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Pro Traders Take Profits on EarningsWhat happened today on the earnings announcement by PEP? Pro traders took profits against the retail crowd's buying on the news headlines that suggested an earnings "beat" for Q2. The retail buying causes the gap up at open, which is a prime cue to take profits on swing trades. This was what we call a pre-earnings run. The earnings results don't matter as much as the technical setup a few weeks ahead of the earnings release. Swing trades were initiated at the reversal from the support at 155, confirmed by price and volume patterns at that time. Now, with resistance overhead, where the initial target for this earnings play was, and the retail crowd causing a gap up at open on the earnings announcement, this is where professional short-term traders close long positions. This should not be construed as a good opportunity to short swing-style, however. It is an example of the execution of a long swing-style earnings strategy. This is an example of TechniTrader's Relational Technical Analysis techniques for planning better trades.
NASDAQ:PEPEducation
by MarthaStokesCMT-TechniTrader
2
Volume Profile and why you need it.Volume profile is an underused and quintessential part of trading, it tells you build up of orders, it tells you fair price, and it tells you where the majority of the liquidity is. You can see in this chart, I have taken it apart piece by piece to show you the basic mechanics and why price moves the way it does, now be honest, how many of you rushed into selling GU last minute because the price was collapsing? Well the funny thing is despite not being alone in doing so in the retail trading world, big banks and instituitions were already two steps ahead as expected, check the Volume profile, notice how it declined on a massively falling currency, what this is telling you is that the amount of exchanges is very low, as the shorters pushed price down they began to close positions, also what would have happened is the amount of retail money and money that isnt associated to high end firms would have started to see negative positions so what do they do? they have to close these sells with buys! so not only are the big banks taking profit, they are also using you as rocket fuel! as the masses of small money becomes negative/trapped/stoplosses, price reacts in an equal and opposite reaction, price rallies. So where is price heading too? it is heading back to an area where it can happily trade, and this is shown by larger bars on the VP, price wants to be happy, to be happy it needs to transact alot! So two takeaways... One, dont rush into falling or rising currencies! as they are heading into areas of low volume and will use mean reversion to run you over... Two, Utilise the fact price has low VP build up to your advantage! use price action and catch moves like that GU rally back to an area of more transactions! and a final little trick, use the VP to tell you if your orderblock is real or a figment of your imagination! feel free to drop some questions below, I may have to make more posts on VP for it to make sense. Maybe I will also make some posts on examples of trading using it, and what to do and not to do. Thinking about it, there is more posts to do, I need to show how to trade mean reversion and 'mountain to mountain' tactics. Hope you find this post interesting, as I take a journey of taking back the layers of many traditional strategies, indicators and the deeper world of maths, I am doing this to try help new traders actually get somewhere! So please give me a like and a follow, I want to expand my reach here on tradingview :) All the best ZenFlo.
Education
by ZenFlo
5
E-MINI Russel 2000 index (pressure concepts/tutorial) To optimise your "edge" practice identifying previous demand and supply zones. These zones have multiple titles. Some analysts call them "order blocks".. I do like order blocks because it does assume a square pattern. Accumulation patterns tend to outline as a square whereas RE accumulation will take on more of a triangular pattern. Imagine if you will an accumulation pattern. This pattern can vary as far as time. But in general these should b considered "HIGH PRESSURE" zones. Price can and will exit this "block" without utilising all of the stored pressure... however, this pressure is still in this zone. When and if price does return here, it will encounter this pressures and there will be a reaction. There are 3 ways in which price will react: 1- Price will find pressure and "bounce" off of this previous box and continue to "mark-up" 2- Price will find this pressure and begin another "trading range" until demand exceeds supply 3- Price will get to this area and find minimum to no pressure and will continue on its trajectory These concepts are not difficult to see with practice. The most difficult part of any trading strategy is waiting for what you want to see. When you hear traders talk about looking left on the chart, this is what is going on. It could sometimes take months to years for price to return to these price areas, indeed. It can also tale a few hours. It depends on wether or not you are trying to day trade or invest longterm. Regardless of strategy, in order to minimise risk, it is paramount that you become aware of these previous "HIGH PRESSURE" zones. You never want to short into a previous demand zone, nor do you ever want to go long into a previous supply zone. Volume helps to facilitate you and I spotting this "residual" volume iin these high pressure zones. These concepts are difficult to type/explain. I am contemplating some sort of video series, text so that I can share these concepts. These concepts however, ARE NOT MINE. They are the charts... they are for all of us to exploit. But in order for anyone to exploit these weaknesses, you need to practice. Trading view is absolutely the best platform to do this and I am certain that if traders began trading accurately using volume, trading view would start charging to use what is currently the free volume indicator. It is THE most powerful TA indicator. Again these are difficult concepts to explain and I do appreciate if you made it through this tutorial Sources of education: Richard Wyckoff Tom Williams Volume spread analysis VSA/ Master the Markets Pete Faders VSA*
Sam Seiden (supply and demand) Read the ticker dot com Wyckoff analytics PsychFX MentFX Element 15 trades (bitchute/odessy) Avoid buying into weakness/supply/resistance Avoid selling into strength/demand/support Avoid entry when price is in middle of a range (phase B)
CME_MINI:RTY1!Education
by dee718
S&P500 Index - Multi timeframe analysis with the Ichimoku CloudMulti timeframe analysis of the S&P500 Index using the Ichimoku Kinko Hyo with original 9,26,52,26 settings, i have also added Volume Profiles (VPVR) and (VPFR) onto the charts. 1 DAY CHART: The Ichimoku Cloud Conversion Line (Tenkan Sen) is indicating that the Mid-Point of the Short-term momentum is upwards at the moment. This will possibly change to sideways or even downwards on the open of the next daily candle. The Ichimoku Cloud Base Line (Kijun Sen) is indicating that the Mid-Point of the Mid-term momentum is sideways at the moment. Note that support at the Base Line (Kijun Sen) has failed on this 1 day timeframe. The Ichinoku Cloud Lagging Span (Chikou Span) is indicating that momentum at the moment…… is downwards. Note that the Lagging Span (Chikou Span) is still under the price from 26 periods ago and is i the Bearish Zone under the Kumo (Cloud). The Kumo (Cloud) is still red. Note that the Leading Span A (Senkou Span A) has started to move upwards but will swing back down if the price continues to drop. Note that the Leading Span A (Senkou Span A) is still under the Leading Span B (Senkou Span B). Be on the lookout for if/when the Leading Span B (Senkou Span B) starts to move downwards on this 1 day timeframe indicating further strength to the downside. Note that the price is still in the Bearish Zone under the Kumo (Cloud) on this 1 day timeframe. Note that on this 1 day timeframe, the Price is under all of the Ichimoku Cloud indicators so let’s have a look at the 1 week timeframe and see if we have any Ichimoku support levels. Volume Profiles: Note that the Price is still under its Volume Profile Visible Range Point of Control (VPVR POC) for this charts visible range. Not that the Price is still under its Volume Profile Fixed Range Point of Control (VPFR POC) for the fixed range of 14x daily candles i have selected. 