Technical Summary: JSE Mid & Large CapsTechnical Summary: JSE Mid & Large Caps.
Ascertain which regime a share is trading in.
The readings are subject to change as the price action develops.
J200 trade ideas
Oh no Mr Market not this shenanigan again! We've started off the year of 2024 the same way we started in November 2022.
In a sideways range with a high of 75,000 and a low of 63,000.
This is very disappointing and tough for position and swing traders who mainly focus on the JSE stocks.
What can we do this year to help ride up and down the range? I can give some ideas but it's up to your trading personality and risk profile how to go about it.
Some ideas are.
1. Lower your risk and reward price expectations.
2. Look into intraday trading the JSE ALSI 40
3. Make use of the trailing stop loss more
4. Risk less per trade when the market is really just volatile
5. Diversify into other markets and bite the bullets
So, analysis wise I guess the JSE will want to go back to 75,000. Any trader can see a rectangle and guess the range movement for the year.
What are your thoughts?
What we really need is a breakthrough and a breakout.
Traders Don’t Fail – They QuitIt’s been a very tough year for swing traders.
Go long the market drops. Go short the market rallies.
Don’t do anything and you save from the burn.
But in the bigger scheme of things, it looks like we are in an accumulation phase.
The accumulation phase is a period in which smart money (informed and experienced traders or institutional investors) is believed to be accumulating a particular asset while it is still relatively undervalued.
This phase occurs before a notable uptrend or bullish move in the market.
Key characteristics of the accumulation phase include:
Sideways Movement:
Prices move within a trading range, often forming a base or a consolidation pattern.
The range represents a period of equilibrium between buying and selling forces.
You can see the JSE ALSI has been in a tight range this entire year.
Decreasing Volume:
Volume tends to decline during the accumulation phase, indicating a decrease in overall market activity.
Lower volume signals that the asset is not attracting significant attention from the broader market.
There have not been huge orders on the JSE ALSI like other years. It could be because there are LESS investors buying shares and more going into derivatives and margin trading.
Or because they are worried about the state of the economy with load shedding, foreign direct investments pulling out, the country being rated down or people fleeing the country.
Smart Money Accumulation:
Informed traders or institutional investors quietly accumulate the asset during this phase.
Their accumulation is not typically evident in the overall market activity due to the relatively low volume.
Now with December, we could see investors piling into trades from their bonuses, offsetting taxes, preparing for the next year or with optimism with the festive season.
Transition to Markup Phase:
After a sufficient accumulation, there is an expectation that the asset’s price will break out of the trading range.
This breakout marks the end of the accumulation phase and the beginning of the markup phase, characterized by a sustained uptrend.
So, my hopes and bets are UP.
I think once we break out above the range, we could see the JSE ALSI rally a good 10 -20%.
But geez, we need strong catalysts to kick in.
Even if it’s international markets helping us run up with Dual LIsted companies or America’s leading influence.
What are your thoughts? You think we’ll get our long waited for rally?
Traders and investors who stay in the game will reap the rewards.
Patience is a trader's virtue.
Impatience is the reason why traders quit. They don’t FAIL – THEY QUIT.
5 Non Trading Activities to Success…While charts, trends, risk and reward are our daily companions.
Let’s not forget that life’s full of exciting opportunities beyond the trading desk.
We are human at the end of the day.
And you also need to consider extra elements that will help you propel towards success.
Let’s get into the 5 Non trading activities you need to act on.
Healthy Lifestyle: Trading, Eat, Rest, Gym, Repeat!
Who said trading is all about staring at screens and analyzing numbers?
It’s time to inject some energy into your life!
A healthy lifestyle isn’t just about balance sheets; it’s about balance in everything.
You need to take your vitamins, eat healthy, feel great, hit the gym, go for a run, or channel your inner yogi.
The adrenaline rush from trading pairs perfectly with the endorphin high from a good workout.
The healthier you are, the more sharp your mind will be.
And this will get you to think straight and control your emotions better.
Besides, you are what you eat and what you do.
Mindful Meditation: Zen and the Art of Trading
Mindful meditation isn’t just sitting and going OOOHHM….
It’s for all successful entrepreneurs that deal with daily stresses and risks.
Sometimes you just need to take a breather, clear your mind, and get your mind and thoughts in order.
