timeframes. In most cases, on weeks, but on instruments that quickly go through their cycle (cryptocurrency), they can occur on a daily timeframe.
The rounded bottom is quite rare, but very reliable bullish pattern. Typically, a pattern is formed at the end of a long-term “bearish trend” and usually gives a signal of a market reversal.
It should be noted that the ideal symmetry of the figure is not a prerequisite. The main thing is the presence of its key components: the descent of the price, the bottom, the rise in price and the breaking of resistance.
Ideally, the formation of the “Saucer” pattern usually occurs in a narrow price range, in a calm market with the least volatility, when a trend reversal occurs smoothly, without strong price spikes. If, however, price spikes occur, then very soon the price will return to its usual range. The figure signals the long-term nature of the formation of a trend movement. The longer the figure forms in time, the stronger the signal is considered. The most reliable are the figures formed on weekly charts for at least several months. The older the time frame, the more reliable the signal. The rounded bottom is a long-term figure, and can stretch on the chart for a long period.
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Stages of the formation of the figure.
The Saucer figure consists of the following steps:
1) The descent of the price is the first phase of the figure. Price fall trend with a gradual slowdown. In the classical case, it should be a smooth arc, but in practice its shape can be flat or contain, on the contrary, correction minima and maxima. The main condition in this case is the gradually decelerating pace of price reduction.
2) The bottom is the lowest point of prices. It is the geometric center of the figure. It should be located on a gentle bottom (smooth bottom, without peaks). Although sometimes such a formation as the "Thorn" down or closed squeezes comes across at the bottom. The main thing is that these local formations do not violate the overall picture of the figure and movement in the global. If the lower point of the price forms the so-called platform on the chart, then the trading volumes gradually decrease, and at the moment of the price jump up sharply increase. Another surge in prices may be a signal to buy if the maximum of current prices is higher than the previous maximum.
3) Ascent of the price - after the minimum follows the ascent, which should ideally be symmetrical to the descent, and should last as long as the first phase (the descent of the price). There is a tendency to increase prices with a gradual acceleration.
4) The intersection of the resistance formed by the upper boundary of the whole figure (passes through the maximum point of the figure at the beginning of the period of its formation) is an additional confirmation of the rounded bottom and the final phase of the formation of the figure. After breaking through and fixing the price, the resistance level turns into a support level. When crossing the resistance, the volume rises as a rule.
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The figure "Cup with handle" (Mug).
The "Cup with handle" ("Mug") figure is a figure of the continuation of the trend. It is very reminiscent of the Saucer reversal pattern, but without the handle. One of the main features of this figure is that it is a continuation figure precisely on an uptrend.
The figure got its interesting name because of the external similarity with the shape of the cup.
The "Cup with handle" figure (Mug) consists of two parts:
1) Bowls.
2) Pens.
This pattern appears on an uptrend. A pattern begins to form when a bottom forms in a concave arc on an uptrend. This is the first part of the figure - "Bowl". Upon completion, another bottom is formed, much smaller than the first. The edges of the "Bowl" and "Handle" are at approximately the same level (form resistance). Upon completion of the formation of the "Handle", the price breaks the resistance line from the bottom up and the figure is successfully confirmed.
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Shape shaping and volume change.
As a rule, the volume at the bottom of the "Cup" has a minimum value. "Cups" should gradually increase. The prices of pens should be reduced during formation. On the breakthrough of resistance, “Pens” are of high importance. When the resistance of the figure breaks through.
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You need not only to know the rules of technical analysis, but also to understand what and how and why it works.
All successful bidding.
eurjpy short eurjpy short for 1 day time frame and also 4 hours time frame
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BTC Fractal 2016. Flat 77 days and a shot. The trend. Dow Theory This is a difficult trading idea to understand. This is an option for events that take place if something does not happen in the near future, which is not connected with the cryptocurrency market. But these events can have a huge impact on the financial world and the world at large.
I advise you to monitor the events in the near future in the USA and the situation on the stock market.