1 WEEK CHART: The Ichimoku Cloud Conversion Line (Tenkan Sen) is indicating that the Mid-Point of the Short-term momentum is downwards at the moment. Note that the price has found some resistance from the Conversion Line (Tenkan Sen) on this 1 week timframe. The Ichimoku Cloud Base Line (Kijun Sen) is indicating that the Mid-Point of the Mid-term momentum is sideways at the moment. Note that the Conversion Line (Tenkan Sen) is still under the Base Line (Kijun Sen) indicating strength for short term downwards momentum. The Ichinoku Cloud Lagging Span (Chikou Span) is indicating that momentum at the moment…… is downwards. Note that the Lagging Span (Chikou Span) is still under the price from 26 periods ago. Note that the Lagging Span (Chikou Span) has dropped below the Leading Span A (Senkou Span A) and is now back in the Equilibrium Zone on this 1 week timeframe. The Kumo (Cloud) is still red on this 1 week timeframe. Note that the Leading Span A (Senkou Span A) has started to move downwards and is still under the Leading Span B (Senkou Span B). Note that the price is still in the Bearish Zone under the Kumo (Cloud) on this 1 week timeframe. Note that on this 1 week timeframe, the Price is under all of the Ichimoku Cloud indicators so let’s have a look at the 2 week timeframe and see if we have any Ichimoku support levels. Volume Profiles: Note that the Price is still under its Volume Profile Visible Range Point of Control (VPVR POC) for this charts visible range. Not that the Price is still under its Volume Profile Fixed Range Point of Control (VPFR POC) for the fixed range of 11x weekly candles i have selected. 2 WEEK CHART: The Ichimoku Cloud Conversion Line (Tenkan Sen) is indicating that the Mid-Point of the Short-term momentum is sideways at the moment. The Ichimoku Cloud Base Line (Kijun Sen) is indicating that the Mid-Point of the Mid-term momentum is sideways at the moment. Note that the Conversion Line (Tenkan Sen) is still under the Base Line (Kijun Sen) indicating strength for short term downwards momentum. The Ichimoku Cloud Lagging Span (Chikou Span) is indicating that momentum at the moment…… is downwards. Note that the Lagging Span (Chikou Span) is still under the price from 26 periods ago but is still in the Bullish Zone above the Kumo (Cloud). The Kumo (Cloud) is still green. Note that the Leading Span A (Senko Span A) is still above the Leading Span B (Senkou Span B). Note that the Leading Span A (Senkou Span A) is moving sideways at the moment but the Leading Span B (Senkou Span B) is moving upwards, be on the lookout for if the Leading Span A (Senkou Span A) starts to move closer towards the Leading Span B (Senkou Span B). Be on the lookout if the price drops below and closes below the Leading Span A (Senkou Span A) into the Equilibrium Zone on this 2 week timeframe. Note that the price is still in the Bullish Zone above the Kumo (Cloud) on this 2 week timeframe. Note that on this 2 week timeframe, the Price is under the Conversion Line (Tenkan Sen) and Base Line (Kijun Sen) but still has the Leading Span A (Senkou Span A) and Leading Span B (Senkou Span B) as potential support levels. Let’s have a look at the 1 month timeframe and see if we have anymore Ichimoku support levels. Volume Profiles: Note that the Price is still under its Volume Profile Visible Range Point of Control (VPVR POC) for this charts visible range. Not that the Price is still under its Volume Profile Fixed Range Point of Control (VPFR POC) for the fixed range of 6x 2 weekly candles i have selected. 1 MONTH CHART: The Ichimoku Cloud Conversion Line (Tenkan Sen) is indicating that the Mid-Point of the Short-term momentum is sideways at the moment. The Ichimoku Cloud Base Line (Kijun Sen) is indicating that the Mid-Point of the Mid-term momentum is upwards at the moment. Note that the Conversion Line (Tenkan Sen) is still above the Base Line (Kijun Sen) indicating strength for short term sideways momentum as the indicator is moving sideways at the moment. The Ichinoku Cloud Lagging Span (Chikou Span) is indicating that momentum at the moment…… is downwards. Note that the Lagging Span (Chikou Span) is still above the price from 26 periods ago and is still in the Bullish Zone. The Kumo (Cloud) is still green. Note that the Leading Span A (Senkou Span A) has started to move upwards but may swing back down if the price continues to drop on this 1 month timeframe. Note that the Leading Span A (Senko Span A) is still above the Leading Span B (Senkou Span B). Be on the lookout for if the Leading Span A (Senkou Span A) starts to move closer towards the Leading Span B (Senkou Span B). Note that the price is still in the Bullish Zone above the Kumo (Cloud) on this 1 month timeframe. Note that on this 1 month timeframe, the Price is under the Conversion Line (Tenkan Sen) but still has the Base Line (Kijun Sen) Leading Span A (Senkou Span A) and Leading Span B (Senkou Span B) as potential support levels. Volume Profiles: Note that the Price is still above its Volume Profile Visible Range Point of Control (VPVR POC) for this charts visible range. Not that the Price is still under its Volume Profile Fixed Range Point of Control (VPFR POC) for the fixed range of 6x monthly candles i have selected. Notes: Please remember that the Conversion Line (Tenkan Sen) & Base Line (Kijun Sen) are not SMAs or EMAs they are X amount high/low period midpoints in whatever timeframe you are in, so they should not be used as SMA or EMAs. Note that there are other aspects to the Ichimoku Cloud which make it a very complete system such as Price Theory, Wave Theory and Time Theory but I won’t go into those on this post. Conversion Line (Tenkan Sen) = Highest High + Highest Low calculation over 9 Periods = Blue Line. Base Line (Kijun Sen) = Highest High + Highest Low calculation over 26 Periods = Red Line. Lagging Span (Chikou Span) = Today’s price displaced back 26 Periods = Green Line. Leading Span A (Senkou Span A) = Tenkan Sen and Kijun Sen calculation value displaced ahead 26 Periods = Cloud Green Line. Leading Span B (Senkou Span B) = Highest High + Highest Low over 52 Periods Value displaced ahead 26 Periods = Cloud Red Line. Bullish Zone = Above the Cloud. Equilibrium Zone = Inside the (Kumo) Cloud can be Green or Red. Bearish Zone = Below the Cloud. This was just a post to show how you can use the Ichimoku Kinko Hyo in multiple timeframes for support, resistance & momentum, so I hope this post has been helpful with your trading and understanding of the Ichimoku Cloud. So in which direction is the S&P500 Index going to go...... i leave up to you to make your own minds up ;-).
SP:SPXEducation
by entertheroach
How did Open Interest tell me: Stay long as BTC Dumped!?!BYBIT:BTCUSD I was in 3 long trades as Bitcoin dumped on the 26th of May 2022. I had 2 choices. Close my longs because I saw price dumping below my entry or look at what Open interest was telling me to determine if this was a fakeout. I saw price dropping as OI was dropping. This meant that longs were closing out their positions, which means that when this ended, price could reverse quickly. Longs were closing out their positions and re-entering as shorts. As soon as this selling dried up, Longs started entering and then suddenly shorts were being liquidated, pushing the price up again. This is known as a stop run. Hit long stops and then hit short stops. Be aware of this kind of fakeout as it happens again and again! Learn to trade the retest and why it is important not to short at support and inversely why it is NB not to long at resistance, UNLESS you get a retest of that level! Not financial advice, DYOR. Papertrade before using real money. If this educational snipped helped you, please consider giving it a thumbs up and follow for more like this! Trade Safely and Learn something every day! Shawn
BYBIT:BTCUSD.PEducation
by zartraderguy
Best Session to Trade - At a glance!Market Sessions Introduction Watching the market 24/7 is completely unnecessary, considering price only moves during certain periods of the day. These periods are known as "Sessions" and relate to an exchange's location on the planet. The two most popular sessions - London & New York - typically see the most volatility and gross number of trades placed. However, there are strategies designed around specific sessions, such as the "Asian Breakout", which targets the first two hours of the Tokyo session. The sessions occur every trading day (M - F) during the following UTC times: London: 0800-1600 New York: 1300-2100 Tokyo: 0000-0800 Sydney: 2200-0600 The London and NY session overlap for 3 hours - this is known as the "Golden Window" in Forex trading...but why? Advanced Forex Session Analysis I created a tool to explore the concept of the "Golden Window" and answer a few burning questions: did every asset have the same golden window? if the golden window shifted, could you detect it? does restricting trading times to the golden window improve win rate? what does the golden window even look like? This tool is available for free and open source - Advanced Forex Sessions It scores each session by Volatility (ticks moved) and Volume (number of trades placed), then displays the windows on chart. I've discovered answers to a few questions and can confidently say, NO, not every asset has the same golden window. In fact, nearly all small-cap cryptocurrencies have a golden window during the Tokyo or Sydney sessions. YES, we can detect the window shifting by scoring each session via a rolling average. MAYBE, it's hard to say if restricting trading times will work for every strategy, but I have seen minor improvements for traditional strategies that buy/sell with fixed take profits and stop losses. WHAT does the Golden Window look like? Check out the Advanced Forex Sessions indicator and see for yourself...