Whether you meditate, do self-hypnosis or just do deep breathing exercises – this will help you to be a more calmer and clearer thinker as a trader.
When you find your inner peace in your mind, it will reflect on your trading and results.
Continuous Learning
Trading is an ever-evolving game, and the most successful players never stop learning.
I’ve read maybe 200 books on trading in my life and I don’t even think that’s nearly enough to learn everything about the markets.
It’s always crucial for you to dive into new strategies, explore market trends, and devour financial news like it’s the hottest gossip in town.
You need to find yourself in the trading journey. This is a self introspection adventure that is forever going.
Stay curious, stay hungry for knowledge, and watch your trading game reach new heights.
Strong Networking: Bulls, Bears, and Bros
Trading might be a solitary endeavor,.
But success is a team sport.
It’s important to build a network that’s as strong as your risk management skills.
Sign up to trading events, courses, books and programmes.
Connect with fellow traders, and remember, it’s not just about what you know; it’s about who you know.
Your next big opportunity might come from a conversation over coffee rather than a chart analysis session.
Time Management: Trade Like a Pro, Live Like a Boss
In the world of trading, time is money.
But beyond the trading hours, master the art of time management in your personal life.
Schedule downtime, enjoy hobbies, and spend quality time with loved ones.
A well-balanced life isn’t just about maximizing profits; it’s about maximizing joy.
Efficient time management is the key to becoming a trading rockstar without burning out.
So, trade smart, live well, and let success be your favorite trend!
FINAL WORDS:
I trust this has given some food for thought.
That trading isn’t just about technical work. It’s also about inner work.
Work on yourself and become the true trader you aspire to.
Let’s sum up the 5 Non Trading Activities to achieve better success.
Healthy Lifestyle: Trading, Eat, Rest, Gym, Repeat!
Mindful Meditation: Zen and the Art of Trading
Continuous Learning
Strong Networking: Bulls, Bears, and Bros
Time Management: Trade Like a Pro, Live Like a Boss
Why Markets Will Always Change – 9 ReasonsThe only thing constant about financial markets is that they change.
And since 2007 or so, with the higher availability of trading different instruments and markets world-wide.
And not to mention, the ability to go long (buy) and go short (sell).
Yes, these everyday possibilities were difficult to find and trade back then.
Now I’m speaking my age in the markets. But it’s important to know, the algorithms are changing the game every single year.
As long as you’re a trader you need to be able to learn, grow, adapt and evolve with every changing markets.
Let’s go into details about WHY the markets are changing…
New and Old Traders (Volume and liquidity)
Traders are the lifeblood of financial markets.
They come in all shades of experience, net worth, strategies and diversity.
Each new trader and investor, brings fresh perspectives, risk appetites, and systems.
And when they execute, it causes a ripple into the market ecosystem.
Similar to the ‘Butter-fly effect’ where one tiny flutter of the wing can cause weather disturbances which could result in a hurricane.
This blend of old and new creates a constant state of flux, volume, liquidity and adds their unique touch to the market canvas.
New Market Information (Local or international)
Information is the bedrock of trading decisions.
In today’s hyperconnected world, news, data releases, and geopolitical events can instantaneously ripple through markets.
Whether it’s an unexpected earnings report, a geopolitical crisis, FOMC or Central Banks decisions, or a technological breakthrough (like AI).
This new information triggers a financial market reaction.
New Micro, Macro, and Fundamentals (Unrelated to charts and price)
Microeconomic factors include things like: individual company performance.
Also think of corporate actions such as mergers and acquisitions. These will also reshape industry landscapes and impact stock prices.
Fundamentals include any internal news related or announcement event that is NOT related to price and volume action on a chart.
While macroeconomic indicators include: GDP growth with money tightening and injection controls.
While Central banks’ decisions on interest rates, inflation rates and monetary policies influence borrowing costs, investment decisions, and market valuations.
These also play a pivotal role in market dynamics.
As these factors evolve over time, they influence market sentiment (how investors feel on what to buy and sell)
And this obviously drives price movements.
World Economic Info (Major changes happening)
Globalization has interconnected economies in ways unimaginable just a few decades ago.
On the one hand we have 6 more countries joining BRICs. Which is showing the political war and dynamic change between the East and the West.