This is a backup plan, although unlikely. To understand, I advise you to read the description in the trading idea itself and the theory of Charles Dow.
We are ahead of the financial crisis. Dow Jones and Fed Rate%.
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A good option. A scenario if we do not break the ascending line of the main trend (yellow line), and repeat the 2016 fractal (October-December). As a result, the price is fixed above the downtrend secondary trend, which in turn launches a new panic hype as in 2017. A lot depends on the cryptocurrency market on what will happen in the near future on the stock market.
If we from the breakout zone repeat the upward trend as in 2017, then high in 363 days in the region of $ 250 thousand. Personally, I do not believe in it. So the price can only be raised if there is no bitcoin in the hands of ordinary people, and all BTCs are concentrated in the same hands of Big Brother. Not yet. Only complete centralization without the ability to earn a slave to the system can make such a price. I think that no one already believes that one person invented bitcoin - the mythical Satoshi Nakomoto. Also, I think everyone has already taken off their pink glasses and realized that the cryptocurrency project is a project from people who are now managing the financial world. Everything was created not for decentralization and anonymity, but rather for complete centralization and complete slavery.
All the important areas on which the further movement in one direction or another depends, I have displayed on the chart.
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Bad option. If after lateral movement we continue to move in a secondary downtrend and break through the upward trend of the main trend. Then a completely different price reduction process is launched.
The entire algorithm of actions from breaking through or holding a certain level when breaking through the main uptrend trend I described in this trading idea:
BTC Inverted Dragon. The tragedy of faith. Important areas. Figures.
In these two teaching ideas, I clearly demonstrated and described in great detail how such formations are practiced
EDUCATION Dragon figure. Formation. Structure. Targets.
EDUCATION Simultaneously Figures Inverted Dragon and Dragon
When breaking through the zone of $ 7000, important areas on which further movement will depend
“Bear measured move” is the 3rd phase in which we are now.
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I also outlined the main and secondary trends in ideas. This is from the basis of trading - the Dow theory. Works great for about 100 years in different markets. True, it is naturally necessary to take into account market changes over such a long period from the moment the theory was created.
I will describe this Dow theory a bit so that you understand the essence of the trading idea.
Six postulates of the Dow theory.
1) There are three types of trends.
2) Each primary trend has three phases.
3) The market takes into account all the news.
4) Stock indices must confirm each other.
5) Trends are confirmed by trading volumes.
6) Trends are valid until there is a clear signal of termination.
The market has three types of trend.
Trend analysis is the next step in the Dow theory. When the market moves in a certain direction, it never makes it a straight line. The market always moves like this: a new peak; rollback; new peak. A rollback is followed by a new maximum value, a new rollback, and so on until the trend changes.
As a result, any trend can be decomposed into several stages. Each stage will have its own maximum and minimum value. If the trend goes up, then each maximum value will be greater than the previous one. Similarly for a downtrend, where each low updates the previous low.
According to the Dow theory, there are 3 types of trends:
1) main.
2) secondary.
3) insignificant (small).
The main trend i s a key market movement. To determine it, you need to open a larger timeframe on the chart, say, monthly or weekly. This global trend ultimately affects everything, including secondary and insignificant trends. According to the Dow theory, the global trend lasts 1-3 years, which, however, can change.
The main trend remains valid until there are clear indications of its completion. One of such indications may be, for example, closing the price below the trend line.
A minor trend, as a rule, goes against the main trend or acts as a correction to it. This is how the main trend can go up, and secondary trends - down.
A ccording to the Dow theory, secondary trends last from 3 weeks to 3 months, and the rollback against the main trend lasts from 30 to 60% of its movement. Also, the secondary trend is usually much more volatile than the main one.
Minor trend (small) . In theory, this is a market movement lasting up to 3 weeks. As a rule, it is a correction to a secondary trend.
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The main trend has three phases.
According to the Dow theory, each major trend has 3 key phases:
1) phase of accumulation (distribution).