OANDA:US30USDEducation
by DasanC
2
Mastering The Wyckoff Method of Technical Analysis Introduction: ----------------------------------------------------------- In the time period of April in 2021 Bitcoin reached its local high of roughly US $65,000 per coin, shortly after when May came along many social channels quickly lit up with the now infamous “Wyckoff Distribution Schematic” (This was one popular video that described it here: www.youtube.com), and shortly after BTC came crashing down back to the $30,000 region playing this schematic almost perfectly. I myself was trading Bitcoin using the Wyckoff Method at this time, and I was introduced to a plethora of new traders and investors trying to understand the complicated Wyckoff method, but the fact of the matter was, many were sharing or educating others in incorrect ways to use this method. From this day I took more of an interest in educating others in the Wyckoff Method, and below I am going to pick apart, introduce and help you master some of the key concepts used in this method of analysis. Bitcoins Chart March-May 2021 Read more about the Crash in 2021: www.aljazeera.com Who is “Wyckoff”?: ----------------------------------------------------------- Richard Demille Wyckoff (November 2, 1873 – March 7, 1934) was considered one of the five “titans” of technical analysis, along with Dow, Gann, Elliott and Merrill. At age 15, he took a job as a stock runner for a New York brokerage. Afterwards, while still in his 20s, he became the head of his own firm. He also founded and, for nearly two decades wrote, and edited The Magazine of Wall Street, which, at one point, had more than 200,000 subscribers. Wyckoff was an avid student of the markets, as well as an active tape reader and trader. He observed the market activities and campaigns of the legendary stock operators of his time, including JP Morgan and Jesse Livermore. From his observations and interviews with those big-time traders, Wyckoff codified the best practices of Livermore and others into laws, principles and techniques of trading methodology, money management and mental discipline. Wyckoff's research claimed many common characteristics among the greatest winning stocks and market campaigners of the time. Wyckoff also has techniques he believed offered advantages when markets were rising or falling (bullish and bearish). Wyckoff offered a detailed analysis of the "trading range", a posited ideal price bracket for buying or selling a stock. One tool that Wyckoff provides is the concept of the Composite Operator , another is Volume based analysis . Who is the Composite Operator / The Composite Man?: ----------------------------------------------------------- “…all the fluctuations in the market and in all the various stocks should be studied as if they were the result of one man’s operations. Let us call him the Composite Man, who, in theory, sits behind the scenes and manipulates the stocks to your disadvantage if you do not understand the game as he plays it; and to your great profit if you do understand it.” (The Richard D. Wyckoff Course in Stock Market Science and Technique, section 9, p. 1-2) Based on his years of observations of the market activities of large operators, Wyckoff taught that: The Composite Man carefully plans, executes and concludes his campaigns. -The Composite Man attracts the public to buy a stock (financial asset) in which he has already accumulated a sizable line of shares by making many transactions involving a large number of shares, in effect advertising his stock by creating the appearance of a “broad market.” -One must study individual stock charts with the purpose of judging the behaviour of the stock and the motives of those large operators who dominate it. -With study and practice, one can acquire the ability to interpret the motives behind the action that a chart portrays. Wyckoff and his associates believed that if one could understand the market behaviour of the Composite Man, one could identify many trading and investment opportunities early enough to profit from them. Above excerpt from: school.stockcharts.com Many traders and investors who follow the Wyckoff Method treat the Composite man as a real entity, for Cryptocurrency holders this might be seen as a whale who controls the price. Wyckoff himself did not find it necessary to define a importance between the Composite man being an imaginary being, a creation of one's own mind or a real entity, but defined an importance towards “Thinking” like the Composite Man, by thinking like a “Large Operator” we change our Psychology. But what does this mean? In the book titled, “The Compound Effect” by Darren Hardy (Founder of Success Magazine) there is a section titled “Find Your Fight” in Chapter 3, in this section Darren describes how hate is often as strong as a motivating force as love, but why is this relevant? A person who is in love may do crazy things, but so will a person who is consumed by hate, as both are powerfully motivating forces. By creating a “Enemy” (Someone to hate) our mindset changes to a defensive manner, we are now in “Battle” with our Enemy. Here is a quote from the book, which is one of my favourites: “Contrary to social correctness, it can be good to hate. Hate disease, hate injustice, hate ignorance, hate complacency, and so on. Sometimes identifying an enemy lights your fire.Some of my greatest motivation, determination, and dogged persistence came when I had an enemy to fight. In history, the most transformation stories and political revolutions came about as a result of fighting an enemy. David had Goliath, America had the British. Luke had Darth Vader…” And as traders; we have The Composite Man… A great article on the Composite Man can be located here for further education: www.wyckoffanalytics.com Wyckoff's "Five Step Approach": ----------------------------------------------------------- The Wyckoff Method involves a five-step approach to stock selection and trade entry, which can be summarized as follows: 1. Determine the present position and probable future trend of the market. Determine what the current characteristics of the price structure and Supply & Demand are, (are we in a Uptrend, Downtrend or Sideways) by getting a general idea of the Price Structure, Sentiment & Supply and Demand we can determine if we want to be in a long or short trade, or no trade at all, and what the probable future direction of the market may be. Refer to Section “Market Phases & Cycles” below to understand this further. 2. Select stocks in harmony with the trend. In an uptrend, select stocks that are stronger than the market. By selecting assets moving with the Primary Trend, we are increasing chances of success. (For example, if the dominant asset in Crypto, Bitcoin is on a strong uptrend is it fair to assume that you are going to have more success trying to long other Cryptocurrencies which are highly “correlated” and likely to follow in that direction. Financial Assets that “decorrelate” and show stronger increases during uptrends and smaller decreases on pull backs may be showing signs of being stronger then the market as a whole (long position), for shorts we are looking for Assets that are showing weakness and stronger decreases then the market as a whole. 3. Select stocks with a “cause” that equals or exceeds your minimum objective. Every action, has a reaction, every cause, has an effect, this statement basically means that if you are going to enter the market and take a position, look for assets that have a rational and reasonable cause for you to reach your target objective. A great example is using Price Target Measurements when trading Chart Patterns, each Chart Pattern is the cause, and the Price Target is the effect. If there is a Cause, but no Effect, then it is a potential sign of weakness. Please see “Wyckoff Laws” below for more information. 4. Determine the stocks' readiness to move. Use a pre determined system to determine how close assets are to entering the Mark Up or Mark Down Phases. Find the right system to see when a asset is about to Uptrend or Downtrend. Use the 9 Buying & Selling tests, aswell as the Wyckoff Schematics explained below to understand this concept further. 5. Time your commitment with a turn in the stock market index. Financial Markets are highly correlated, this means that we want to be timing our investments and trades with the Leading Market Assets or Index’s (A Index is basically a grouping of the Top Stocks or Companies in that Industry, for example, SP500, AU200). Why do we want to time? Lets use Bitcoin as a example. Sometimes Bitcoin is almost correlated to 80-90% of the Stock Market, that means the price moves almost in sync, so by watching the price movements and analyzing the Stock Market we can also get clues on the direction of the asset we are trading. If Bitcoin is moving up, but the Stock Market is heading down, and the correlation is HIGH, we can assume that the upside move may not be likely to continue. Market Phases & Cycles: ----------------------------------------------------------- According to Wyckoff, the market can be understood and anticipated through detailed analysis of supply and demand, An idealized schematic of how he conceptualized the large interests' preparation for and execution of bull and bear markets is depicted in the figure above. The time to enter long orders is towards the end of the preparation for a price markup or bull market (accumulation of large lines of stock), while the time to initiate short positions is at the end of the preparation for price markdown. Also note the different Phases of the Market. Before we continue below, please click on the image below for my basic introduction to Market Phases & Cycles, which is an important topic to have an understanding of before continuing onto Wyckoff Schematics. This is also relevant to understand Cause & Effect mentioned below. Notice how each Cause has an Effect! To simplify the concept - Markets move in cyclical patterns, with a full cycle usually having Accumulation > Reaccumulation > Distribution >Redistribution, there can also be Micro trends within the cycle. Uptrends (HH, HL), Downtrends (LL, LH) and Sideways movements form the price structures which make up the Phases of the market, which in turn create the Cycles. Three Laws of Wyckoff ----------------------------------------------------------- Wyckoff Analysis is fundamentally based off the Three Laws of Wyckoff, which can be found and recognized across many different types of Analysis, the Laws help give insight to our analysis and choice of buying/selling. 