Economic trends in one part of the world can have far-reaching effects elsewhere.
Trade agreements, currency fluctuations and Forex wars, and shifts in supply chains impact various sectors and industries.
And this can also lead to a change in market price, volume and conditions.
Also, when one event kicks in there is a domino effect.
And this can trigger a cascade of events that reverberate across financial markets worldwide.
Sentiment (How the overall feeling is)
Psychological factors like fear, greed, and uncertainty can drive sudden market movements.
Market sentiment is often reflected in buying and selling volumes.
When investors and traders are feeling optimistic and positive – they buy and hold.
When they are feeling down and negative (about positions) – they sell and short.
High volume with buying or selling can indicate strong conviction – for other investors.
While low volume might signify uncertainty.
This ebb and flow of market participation led to constant changes in market trends and patterns.
Then there are other reasons that financial markets are constantly changing including:
Technological Advancements (At an accelerating rate)
As the world evolves and technology compounds at unprecedented levels, we will see innovations in:
Trading platforms
Algorithms
new instruments & markets
high-frequency trading
New AI related trading bots
Better chart pattern recognition plugins
Improved automatic trading developments.
And emerging technologies can change existing business models in a way they can make them obsolete to totally transform them.
These will all influence market behaviour of demand and supply with investors and traders.
Which will cause a shift and change in price and volume.
Regulatory Changes (Boring but inevitable)
Also, rules.
Rules, regs and legs are always updating and changing.
This will also alter trading practices, liquidity, price movement and market structure.
Political Uncertainty (Fun times ahead for the world)
The rate the world is separating and joining forces in all different ways, there is change coming to the financial markets.
With the EU having control over 27 countries economies.
With BRICs adding another 6 countries to theirs.
With other countries breaking away from the US dollar.
While other companies and countries are switching and adopting more to crypto and AI.
The very foundation of politics and control is changing under our very eyes.
And this will definitely have a major shift in economic directions as well as on the markets.
Natural Disasters and health disasters (Brace yourself and keep your masks)
From Global Warming, to less resources available to mind.
From catastrophic events, floods and droughts.
These can all disrupt supply chains, impact production, and affect the prices of commodities and goods.
And then financial markets and prices, will all be affected.
And what about pandemics?
If we have another COVID-19 type event, this will once again create rapid shifts in consumer behaviour.
And this will have a major impact and ripple throughout companies, industries, countries and essentially the world markets.
FINAL WORDS:
You can clearly see, why financial markets will always change.
And as markets continue to shift and adapt, the only constant is change itself.
So it’s our job to adapt or die.
Embrace it, learn from it, love it and enjoy the process along the way.
It means, this journey and income generating source will NEVER get boring.
It can ONLY get better (well we can be optimistic to think that).
Let’s sum up why the financial markets landscape will always change…
New and Old Traders (Volume and liquidity)
New Market Information (Local or international)
New Micro, Macro, and Fundamentals (Unrelated to charts and price)
World Economic Info (Major changes happening)
Sentiment (How the overall feeling is)
Technological Advancements (At an accelerating rate)
Regulatory Changes (Boring but inevitable)
Political Uncertainty (Fun times ahead for the world)
Natural Disasters and health disasters (Brace yourself and keep your masks)
WHAT ARE Fakeouts, Shakeouts and Whipsaws?YOUR QUESTION ANSWERED!
What on earth are Fake outs, Shake outs and Whipsaws?
After this you will know…
Fake-out:
(When the price makes a false breakout of a chart pattern)
A fake-out occurs when the price of a market appears to break out of a certain chart pattern.
This could be a trendline, support, or resistance level.
But then quickly reverses and retreats back within the pattern.
Shake-out:
(Where the market is highly volatile and the price moves to levels that hits their stop losses and gets traders out of their trades)
A shake-out is a scenario where the market becomes highly volatile and the price moves rapidly to levels that trigger the stop-loss orders of many traders.
Stop-loss orders are pre-set risk levels at which traders automatically exit their positions to limit their losses.
A shake-out is designed to “shake out” weak or inexperienced traders from the market.
When stop-loss orders are triggered, it can create a temporary spike in the opposite direction of the prevailing trend.
Once these traders are “shaken out,” the market might resume its original trend.