2) the phase of public participation.
3) phase of panic (realization).
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Accumulation phase.
This is the first phase, the beginning of an uptrend. It is at this stage that traders and investors enter the market, which can rightly be called professional. They have the greatest amount of information (often internal - insiders) about the current state of the market and the first to begin active actions. Other market participants do not realize at this time the state and direction of the market
The phase of public participation.
Participation phase Advanced investors and traders enter the market during the accumulation phase. In their opinion, the worst is over. When the trend really unfolds, the stage of public participation begins. Economic data are improving, the market is full of good news. The more such news, the more market participants connected in this phase. This phase is the longest of all, it is also characterized by the most active movement. Highs are constantly updated - exactly what investors were waiting for.
The phase of panic (implementation).
This is the phase where experienced traders and investors exit the market, while less experienced traders enter the market. As a result, such investors and traders are excited to buy at the peak of the trend, shortly before its spectacular fall. The same phase is a reversal phase - professional investors and traders understand that the market has exhausted itself and begin to close their positions opened in the first phase.
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The crowd, in general, buys and sells at the wrong time
Charles Doe
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Look at the related BTC trading ideas for the last half of the year, I fixed them under the trading idea.
USDJPY 1 Day time frame. Idea from learningcurrencytrading.comUSDJPY 1 Day time frame
Entry level of fibonacci Retracement
Head and Shoulders
Long term investment
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Simultaneously Figures Inverted Dragon and DragonOn the graph you can see how one figure goes into another and all goals are fully fulfilled.
The figure of the technical analysis "Inverted Dragon " all the description, lines, goals on the graph are yellow.
The figure of the technical analysis " Dragon " all the description, lines, goals on the chart are blue.
In trading such figures, the most important thing is the trend lines ("Dragon Ridge"). In this example, "Inverted Dragon" has an upward trending white color. And the figure "Dragon" has a downtrend in purple.
Also, when trading and identifying a figure, zones of a trend break are very important, in this example they are indicated by red circles.
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About the figure "Dragon" I described in great detail in the article: Figure Dragon. Formation. Structure. Goals.
Read more in this tutorial.
In this article I want to describe the mirror image of the “Dragon” figure - this is “Inverted Dragon”.
The “Inverted Dragon” / “Dragon” figures got their name due to some resemblance to a fairy-tale character: he also has a head, two legs, a tail and a hump on his back.
The figure "Inverted Dragon" consists of 5 parts, formed in the following order:
1) Dragon Head - the minimum price of all parts of the figure;
2) The first paw of the Dragon is the local maximum price;
3) The Hump of the Dragon - the minimum price between its paws;
4) The second paw of the Dragon is another maximum located slightly below / above the first paw, in rare cases equal to the maximum of the first paw;
5) Dragon Tail is the target price that should bring you revenue.
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“Inverted Dragon” is a reversal pattern that indicates almost the very beginning of a trend reversal. The formation of the “Inverted Dragon” tells the trader that the mood in the market may change soon and the current trend will unfold.
The figure is a more modified version of the “Double Peak” figure, while signaling a change in the bull market to the bear market. But there is one fundamental difference from the “Double Peaks” figure.
A prerequisite for the formation of the Dragon is a trend line drawn through the head and hump of this model ("Dragon Ridge").
It is important that this trend line is clearly visible on the chart. The trend line plays an almost decisive role in the figure.
“Inverted Dragon” and “Dragon” with the correct identification and understanding of the work, you can get good profit on various time frames.
The “Inverted Dragon” shape and its mirror image “Dragon” are very similar to the “Double Peak” and “Double Bottom” figures, however, they also have significant differences, which will be described below.
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Stages of the formation of the figure.
The "Inverted Dragon" is formed on an uptrend. Its formation begins with the "Head". It represents a local minimum. After the formation of the "Head", the market continues an upward movement, as a result of which two maximums "1 paw" and "2 paws" successively appear on the price chart. (Two peaks).