1. Supply vs. Demand --------------------------------- Wyckoff states when demand is greater than supply, prices rise, and when supply is greater than demand, prices fall. When sellers outweigh the buyers, the market is dominated by Supply, a large supply of an asset to sell, means greater selling pressure and a higher probability of a decrease in price. A sign of Demand (Buying Pressure) is a shortage of Supply, in a Cryptocurrencies case it would mean that the demand of buyers on exchanges outweighs the supply available for purchase on exchanges. As the amount up for purchase quickly falls to a low number the greed of participants drives them to want to pay higher prices for an asset. When buyers outweigh sellers, the latter occurs with a higher probability of increase in prices. A sign of Supply (Selling Pressure) is a shortage of Demand, in a Cryptocurrencies case it would mean that the demand of buyers on exchanges under weighs the supply available, institutional investors and funds hold majority share of the SUPPLY and with no interest in buying from the retail participants we see investors (sometimes impatient or fearful) become sellers in anticipation of there being no increase in price in the short term (relative to their perspective). Using this secondary chart below, we can clearly see the "Demand (Green)" and "Supply (Red)" areas of Siacoin SC. We can see that both the Demand & Supply areas are respected and have strong reactions, and with patience we will see if the dominating factor on Siacoin right now is Supply or Demand, but considering some of the points I will go into below so far its looking like it is shifting into the favour of demand currently with a visit to the 0.5 (50%) of the Trading Range. Take note of the small abbreviations at the start of the TR (Trading Range) for now - see Wyckoff Schematics section later. Other ways to analyze Supply & Demand in Cryptocurrencies are more literal - for example you can literally go onto the Blockchain and see the wallets of coins, how many each holds, what % of the Supply is owned by Siacoin itself, the amount of wallet holders, I will not go into this type of analysis in a detailed manner as it is not my expertise. 2. Effort vs. Result --------------------------------- Wyckoff states that every effort should lead to a result in the financial markets. Here is a example of a “Effort Vs Result” in a Trading Range (Parallel Channel) using Volume & Price Analysis (Please Click the Image, for Further Educational Idea) This statement is applied to our charts by using data on Trading Volume. When we see abnormally large trading volume at key areas on the chart, we can usually expect a continued move in that direction, if the Effort produces no result though, that abnormally large trading volume can give us a sign that the participants betting on the market to move in that direction have not gathered enough momentum to do so (Marked in Light Blue), which leads to them being trapped (Marked in Dark Blue) and then a reverse in the opposite direction in price (Marked in Purple). Effort Vs Result can also be interpreted in a number of ways, lets analyse the above Siacoin SC chart using this concept: In the first image, the Trading Range is created, once at the lower range, volume decreased (this was not just a singular occurrence, with the whole Crypto market having similar low volume and "choppiness" but within this low volume area we can see there was two larger red volume bars, these two bars showed us a increase in sellers in this area, (An effort) but no Result (further Decrease on the next candles) this gives us a sign that the sellers may not be the dominant force now (A “Divergence) leading us to test the previous dominant force area above as supply. This then led us to test the upper Trading Range, where the exactly same thing happened in the opposite. In the 3rd image, we can finally see that the effort of the buyers is now leading to zero result, the trading range is starting to drag out and the volume of sellers is dropping off, in a REAL breakout the volume should continue to increase with the prices. We can see below that never happens here. As the images progress the Supply is obviously Dominant. This leads us to the current chart, where we can see that now the sellers are losing momentum and the buyers have just stepped in. (See the volume?) In the current trading range on SC (Siacoin) we can see quite a lot of abnormally large green bars at the upper range, this shows us that even though a large amount of buyers did in fact come into play here, the upper ranges dominant force was the Supply, and prices then headed towards the lower range.We are now in the process of “Testing” that lower range for Demand. So far the circled Red Bars (in the First chart, the original chart of this post) show us the sellers may be trapped locally. 3. Cause vs. Effect --------------------------------- Wyckoff states that every cause in the market leads to a proportional effect. The market has phases, such as Accumulation, Reaccumulation, Distribution and Redistribution. Each phase should have a "Effect" to match the cause, Accumulation has a Markup, aswell as Reaccumulation, And Distribution and Redistribution are followed by a Mark Down. The phase is the cause, the mark up is the effect. Click on this link for a quick infographic on the Market Phases (Consider each phase as a Cause) which then should have an Effect (Mark Up or Mark Down Phase), this creates the “Market Cycle” and all markets move in cycles: ibb.co This is similar to how a Bull Flag has a target measurement (Mark Up) and a Bear Flag has a target measurement for the downside (Mark Down). For more information on Flag Patterns click the below image, notice on the bottom right picture how the Flag has a measurement which is represented by a extended line, the previous line and the Flag is the Cause, the extended line pointing upwards is the Effect in this case: In this case, if we see a breakout to the upside of this current trading range on SC Siacoin (the Cause) we can assume the Effect will be a strong breakout above the range leading to Mark Up Phase, otherwise the Cause has no Effect, in this situation meaning the range might fail and break downwards. This is similar in a way to Effort vs Result explained earlier, For every Effort, there should be a Result, for every Cause, there should be an effect. Wyckoff Schematics ----------------------------------------------------------- A trading range (Sideways Movement, Zig Zag) shows us an equilibrium between buyers and sellers, and the Wyckoff Theory & Schematics give us clues to which probable direction the price may head out of the horizontal moving price structure. Each Trading Range can be an important Phase in the larger Market Cycle, giving us potential clues and hints within the overall trend. The Wyckoff Schematics help us identify the different between Accumulation and Distribution Trading Ranges (Or Reaccumulation or Redistribution) - In a Trading Range the price Zig Zags up and down until eventually a breakout occurs, using the Wyckoff Accumulation Schematic we can see there are some clues in the similarities of the chart and the schematic that tell us Siacoin may be ready to at least test of the upper bounds of the Trading Range. It is important to note that most Trading Ranges start with obvious characteristics, which we will delve into further below, the first characteristics of the Trading Range (TR) help us identify that we are now moving in a sideways trend: When paired with the Wyckoff 9 Buying and Selling Tests - the Wyckoff Schematics are a great tool to help measure potential entries, exits, risk and to read the price movement in general. There are four types: Accumulation , Reaccumulation , Distribution & Redistribution. And each Trading Range is Analysed in 5 key phases: By splitting our Schematics into 5 key phases, the characteristics become easier to recognize and identify.Remember this when moving forward in this section. Phase A: The trading range (TR) is created (example above) Phase B: The Supply & Demand of the TR is tested Phase C: Deviation outside TR or Final point before reversal Phase D: The new trend begins Phase E: The trend continues In phase D & E, the obvious “Change of Trend” is evident, refer to this infographic below and you can see how a trend contains Higher Highs, Higher Lows (HH, HL) or Lower Lows, Lower Highs (LL, LH); we will come back to this soon: 1. Accumulation : --------------------------------- In accumulation, the shares purchased outnumber those sold. There are roughly 9 characteristics of an Accumulation Range: 1. PS (Preliminary Support) the first Support area that was lost, creating the upper bound of the TR. 2. SC (Selling Climax) the climactic action that is bought up quickly creating the lower bound of the TR. It is a strong example of Effort vs Result usually, with abnormally large selling volume, but no further downside. 3. AR (Automatic Rally) a low volume, quick reaction visiting the other side of the TR, usually indicating short covering. 4. ST (Secondary Test) a secondary test of the initial Demand Area created by the SC. 5. Spring (Fake Out) & Test or LPS (Last point of Support). Spring is usually a great example of Effort vs Result. Spring is then confirmed by a test of Support. LPS (Last Point of Support) occurs when price revisits the recent Demand (Support) area, usually a former Resistance. The term may be used in a plural manner, with multiple LPS forming the Higher Lows that make up the basis of a market trend. 