You’ll see this most commonly with low liquid, high volatile markets like Penny Stocks or Penny Cryptos.
Whipsaw:
(This is where the market will change its most prominent direction within the day).
Whipsaw refers to a situation where the market quickly changes its direction within a relatively short period, often during a single trading day.
This can cause confusion and losses for traders who are caught off-guard.
Whipsaws can occur due to various factors, such as sudden news releases, economic data surprises, or changes in sentiment.
They are characterized by sharp price movements that can make it difficult to make accurate trading decisions.
Whipsaws are especially common during periods of high market uncertainty or when there’s a lack of a clear trend.
Let’s create a quick summary of the three:
Fake-out:
(When the price makes a false breakout of a chart pattern)
Shake-out:
(where the market is highly volatile and the price moves to levels that hits their stop losses and gets traders out of their trades)
Whipsaw:
(This is where the market will change its most prominent direction within the day).
If you have any trading question let me know in the comments
#TOP40 South Africa 40 finds support@ trendline + Horizontal supNote how the trendline that has formed has had its 3rd successive touch with a reversal candlestick. Each turn off support has created strong upside price action the following day. The level where the top40 found support is even more significant as the 67500 has been a massive change of polarity on many occasions through the second half of 2023. The bulls have their work cut out for them as the failure to hold price above the 200dma was not a positive development. However in the short term, i think we can retest 69300 and maybe 70 000 but ultimately a close and successive days of trading above 70k is needed for bulls to sustain momentum and drive the market higher.
JSE ALSI Target set to 80,000!As expected, the JSE ALSI consolidated a handle and the price broke up and out of the brim level.
This aligned with the upside of the Santa Claus Rally along with the resource rally.
We also have the January Effect that will continue to push the price up.
We have an aggressive entry on the longer time frame, and others will wait for a pull back to the brim before buying up.
So the target remains at 80,000.
SANTA CLAUS Rally in 2023 for JSE ALSI 40?Will we have a Santa Claus rally this year?
Statistics say, it is likely but let's start from the beginning...
The Santa Claus rally is when stock prices, both locally and globally, tend to go up and end the year on a positive note.
Now, why does this happen? Here are some ideas:
Holiday Cheer:
During the holiday season, people generally feel more optimistic and positive.
The festive mood can rub off on investors, making them look at the market with a brighter outlook.
Positivity often leads to more buying, which helps the rally.
Tax Time:
Toward the end of the year, investors and fund managers review their portfolios for tax purposes. This is when you'll see them selling stocks to get some tax benefits.
Once they sell, they use the money to buy other stocks, thinking those will do well in the coming year.
This buying spree lifts stock prices and pushes up market indices.
Bonus Spending:
Investors often use their year-end bonuses to buy stocks. More buying means higher demand, and you know what that does – stocks go up!
While it's a bit speculative, nothing says Santa Claus Rally like charts showing off holiday cheer.
The JSE has seen gains in 14 out of 20 Decembers!
Take a look at the JSE-ALSI stock market chart since 2003. Each December is marked with a vertical blue line, showing how it performed:
That's a 70% win rate with positive gains in 14 out of 20 Decembers, accumulating a total of 38.72% gains.
So, chances are, buying this Christmas might be a good idea, especially after a sideways year for the JSE ALSI.
5 TRADING PROTECTION LEVELS - NB*REMEMBER
Every trader needs 5 protection levels.
Stop loss to stop yourself from furthering losses
Time stop loss to get you out of non-performing trades
Adjusted stop loss to lock in profits when the market moves in your favour.
Risk % per trade to only lose a certain amount of your portfolio
% of Drawdown before you HALT trading - when the market is not in a favourable environment to your strategy.
These are the control factors to manage your portfolio with better direction and management.
What other protection levels do you apply?
The 12 Dangers of Trading DoubtDoubt is danger.
It’s a big enemy for trading.
And it’s something that is innate, which is hard to escape from.
It leads to you to miss opportunities, destroys confidence, clouds judgement and keeps you stuck in a rut.
When you are infected with doubt, this can infiltrate even the most experienced traders.
This article delves into the various dangers of trading doubt and how to overcome its destructive effects.
Missed Opportunities
When doubt creeps in, traders often find themselves hesitating or second-guessing their decisions.