The local maximum from the first test of the resistance line at the upper border of the figure forms "1 Dragon's paw." After repeated testing of the same level of resistance, "2 paws of the Dragon" is formed. The difference between the maxima of the first and second "paws" can be from a few percent to 5-10%.
Between the paws of the "Dragon" should be formed a hollow (bottom, local minimum - correction from the upward movement), which is called the "Hump of the Dragon." At its core, the formation of the “Head – Lap – Hump – Lap” ligament is a “Double Peak” reversal pattern.
The close of the formation of the “Inverted Dragon” figure is indicated by the closing of the price below the “Dragon Range” - a trend line (support) drawn along its points from the “Head” and “Hump”. This will be a signal of a trend reversal. It is advisable to wait until the candle, after crossing the line, closes below the "Hump" level (the price has fixed).
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Shape shaping and volume change.
As prices move from head to forepaws, volumes rise, confirming the uptrend that existed at that time. But already with the formation of the hump of the dragon, everything changes. Volumes begin to grow in the direction of the downtrend and decrease in the direction of the upward. This indicates an imminent change in trend.
Finally, an additional confirmation signal can be an increase in the trading volume, which should increase during the price breakthrough of the uptrend of the “Inverted Dragon” figure (support). This is a breakdown of the trend line that connects the points of the “Dragon Head” and “Dragon Hump”. And then the price drop in the direction of the dragon's tail is accompanied by a rapid surge in volume, which finally confirms the trend reversal.
True price movements are always accompanied by an increase in the volume indicator. This means that if volumes grow in the direction of the dragon's tail (the direction of the future trend) and decrease in the direction of the previous trend, then the future trend is definitely gaining strength and the “Inverted Dragon” figure is true.
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Setting targets when working with a figure.
There are two options for entering a deal:
1) Entrance when breaking the line of the "Dragon Range" of the uptrend (line- "Head" - "Hump").
2) Entrance when breaking through the level of "Hump of the Dragon.
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First target.
To be at the level of the last minimum - the level of "Hump".
The second target.
To be at the very minimum value of the figure - the level of "Head".
The third target.
In rare cases, this is the entire length of growth from the “Head” to the very top “Paw” - then from the point of breakdown of the ascending trend line (“Dragon Ridge”), we establish the entire length of the previous growth — this will be the last target of the “Dragon Tail”.
In this example, the graph shows only taking 2 goals. Only in 10% of cases, 3 is the target relevant, for this you need a very strong trend movement.
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There should be a strategy and plan. At the same time, your strategy and plan should be plastic from market situations.
Dragon figure. Formation. Structure. Targets.“Dragon” is a reversal pattern that indicates almost the very beginning of a trend reversal. The formation of the Dragon tells the trader that market sentiment may change soon and the current trend will unfold.
The figure is a more modified version of the "Double bottom" or "W" shape, while it signals the change of the bear market to the bull market. But there is one fundamental difference from the “Double Bottom” figure.
A prerequisite for the formation of the Dragon is a trend line drawn through the head and hump of this model ("Dragon Ridge").
It is important that this trend line is clearly visible on the chart. The trend line plays an almost decisive role in the figure.
“Dragon” and “Inverted Dragon” with the correct identification and understanding of the work, you can get good profit on various time frames.
The figure “Dragon” and its mirror image “Inverted Dragon” are very similar to the figures “Double top” and “Double bottom”, however, they also have significant differences, which will be described below.
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There are two types of this figure, depending on the trend:
1) “Dragon” - is formed during a downtrend and signals a trend change to an uptrend;
2) “Inverted Dragon” - is formed during an uptrend and signals a trend change to a downtrend .
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The figure "Dragon" got its name due to some similarities with the fairy-tale character: he also has a head, two legs, a tail and a hump on his back.