6. JAC (Jump Across the Creek) the Creek is an imaginary line created by the previous downtrend (similar to a Moving Average), we want to see the price “Jump” across the creek. 7. LPS (Last Point of Support) occurs when price revisits the recent Demand (Support) area, usually a former Resistance. The term may be used in a plural manner, with multiple LPS forming the Higher Lows that make up the basis of a market trend. 8. SOS (Sign of Strength) is an abnormally large volume signature upwards price movement which confirms the Spring or LPS. 9. BU/LPS (Back Up / Last Point of Support) occurs when price revisits the recent Demand (Support) area, usually a former Resistance. The term may be used in a plural manner.The SOS & LPS together form the Basis of a Uptrend, see this image for reference: ibb.co . The final LPS before leaving the Trading Range should start the Uptrend.The LPS can sometimes move to the 50% of the Trading Range. We should then enter the Mark Up phase as described at the start of this article. Remember; Accumulation is the Cause, Markup is the Effect. Examples & Links : Accumulation Schematic #1: school.stockcharts.com In this schematic, the Spring is located in the end of the TR, showing trapped sellers. Accumulation Schematic #2: school.stockcharts.com In this schematic, there is no Spring action, instead the price starts moving upwards from the LPS Area (Last Point of Support), the Spring (in this case, ST) is located at the middle of the TR, showing trapped buyers. Example of Accumulation #1 Analysis (Click image, press play to see the result!): Example of Accumulation #2 Analysis: 2. Reaccumulation : --------------------------------- After Accumulation, comes Reaccumulation. Where after a extended upside move, a repeated sideways movement occurs which leads to another extended upside move. ReAccumulation is known also as a Trend Continuation. The characteristics are almost identical to Accumulation, except the previous price movement leading up to the trading range is upwards : Here are the characteristics explained : 1. PS (Preliminary Supply) the first selling area creating the Trading Range. 2. BC (Buying Climax) the climactic action that is sold up quickly creating the upper bound of the TR. It is a strong example of Effort vs Result usually, with abnormally large buying volume, but no further upside. 3. Shakeout (Fake Out to the downside trapping sellers) (I have marked this as SC, to simplify the process as a Shakeout is quite similar in its characteristic. 4. AR (Automatic Rally) a low volume, quick reaction visiting the other side of the TR, usually indicating short covering. 5. ST Area (Secondary Test Area) a secondary test of the initial Demand Area created by the Shakeout. 6. Spring (Fake Out) or LPS (Last point of Support) A Spring occurs when price falls underneath the Trading Range, triggering stop losses and usually inducing investors to Panic Sell, (this is the most profitable area to buy). Spring is then confirmed by a test of Support. Spring is usually a great example of Effort vs Result. LPS (Last Point of Support) occurs when price revisits the recent Demand (Support) area, usually a former Resistance. The term may be used in a plural manner, with multiple LPS forming the Higher Lows that make up the basis of a market trend. 7. JAC (Jump Across the Creek) is when the price “Jumps” across the Trading Range, giving us a final clue before the breakout occurs. The “Creek” is an imaginary line formed from the projected path of the previous price swing highs, this can be used similar to a Moving Average. 8. SOS (Sign of Strength) is an abnormally large volume signature upwards price movement which confirms the Spring or LPS. 9. LPS (Last Point of Support) occurs when price revisits the recent Demand (Support) area, usually a former Resistance. The term may be used in a plural manner.The SOS & LPS together form the Basis of a Uptrend, see this image for reference: ibb.co . The final LPS before leaving the Trading Range should start the Uptrend.The LPS can sometimes move to the 50% of the Trading Range. We should then enter the Mark Up phase as described at the start of this article. Reaccumulation = Cause, Mark Up = Effect Examples & Links : It is important to note that Reaccumulation can appear as Accumulation, in the image below we can see that MANAUSDT looked like Accumulation Schematic #2, yet was actually Reaccumulation due to the previous uptrend. And in this example Reaccumulation looked exactly like Schematic #1 of Accumulation! Reaccumulation Schematic #1: ibb.co In this schematic, the Spring is located at the end of the TR, showing trapped sellers. Reaccumulation Schematic #2: ibb.co In this schematic, the ST (or Spring) is located at the middle of the TR, showing trapped buyers. Traditional Reaccumulation Schematics: ibb.co (Credit: Roman Bogomazov / www.wyckoffanalytics.com) Example of Traditional Reaccumulation #2 Analysis: (Press Play!): 3. Distribution : --------------------------------- Above we learnt that in accumulation, the shares purchased outnumber those sold while, in distribution, the opposite is true. The shares sold outnumber those purchased. In a Distribution Trading Range two of the key characteristics are the UTAD/UT (Upwards Thrust / Upwards Thrust & Distribution) above the Trading Range, and the SoW's Signs Of Weaknesses with strong volume at the bottom end of the range. The start of the trading range should be easily identified by a BC (Buying Climax). The extent of accumulation or distribution determines the cause that unfolds in the subsequent move out of the TR . There are roughly 9 characteristics of an Distribution Range: 1. PS (Preliminary Supply) is the first selling area creating the Trading Range. 2. BC (Buying Climax) is the climactic action that is sold up quickly creating the upper bound of the TR. It is a strong example of Effort vs Result usually, with abnormally large buying volume, but no further upside. 3. AR (Automatic Rally) is a low volume, quick reaction visiting the other side of the TR, usually indicating long covering. 4. ST (Secondary Test) a secondary test of the initial Supply Area created by the BC. 5. SOW (Sign of Weakness) are strong moves to the lower bounds of the Trading Range (or Underneath) with strong volume signature. 6. UT or UTAD (Upwards Thrust) in a UT (Upwards Thrust) a significant amount of buyers enter the market, “Buying the Breakout”, but their Effort, leads to no Result and this variation of a “Bull Trap” is the most significant characteristic of the Distribution TR. A UTAD (Upwards Thrust and Distribution) forms within the middle or end of the Trading Range; there is an obvious lack of Result vs Effort, with abnormally large buying volume signature, yet price fails to get back above this area again. It can look similar to a miniature Trading Range (Distribution). 7. UTAD or LPSY (Last Point of Supply) In Schematic #1 we have the UTAD at the end, in Schematic #2 we have it in the middle (simplified). If the /UT is found in the middle then we are looking for the LPSY to confirm the Resistance, when price revisits the initial Supply area created at the start of the Trading Range, and then successfully decreases from that area. 8. SOW (Sign of Weakness, Fall under the Ice) just like how in Accumulation we Jump Across the creek, in Distribution we do the latter and Fall Under the Ice. SOW (Sign of Weakness) are strong moves to the lower bounds of the Trading Range (or Underneath) with strong volume signature. 9. LPSY (Last Point of Supply) instead of revisiting the initial Supply area created at the start of the Trading Range, in LPSY (Last Point of Supply) revisits the recent Supply (Resistance) area, usually a former Support. The term may be used in a plural manner, with multiple LPSY forming the Lower Highs (LH’s) that make up the basis of a market trend. We should then enter the Mark Down phase as described at the start of this article. Distribution is the Cause, and Mark Down is the Effect. Examples & Links : Distribution Schematic #1: school.stockcharts.com In this schematic, the UTAD is located at the end of the TR, showing trapped buyers. Distribution Schematic #2: school.stockcharts.com In this schematic, the UTAD is located in the middle of the TR, showing trapped buyers. Example of Distribution #1 Analysis (Press Play!): Example of Distribution # 2 Analysis (Press Play!): 4. Redistribution : --------------------------------- After Distribution, Comes Redistribution. Where after a extended down move, a repeated sideways movement occurs which leads to another extended downwards move. Redistribution is also known as a Downtrend Continuation. Redistribution is said to be difficult to analyse, so my general advice is to treat Redistribution as a method to spot an additional Distribution Schematic after a Distribution Schematic and a Mark Down has already occurred previously recently on the chart (Similar to a Bear Flag Pattern after a Distribution). The characteristics are almost identical to Distribution sometimes, except the previous price movement leading up to the trading range is upwards : Here are the characteristics explained : 1. PS (Preliminary Support) the first Support area that was lost, creating the upper bound of the TR. 2. SC (Selling Climax) the climactic action that is bought up quickly creating the lower bound of the TR. It is a strong example of Effort vs Result usually, with abnormally large selling volume, but no further downside. 3. AR (Automatic Rally) is a low volume, quick reaction visiting the other side of the TR, usually indicating long covering + (UT/UA Upwards Thrust / Action) The Upwards Action or Upwards Thrust takes out the Supply above the AR area, before heading back down. 4. ST (Secondary Test) a secondary test of the initial Demand Area created by the SC. 5. UT or UTAD (Upwards Thrust, or Upwards Thrust And Distribution), in a UT (Upwards Thrust) a significant amount of buyers enter the market, “Buying the Breakout”, but their Effort, leads to no Result and this variation of a “Bull Trap” is the most significant characteristic of the Distribution TR. A UTAD is basically a UT (Upwards Thrust) with a Distribution also (miniature Bearish Trading Range) that usually forms within the middle or end of the TR. 6. LPSY + Test (Last Point of Supply) is when price revisits the initial Supply area created at the start of the Trading Range, and then successfully decreases from that area, the test confirmed by tapping the upper Supply Area before heading into the TR again. 