Once you feel hesitation, you’ll miss great opportunities.
Winners will be left on the table.
All because you doubt it’ll go your way and that the markets are conducive.
If you want to stop the doubt you need to act swift and make decisions within three second.
1, 2, 3 – ACT!
Loss in Confidence
Without confidence, you’re going to doubt.
You’re going to question your skills, strategies, and abilities.
As confidence dwindles, you’re going to feel strong fear, panic and worry.
This will lead to irrational decisions driven by emotions rather than logic, rationality and sound analysis.
Change Your System
Even if you have a winning system.
Doubt could cause you to abandon it.
You might already be thinking of finding another.
Looking for better parameters.
Adding extra elements and variables.
This constant tinkering will prevent you from fully realizing the potential of their proven trading strategy and approach.
This is a time game. Not a week, not a month. Noth even three years.
Your trading success will come from being consistent, persistent and consistently applying a well-defined strategy over time.
Search for “Better”
You might even doubt trading all together.
You might have lost a bit of money and now you have this desire to make it back.
So you’ll look into gambling, sports betting, Amway or any other scheme instead.
But you’ll most likely be disappointed. Because everything worth doing well for reward, consists of elements of risk and time.
Don’t Take the Trade
Your finger could be between three stone walls.
Or your finger could be 1 mm from the button.
If you have doubt with your trades, this will paralyse you to enter a trade.
This hesitation will lead you to:
Miss trades
Miss profits
Interfere with the system
Lose confidence
Exacerbate panic and fear
This will only set a precedent for you to do it again.
It’s a bad habit that can destroy you as a trader.
Don’t Follow Criteria
Doubt can lead to a disregard your essential rules.
You might:
Get in at different levels
Move your stop loss further away
Close prematurely for tiny profits or
Take a trade that does NOT match the criteria.
If you question the trading validity of your criteria, this will turn you into an undisciplined and unsuccessful trader.
Overtrading
Once doubt sets in – so will mania.
And to break away from doubt, you take on a dangerous path.
In an attempt to overcome doubt, you might start overtrading or revenge trading.
This is where you’ll enter too many trades in quick succession, without following any criteria.
Emotional Roller Coaster
Doubt is not just feeling lazy.
It actually comes with feelings of frustration, anxiety, and self-doubt dominating their thought process.
This emotional turmoil can cloud judgment and lead to reactive rather than rational decision-making.
Analysis Paralysis
When doubt takes hold, this is where you might go all out with indicators, parameters and price action elements.
This will lead you to excessive analysis.
You’ll continuously seek more information before making a decision.
This analysis paralysis can cause a couple of issues.
It can overcomplicate trading
It makes back and forward testing almost impossible
The variables can cause conflict with each other.
Your charts will look like Christmas trees
This can lead you to miss trading opportunities and an inability to take action.
Inconsistent Results
Consistency is key in trading success.
Doubt-driven decisions can lead you to inconsistent results.
You’ll have your journal with how the trades were SUPPOSED to go.
Versus how you made them go.
And this will make it challenging to gauge the effectiveness of a trading strategy over the long term.
Psychological Toll
Doubt is a constant battle.
If you have this, it will infect your mind it will take a toll on your mental well-being.
It can lead to stress, burnout, and even health issues if you don’t fix them.
Loss Aversion
Doubt can cause a psychological bias known as loss aversion.
This is where traders become will focus to avoid losses rather than maximise their gains.
This mindset can hinder traders from taking necessary risks to achieve substantial profits.
Focus on cutting small losses and banking small profits and you’ll have a recipe for disaster.
It’s time to build your confidence
This will come from working on a trading journal, risking less and building a track record.
Over time, the doubt will creep away and the certainty will override.
Let’s some up the elements of doubt for a trader…
Missed Opportunities
Loss in Confidence
Change Your System
Search for “Better”
Don’t Take the Trade
Don’t Follow Criteria
Overtrading
Emotional Roller Coaster
Analysis Paralysis
Inconsistent Results
Psychological Toll
Loss Aversion
Worship the 200MA with the JSE ALSI 40 - But we will break up!The JSE ALSI 40 once again tested the 200MA.
It then retreated back with its tail between its legs.