The figure "Dragon" consists of 5 parts, formed in the following order:
1) Dragon Head - the maximum price of all parts of the figure;
2) The first paw of the Dragon - a local minimum price;
3) The Hump of the Dragon - the maximum price between its paws;
4) The second paw of the Dragon is another minimum located slightly below / above the first paw, in rare cases equal to the minimum of the first paw;
5) Dragon Tail is the target price that should bring you revenue.
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Additional signals that confirm the trend reversal and enhance the development of the "Dragon" figure:
1) The ratio of the length of the "dragon's paws" - if the "second paw" is longer, then there is more confidence in the upcoming turn.
2) When the level of the "second paw" coincides with some important level of support / resistance, already tested in the past, this also enhances the development of the figure.
3) Candles are strongly pronounced (large bodies with short shadows) that have gone in the opposite direction after the formation of the "second paw", the greater the likelihood of a change in the current trend.
4) The more a trend exists, the more likely it will end. The “Dragon” pattern is often in the 5th wave of the trend and in this case the reversal signal is very reliable.
5) An additional confirmation signal can be an increase in the indicators of the trading volume, which should increase during the break through the price of the downward trend line of the “Dragon” figure (resistance). This is the line drawn from the top of the Dragon Head to the bottom of the Dragon Hump.
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Setting goals when working with a figure.
There are two options for entering a deal:
1) Entrance when breaking the line of the "Dragon Range" of the downtrend (line- "Head" - "Hump").
2) Entrance when breaking through the "Hump of the Dragon" level.
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Now you need to decide on our targets:
The first targets will be at the level of the last maximum - the level of "Hump".
The second target will be at Head level
The third target is, in rare cases - the full length of the fall from the “Head” to the lowest “Paw” - then from the breakdown point of the downward trend line (“Dragon Ridge”) we set the entire length of the last price
See the chart above. The graph shows that it was the Third Goal that worked completely on the graph.
Making A Good Indicator DescriptionIntroduction
When posting an indicator a good concept/code isn't the only thing required in order to have a quality indicator, its description is also extremely important. Each person has its own style,
mine is pretty academic, but as long as your description respect certain criterions you are free to do as you wish.
In this post i want to help you make the best of your published indicator by introducing basic concepts in post writing.
Basic Description
An indicator description should at least explain what kind of information your indicator is giving as well as how to interpret/use it. Lets take the Supertrend indicator as example, we'll be making a brief description of it.
The Supertrend indicator is a technical indicator created by the french trader Olivier Seban that aim to detect the current market trend direction. The indicator detect an up-trend when below the market price and a down-trend when above.
This indicator posses two setting, length and mult, higher values of length/mult allow the indicator to detect trends of longer period. This indicator can also be used as trailing stop loss, it can also provide a support level when below the price or a resistance level when above.
Lets breakdown this simple description.
-"The Supertrend indicator is a technical indicator created by the french trader Olivier Seban"
If the indicator is not yours, always credit/mention the original author, this is no option.
-"that aim to detect the current market trend direction"
Aim of the indicator.
-"The indicator detect an up-trending market when below the market price and a down-trend when above."
How to interpret the indicator.
-"This indicator posses two setting, length and mult, higher values of length/mult allow the indicator to detect trends of longer period."
Always try to introduce the indicator settings and explain how they affect the indicator output.
-"This indicator can also be used as trailing stop loss, it can also provide a support level when below the price or a resistance level when above."
Alternative uses of the indicator, try to provide a graphic showing the indicator acting as mentioned, i our case we should show a graphic showing the Supertrend acting as a support/resistance.
Once you write up your indicator description read it back several times (something i wish i could do more often) and always ask yourself if your indicator description fully describe the aim of the indicator. If you like writing you can of course add more elements, although try not to be redundant, this is really important, skip things such as :
"Yesterday i was dinning with a colleague and he asked me how to get zero-lag filters, since then i tried to..."
This is tiring for the reader and so try not including it.
More Complete Description
A more complete description introduce additional elements regarding your indicator such as your motivation behind its publishing, its calculation...etc.