7. SOW (Sign of Weakness) *sometimes* with a potential UTAD (Upwards Thrust and Distribution): Signs of Weakness are strong moves to the lower bounds of the Trading Range (or Underneath) with strong volume signature. 8. SOW (Sign of Weakness, Fall under the Ice) just like how in Accumulation we Jump Across the creek, in Distribution we do the latter and Fall Under the Ice. 9. LPSY (Last Point of Supply) instead of revisiting the initial Supply area created at the start of the Trading Range, in this LPSY we are visiting the Supply area created near the bottom of the Trading Range. We should then enter the Mark Down phase as described at the start of this article. Redistribution is the Cause, Mark Down is the Effect. Examples & Links : It is important to note that Redistribution can appear as Distribution just like Accumulation as Reaccumulation as mentioned earlier, here is a example on ETHUSDT: Redistribution Schematic #1: ibb.co In this schematic, the UTAD is located at the end of the TR, showing trapped buyers. Redistribution Schematic #2: ibb.co In this schematic, the UTAD is located in the middle of the TR, showing trapped buyers. Example of Redistribution #1 Analysis (Press Play!): Example of Redistribution #2 Analysis (Press Play!): 5. Failure of Schematic : --------------------------------- Wyckoff based trades can also fail. It is also important to note that Wyckoff Schematics are not a guarantee, more so a system for you to analyse the market and know potential lower risk areas to position your trades. In this example below (Click+Press Play!) we can see that the Accumulation on BATUSDT did have a strong breakout, but never entered into a correct markup phase and then "failed" when the price came back inside of the TR (Trading Range): Nine Buying/Selling Tests: ----------------------------------------------------------- Whereas the three Wyckoff laws provide a big-picture foundation for the Wyckoff method, the nine buying and selling tests are a set of narrower, specific principles to help guide trade entry. These tests help delineate when a trading range is drawing to a close and a new uptrend (markup) or downtrend (markdown) is about to begin. In the book, by Hank Pruden, named "The Three Skills of Top Trading" , as well as the following article by Jack K Hutson the Nine Buying and Selling Tests of Wyckoff are discussed and outlayed similar to the above image: These nine tests can be difficult to understand, or even apply to your charts, so I have summarised them and modernised these tests for a purely candlestick chart and simplified point of view. Alot of analysts beforehand made use of P&F (Point & Figure Charts). At the top of your Tradingview chart, you can see a small icon, if you click it you can see the different types of charts available, we are currently on Candlesticks, Point & Figure is another option that was used for some Wyckoff Analysis, but in my simplified version we are just using Candlesticks: ibb.co Here are my simplified Buying & Selling Tests explained with images 1. Buying Tests : --------------------------------- I am using the chart of ZILUSDT as a example. Wyckoff Buying Tests for Accumulation (Simplified Version) 1. Downside price target complete or close to complete of any previous Bearish Patterns (Bear Flag Pattern used for Target Measurement: www.thepatternsite.com ) 2. PS, SC, and AR/ST on chart (Remember our first chart above, with Supply & Demand? ON the left we can see creation of the trading range with the Selling Climax (SC), Automatic Rally (AR), and Support Test (ST) we also covered this in the chart below (The 2nd below is showing that on ZILUSDT): 3. Bullish Signs (volume or price increases on rallies and diminishes during reactions) 4. Diagonal Resistance Broken 5. Higher lows & 6. Higher highs 7. Asset stronger than the market (more responsive on rallies and more resistant to reactions than the market index or other dominant assets) 8. Base forming (horizontal price line) (It can resemble a Flat Base Pattern: www.thepatternsite.com) 9. Estimated upside profit potential is at least three times the loss if the initial stop-loss were hit (Risk to Reward; 3:1) We can now see we have completed all 9 Buying Tests: And for the final images, we can see that ZIL has a massive upside move, moving to the Mark Up phase from our Buying Tests Analysis: Aswell as starting to complete a larger Accumulation #1 Structure as desribed above. 2. Selling Tests : --------------------------------- I am using the chart of XTZBTC as a example. If you missed it above, dont forget to see the original 9 Selling Tests: ibb.co Wyckoff Buying Tests for Distribution (Simplified Version) 1. Upside price objective complete of any previous Bullish Patterns on higher timeframes, or close to complete (Bull Flag Pattern used for Target Measurement: www.thepatternsite.com ) 2. Bearish Signs (volume decreases on rallies and increases on reactions) 3. Preliminary supply, buying climax (PSY, BC) We also covered this in the chart below (The 2nd below is showing that on XTZBTC): 4. Asset weaker than the market (more responsive than the market on reactions and sluggish on rallies) XTZ was a perfect example of Selling Test #4, as you can see it was much weaker than Bitcoin at the time, which was leading the market. 5. Diagonal Support Broken 6. Lower Highs & 7. Lower Lows 8. Crown forming (It can resemble a ugly Double Top Pattern: www.thepatternsite.com) 9. Estimated downside profit potential is at least three times the loss if the initial stop-loss were hit (Risk to Reward; 3:1), we have now completed all 9 Selling Tests! And for the final images, we can see that XTZBTC has a massive downside move, moving to the Mark Down phase from our Selling Tests Analysis: As well as starting to complete a larger Distribution #2 Structure as described above. Refer to your schematics above if your confused. Conclusion: ----------------------------------------------------------- Not only does the Wyckoff Method teach the novice Investor/Trader the techniques, foundations and methods needed to analyse the market, it also helps create a system and mindframe towards observing and timing the market, which allows the trader to be much more rationalised and organised in their train of thought as well as much more risk averse. By using the Wyckoff based analysis on Siacoin we can clearly see this token has potential for more upside, although we do need to be cautious as a significant pullback on Bitcoin could easily “Fail” the “Spring” action of the TR (Trading Range) in the original analysis image above. What would a successful accumulation breakout look like on Siacoin? Refer to the original chart at the start of the post. I have made a small drawing, describing the characteristics we need to see for this to progress further. You can use that drawing along with the next below to get a rough idea of what a successful breakout will look like, compare with the Accumulation Schematics you studied above. What would a failure of accumulation look like on Siacoin? I will give two examples: 1. Failure of Spring 2. Failure of Phase E (Uptrend) I hope you enjoyed my explanation of the Wyckoff Method - Thank you and if you found this writeup insightful, educational and informative don't forget to hit Subscribe, Like & Comment so others can also potentially see and benefit from this post, if you wish to see these concepts in action, I recommend visiting my signature as well. Other Resources & References: ----------------------------------------------------------- Websites: Wyckoff Analytics: wyckoffanalytics.com Wyckoff SMI: wyckoffsmi.com Videos: Wyckoff Youtube: www.youtube.com Wyckoff SMI Youtube: www.youtube.com Stockcharts.com Youtube: www.youtube.com (I didnt cover volume much in this article, check out the above video for a Volume Tutorial) Articles: school.stockcharts.com school.stockcharts.com school.stockcharts.com www.wyckoffanalytics.com www.wyckoffanalytics.com Magazine of Wall Street Database: (Founded by Wyckoff) shorturl.at Books: www.amazon.com www.amazon.com References: en.wikipedia.org school.stockcharts.com
SEducation
by Worth_The_Ri5k
22
The Laws of Wyckoff: Effort Vs ResultIntroduction: --------------------------------- Richard Demille Wyckoff (November 2, 1873 – March 7, 1934) was considered one of the five “titans” of technical analysis , along with Dow, Gann , Elliott and Merrill. Wyckoff was an avid student of the markets, as well as an active tape reader and trader. He observed the market activities and campaigns of the legendary stock operators of his time, including JP Morgan and Jesse Livermore. From his observations and interviews with those big-time traders, Wyckoff codified the best practices of Livermore and others into laws, principles and techniques of trading methodology, money management and mental discipline. Laws of Wyckoff --------------------------------- Wyckoff Analysis is fundamentally based off the Three Laws of Wyckoff, which can be found and recognized across many different types of Analysis, the Laws help give insight to our analysis and choice of buying/selling. The Three Laws of Wyckoff are: Supply & Demand Effort vs. Result Cause & Effect Law #2: Effort vs. Result --------------------------------- Wyckoff states that every effort should lead to a result in the financial markets. The above example describes the concept of Effort vs Result in a Trading Range (Parallel Channel) using Volume & Price Based Analysis This statement is applied to our charts by using data found on Trading View from the Volume Indicator. When we see abnormally large trading volume at key areas on the chart, such as a defined "TR (Trading Range)" we can usually expect a continued move in that direction, this is called the Breakout of the range. But if buyers cannot gather enough momentum to continue the Breakout action, they may become trapped, and as prices fall back inside of the defined area, their Effort has produced no Result. That abnormally large trading volume can give us a potential sign that the participants betting on the market to move in that direction failed to gather enough momentum to do so (Light Blue), which leads to them being trapped (Dark Blue) and then a reverse in the opposite direction in price (Purple). This kind of Analysis is not just "fixed" to the bottom or top of a Trading Range, Effort vs Result can be interpreted a number of ways, for example in the below image we can see that the Effort in this case was not outside of the range, but a failure from the buyers to hold prices INSIDE the range: --------------------------------- Thank you and if you found this writeup insightful and informative don't forget to hit Subscribe, Like & Comment to show your appreciation. Visit my signature for further education on these concepts in action
CEducation
by Worth_The_Ri5k
1
Is it okay to FOMO?You need to look at price action, and specifically, Heikin Ashi candles along with the Volume Indicator to tell you whether it's okay to FOMO. Use lower time frames to get in quicker. Mostly, I never recommend it, but sometimes where there is strong buying and a clear trend change, a dip might not come for a while. And when it does, because it went up so fast, it can usually lead to a downtrend so you have to be careful. Especially in crypto where there is Bull Trap manipulations upwards. However, the Volume Indicator can tell you if the bears have lost, which on the left hand side, they clearly lost as we went from Green to red to immediately Green again, showing the strength of the Bulls.
Education
by reiiss7
3
Buy when there's DRY blood in the StreetsBuy When There's Blood in the Street ... After the recent well known events in the financial market and the crypto market I recalled a quote by Baron Rothschild: "Buy when there's blood in the streets, even if the blood is your own." I would say this is very true; however, in the world of trading "Timing is Everything", don't just go blindly with the old saying, this is like the other saying "Catching a Falling Knife". Bottom line, we all have to stomach the ups and downs in the market, this is not for the faint at heart. The downturns are really good opportunities to buy cheap if you pay attention to the Market Structure, trust your indicators, and are disciplined with the money management policies. "Buy when there's blood in the Street ..." I would just wait until the blood is not fresh. It is not about catching the bottom, it is about buying at a discount, which is not the same. I personally use three main variables to time my entry and my exit, (1) Trend, (2) Momentum and (3) Volume. You don't really need more, although each trader has developed his/her own style, I show mine here. I sometimes use more indicators, but basically they measure the same variables from a customized perspective. For the sake of clarity, in this example I use regular popular and publicly available indicators, I use the simple Volume, the RSI, the MACD and the Madrid Ribbons. 1. Trend. "The trend is your friend until that freaking bend at the end". When we see the price structure we determine as simple as it is if there is an uptrend, downtrend, or trading range, the Madrid Ribbons is a very friendly indicator that visualize the direction of the trend at a glance, as long as it is in the green it means uptrend, if this turns from green to red it signals the end of a leg or a reversal of the trend. In this example there's a visible downtrend coming from 2019 when the Energy sector started its decline and a full working economy didn't need as much oil as when it needed a jumpstart. We can see from December 2018 until April 2019 there was a leg to the upside, this didn't last long, on May 2019 it didn't remain above the trendline for long and it kept on slowly bleeding until on January 2020 it collapsed and it broke down. The red ribbons continued until November 2020, when it visually showed a reversal. As simple as that. Follow the trend. 2. Momentum. In this article I use two momentum indicators, the popular RSI and MACD. There are tons of momentum indicators out there, I have coded myself several customized momentum indicators. The idea behind momentum is that momentum precedes the trend. Watch out, it is not "predicting", usually this tells that the direction of the trend is exhausting and it could possibly reverse. We must pay attention if the direction of the momentum is the same of the trend, and if it isn't then raise a momentum divergence flag. This is good to time the entries and exits. a) RSI. Let's look at the RSI on December 2018, it went from Oversold to reach Overbought levels on February 2019, this trip out from oversold signals a trend reversal, entering the trade on January 2nd, 2019 it would have been a great entry. The blood of the downtrend can weight in, trust the indicator and ride the leg. The RSI signals an exit on March 15th, 2019, with a juicy 15% in the leg, not risking to remain longer and not risking a falling knife in the downtrend. b) MACD. This indicator is on the negative side, which means there is a negative momentum going on. We're in a downtrend, remember?; however, it performs a crossover with the signal, which can be seen in the histogram, making it positive. We have a downtrend plus a positive momentum divergence. At the time the price crosses the trend we have a positive trend plus a positive momentum convergence, the Bulls are in control. this signals another entry. Riding the leg from the histogram crossover until the MACD histogram crosses down the Zero line gives us the same performance as the RSI on the same period. Look at the signal from MACD, the trend is still up, but the histogram is already negative, this signals a negative momentum divergence, it would be the time to take the money and run, preventing the main downtrend could continue. 3. Volume. Usually the volume is displayed in contrasting colors, green when the price bar goes up, red when it goes down. It's tricky, in order for the volume to exist there must be two sides, a buying and a selling side. I see it as volume is volume, and it denotes the interest of the market at a certain price level, I'm not too worried if it's red or green, I'm focused on whether there is high or low transactional activity. As you can see on December 21st, 2018 there was a volume peak that was increasing from the 13th and after the 18th it slowed down. There could have been a lot of sellers willing to take the exit when the prices declined, however there were not buyers to take their "garbage" and all of a sudden there are buyers at the lowest level willing to enter the trade on its way down, like kamikaze traders. The relative volume means those were not retail traders, but institutional traders who can get liquidity following the simple rule "buy on weakness, sell on strength". Another volume pattern is "Volume precedes momentum", a higher relative volume is needed to reverse a trend. So far we have this pattern, a downtrend with a low climatic volume, it's a No Go, it is still bleeding a lot. We wait until the relative volume increases meaningfully and the next sequence in the process is an exit from Oversold on the RSI or a Zero cross over to the positive side in the MACD histogram, next in the sequence is a trend reversal. Last but not least, money management, setup the entry - target - stop/trailing stop levels and ride the leg. Let's take a look at the second example, we still see the trend goes down. There are still some recover legs, that fail to break the trend to the upside, we see also the relative volume is low, so here the institutions are not committed and they patiently let the retail traders to consume themselves until the bid side dries up and the ask side has to settle for lower prices. Watch the period between January 2020 and the end of February 2020, the prices are in free fall, but the volume didn't react immediately, until the last part of February and early March, there was a peak that momentarily stopped the free fall and created a weak support, this was broken again, the number of sellers still overwhelm the buyers, and the climatic volume increases. This is the period when the institutional bulls are stepping in and they're buying the "garbage" that creates the kind of panic liquidity the institutions are looking for. At this time also the Bears are switching hats, they're closing their short positions and taking profits. Once the selling volume dries up, which can be seen when the relative volume slows down. This is the point when the bleeding in the market stops and we look for the signals in the Momentum indicators, we see at the end of March 2020 the RSI indicator escaped the Oversold area and the MACD histogram made a crossover the Zero line, in a very strong histogram. Both indicators flash a strong buy. This is the dry blood we're looking for. Emotionally it takes a toll, we just came from a strong downtrend and the fear that this it's not over yet is there. The fear that the heal is temporary and we're just stepping on a weak support is there. If we set the emotions aside and we trust the indicators and a good set of rules of disciplined money management, we can exploit the opportunities of a downturn. _____________________________________ “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” ~Sir John Templeton
NYSE:XOMEducation
by Madrid
11
The power of the VWAP!As day traders we use the VWAP lots in our trading and have even created custom versions of it which help us manage our trades. In this video I go over exactly what happened to US30 / Down Jones at the Frankfurt open and the New York open, and by using the VWAP today we could have taken advantage of these moves, both up and down! Do you use the VWAP? Let us know in the comments below! Also attached to this video are other educaitonal videos you might find value in!