Such description of the Supertrend indicator could look like this :
Detecting the current market price trend has always been a major challenge in technical analysis, systems relying on the cross between a noisy series and a certain level/indicator can produce whipsaws trades. In order to provide a solution to this problem more advanced indicators have been proposed, one of them being the Supertrend indicator developed by the french trader Olivier Seban.
This indicator aim to detect the current market trend direction, the indicator detect an up-trending market when the price is superior to the Supertrend, and a down trending market when the price is inferior to the Supertrend.
The indicator is an iterative calculation, the core element of its calculation involve creating two bands, denoted as upper/lower, calculated as follows :
upper = hl2 + atr(length)*mult
lower = hl2 - atr(length)*mult
where atr is the average true range of period length and hl2 is the median price defined as : (high + low)/2.
Higher values of length/mult allow the indicator to be less sensitive to shorter price variations, this allow to detect trends of longer period.
Apart from the basic indicator usage described above, the Supertrend indicator can also act as a :
- trailing stop loss, in this case if the closing price cross the value of the indicator, the trade will be closed.
- support/resistance level, in this case an upward movements can be expected after the low price cross the Supertrend, and a downward movement when the high price cross the Supertrend indicator.
In conclusion, the Supertrend indicator is an elegant solution when it comes to detecting the current market price trend, its ability to avoid whipsaws trades makes him a good ally for decision making.
Including Graphics
Graphics of your indicators can add more clarity to your description since visual examples are often easier to understand, the goal here is to see how your indicator interact with the market price. Try including readable graphics, this can mean charts without other indicators (except if your indicator can work in conjunction with other indicators).
However keep your main chart (your current chart layout when publishing the indicator) free of any other indicators/elements, it should only contain the price and your indicator, its the first image people we'll see and if it include other indicators then people will have an hard time telling which one is the one you are publishing.
It can be interesting to show your indicators using different settings rather than the one put by default. You can make use of figures such as arrows or crosses in order to highlight the signals made by your indicator.
Additional Advices
Use a bold text when declaring the title of a section, use italic with text that represent code, formulas, variables names.
You can first write your indicator description on a text editor.
If your code include another work from tradingview don't forget to mention it in the description, for example :
this indicator make use of the "name of the indicator" made by "name of the author" that you can find here "tradingview link of the indicator".
In this case make sure you have the consent of the author of the indicator you are using. This is no option, else you can have your indicator taken down.
Don't include bitcoin wallets/donation links in your indicator description, those go on your signature and nowhere else.
Knowing when not to make a description is important, and by that i mean knowing when not to publish, make sure to read the house rules before you are publishing an indicator.
If you are still struggling then you can try to read other indicators description on the net, if you want a deadly serious description then you can learn from the structure of research papers. For example if your indicator is similar to a moving average try reading descriptions of moving average indicators and inspire yourself from them.
Conclusion
Making a good indicator description is essential, the benefits of doing it are enormous, don't forget that scripts take space in servers. If you are publishing a script and that you know that your description is to short and doesn't explain the aim of your indicator then you are just adding more work for the moderators, its not nice.
Also great descriptions allow you to gain trust and credibility in the community, and more importantly it shows that you care about your indicator, i might be harsh but people that does not care about their indicators does not deserve to publish them (however its not case with you nice reader, right ?).
I hope i can help users with this post, its an important subject, if you have doubts about your indicator description try seeking for help in the pinescript chat, you can even contact me, i will be happy to help.
Thanks for reading, and if you plan to use those advices then thanks for caring, love u :kokoro:
NZDCAD Bullish Bias from Institutional DemandHey everyone,
Planning to share more charts here, with this being one of the first ideas. NZD/CAD gained a lot of bullish momentum from daily demand and is likely to see more bullish price-action for the upcoming days. Personally I am positioned long on this one and I am looking for potential 1hour or 4hour scale-in opportunities for the upcoming days.
More updates in the community soon.
Best regards,
NCFX