OANDA:US30USDEducation
by PrimedGroup
Weekly Line Chart DivergencesHello traders, I am not a financial advisor. I am not telling you to trade any asset. I am simply sharing my ideas on how to use tools to implement my own investment strategy. Here is a zoomed-out look you can use to come up with some of your own ideas on where the $SPX may go and how to manage your risk. Most of my core strategies are developed on the indices so I will have to implement them on individual tickers unless the comments are interesting. This is a lagging indicator and should put me on the side of the trade that is *probably* likely to continue. By probably, I mean you need to do your own research and look at what the markets want to go and develop your own tools to work with the data. Orientation: Line Chart of ticker on weekly time frame RSI using 12 periods (or weeks, in this case) Signals can be marked using a vertical line or time-based axis marker . In this case, I am using 3 colors of lines, explained by the "Monday Action" legend. We will dive into more detail later on. I also have EMA using ohlc4 on periods (or weeks) 10, 25, 50, 100, 200. Now to the good stuff: Divergences have been around for quite some time. Research about the RSI (Relative Strength Index) and it's roots It is much easier to see something that is larger, than smaller, thus we look at weekly time frames One can use volume, closing price and RSI to help manage one's risk Narrowing a decision to 3 choices can help alleviate indecision So for this application of the RSI and divergence, one can use a simple line chart on a weekly time frame (this chart is based on the closing price from what I can tell, but I was unable to confirm that with the Help Center. I was able to confirm by checking yesterday's close with current reading - it will be different after this post as the weekly close will come in today (writing before market close Friday morning)). We can start at the March 2020 rally. We can see the March 23rd, 2020 weekly close paint a divergence on the RSI. One can see the price close at a higher high when compared to March, 16th, 2020. The RSI values remain relatively flat: 17.95 to 18.04. Find entry One might conclude this is a time to buy. Because of the magnitude of the move DOWN, the move up was also shorted. One would have to employ the use of other tools in order to find entry in the following week. (Use the white anchored notes to see the explanations of thought process). Find an entry in the next week. One can place orders on the weekend in "shotgun fashion" perhaps placing 50% order above current price and 50% below, or whatever method suits you. Hedge Risk The next yellow line is 08/24 - 31/2020. The close indicates indecision in the market. Since this is the first divergence I would simply hedge the FANTASTIC long during the March 2020 buy. This can help to be determined from YELLOW vs RED using the 10 period moving-average of volume. Use options or other means to protect one's long investments Sell of Heavy Hedge The next divergence is JAN 2021. This is the second one so I would probably sell at this point. I would use my other tools to figure out what to do. Heavy hedging can be using derivatives or shorting your long positions. Timing A simple way to use this strategy might be to use the color's GREEN, YELLOW, RED, just like traffic lights. There will be deviations, and variations to the method, but if you back-test this you will probably find this works generally well. Monday Action Now I used the words Monday Action simply because that was the next possible day to make a decision. I can make my decision probably anytime within Friday if I feel comfortable with it. I can also place actions for Monday on the weekend. Bottom Line This week's close is very important. If we follow the green, yellow, red method from above, this very well can be a RED. It can also be another YELLOW. Volume is indicating something big, but we will see!
SP:SPXEducation
by elkenpolar
Options flow predicting moves on Derivatives (Futures)Options have been and are an important instrument on the financial market for a trader trading Intraday Futures. Therefore, while exploring the mechanics of the option market over the last several months, as a result of work, indicators were created that load data from Quandl and then look for patterns that may herald a change of direction on the derivative market - in this case Futures Contracts. There are two main types of Options: CALL - allow their owner to buy a given product in the future at a predetermined price (Strike Price) PUT - allow you to sell this product at a predetermined price (Strike Price) By observing the market volumes of both types of Options, we can observe the sentiment of investors. The key factors are which volume (call or put) prevail in the volume and the dynamics of the volume - what is the trend on volume, whether the difference between them increases or decreases. In addition, the Put / Call Ratio analysis allows you to confirm or negate the signals from the Option volume. The Ratio indicator behaves inversely to the price movement - in the case of a bearish sentiment, we expect the ratio to increase, and in the case of bullish sentiment - the indicator should decrease. If the Ratio follows the price in the same direction, it is an anomaly. Of course, the mere observation of the Option volumes and the Put / Call ratio is not sufficient, as the Options Market is a much more complicated activity. It is worth including in the calculations such factors as Expiration Date, Bonus Amount, option type (In the Money, Out of Money or At the Money). Not each of the factors is equally important, therefore the key is additionally the appropriate selection of the weighting factors. For this purpose, due to the multitude of data, it is worth using Machine Learning, which I also do by saving the resulting data in a dataset in Quandl and displaying the data in TradingView using Pine Script. Below are some additional examples from recent sessions on ES showing the predictive nature of the Option sentiment, often preceding major movements in the ES index (during the spot session): First, from the left, the session from November 15 is shown and an opportunity to play Short. On the right, the session from November 16 and an opportunity to play the Long position this time. Session from November 10, where we first got the Bull's signal, and at the top we got a warning signal of traffic reversal and the possibility of entering Short: And one of my favorite moves on November 3:
CME_MINI:ES1!Education
by skyline-trader
Regressive VWAP Breakout StrategyStrategy type: Breakout Ingredients: Price, Volume, Regression Prerequisite add-ons (free): Regressive VWAP and Strategy Visualizer Target market: CME:BTC1! or BITSTAMP:BTCUSD - Long Entry on Close crossing over Regressive VWAP - Short Entry on Close crossing under Regressive VWAP - Optional: exit when price retraces to upper band (LX) or lower band (SX) The key to this breakout strategy is the Regressive VWAP, which weighs Price and Volume with Regression Analysis, making the slope and its bands more responsive, with a degree of mean reversion. Below is another example, this time CME_MINI:ES1! .
CME:BTC1!Education
by ChartVPS
2
Regressive VWAP Band Buffer Strategy on GC 10RRequired add-on (free): NEXT Regressive VWAP Target market: COMEX:GC1! 10R chart Strategy Overview: - Long when price crosses upper band (green) - Short when price crosses lower band (red) - Do not initiate trades in the buffer zone (between the bands) - that is our filter Setting Alerts: Here is how to set price (close) crossing band alerts: open a chart, attach NEXT Regressive VWAP, and right-click on chart -> Add Alert. Condition: Symbol, e.g. ES (representing the close) >> Crossing >> Regressive VWAP >> Upper ( or Lower) Band >> Once Per Bar Close.
COMEX:GC1!Education
by ChartVPS
Volume Profile (Top 3 Reasons To Use Value Area Trading)Top 3 Reasons To Use Value Area Trading (on Volume Profile) 1) Plots on a vertical scale and gives you a specific price level where the most volume has occurred. 2) You gain far more information about price levels and volume. 3) Most importantly: Makes it easier to sport institutional support and resistance levels. Why is it important to know where 70% of trading volume? Because retailer traders need to know where large institutional or big banks are buying and selling and need to trade with them, not against them. POC or point of control is the LINE on chart is the largest volume by institutional traders- on the chart. Largest horizontal line. *IF price action is above point of control- then trade bullish or buy *IF price action is below point of control- then trade bearish or sell You can see thin volume outside of the value area, where price action moves quickly thru areas into value areas. You can use last couple or few days to find volume profiles or value areas to determine where price action might go too.
Education
by Anbat
2