However, the drop has not been aggressive and big. So we can make an assumption that this is a current dip that will cause a rounding bottom.
If this is true, it will complete a Cup and Handle formation. And when the price breaks above the brim level we could see 80,000 on the cards.
With the Santa Claus rally and positive sentiment with the interest rate hikes being halted in the US and the weakening dollar - It looks like we will continue to see its rally.
Happy to be in the markets during this time. But if there is ONE lesson to take in, worship the 200MA to determine the CURRENT trend.
Break above 200MA and it's a slay up from there.
Tough year for JSE ALSI Positions TradersIt's been a very tough year for swing traders.
Go long the market drops. Go short the market rallies.
Don't do anything and you save from the burn.
But in the bigger scheme of things, it looks like we are in an accumulation phase.
The accumulation phase is a period in which smart money (informed and experienced traders or institutional investors) is believed to be accumulating a particular asset while it is still relatively undervalued.
This phase occurs before a notable uptrend or bullish move in the market.
Key characteristics of the accumulation phase include:
Sideways Movement:
Prices move within a trading range, often forming a base or a consolidation pattern.
The range represents a period of equilibrium between buying and selling forces.
You can see the JSE ALSI has been in a tight range this entire year.
Decreasing Volume:
Volume tends to decline during the accumulation phase, indicating a decrease in overall market activity.
Lower volume signals that the asset is not attracting significant attention from the broader market.
There have not been huge orders on the JSE ALSI like other years. It could be because there are LESS investors buying shares and more going into derivatives and margin trading.
Or because they are worried about the state of the economy with load shedding, foreign direct investments pulling out, the country being rated down or people fleeing the country.
Smart Money Accumulation:
Informed traders or institutional investors quietly accumulate the asset during this phase.
Their accumulation is not typically evident in the overall market activity due to the relatively low volume.
Now with December, we could see investors piling into trades from their bonuses, offsetting taxes, preparing for the next year or with optimism with the festive season.
Transition to Markup Phase:
After a sufficient accumulation, there is an expectation that the asset's price will break out of the trading range.
This breakout marks the end of the accumulation phase and the beginning of the markup phase, characterized by a sustained uptrend.
So, my hopes and bets are UP.
I think once we break out above the range, we could see the JSE ALSI rally a good 10 -20%.
But geez, we need strong catalysts to kick in.
Even if it's international markets helping us run up with Dual LIsted companies or America's leading influence.
WHat are your thoughts? You think we'll get our long waited for rally?
Traders and investors who stay in the game will reap the rewards.
Patience is a traders virtue.
Impatience is the reason why traders quit. They don't FAIL - THEY QUIT.
Until then trade well...
T
JSE Technical SummaryTechnical Summary as of yesterday's close.
Readings for:
Oversold
High bullish momentum
Strong
Neutral
Weak
High bearish momentum
Oversold
JSE ALSI ready to rally once price breaks 200MA then 76,185Cup and Handle has formed on JSE ALSI.
The price broke above the Brim level, came back and tested the support showing upside is on the cards.
7>21
Price remains below 200MA but as I like to say, the more it tests it the more likely it will break above like thin ice.
Target remains at around 76,185
The only constant with trading the markets is...The only thing constant about financial markets is that they change.
And since 2007 or so, with the higher availability of trading different instruments and markets world-wide.
And not to mention, the ability to go long (buy) and go short (sell).
Yes, these everyday possibilities were difficult to find and trade back then.
Now I’m speaking my age in the markets. But it’s important to know, the algorithms are changing the game every single year.
As long as you’re a trader you need to be able to learn, grow, adapt and evolve with every changing markets.
Let’s go into details about WHY the markets are changing…
Since around 2007, the landscape has undergone significant transformations, driven by several key factors that shape the dynamic nature of these markets.
1. Globalisation and Technological Advancements
Traders now are able to gain access to enhanced connectivity, facilitating participation in markets worldwide.
They also have amazing trading and charting platforms like TradingView.
This increased speed of information dissemination and transactions has a profound impact on market dynamics. And this helps contribute to the perpetual state of change.
2. Diversification of Instruments and Markets
The availability of diverse financial instruments, ranging from stocks and bonds to commodities and cryptocurrencies, has expanded trading possibilities.
Each year we seem to have more assets, markets, instruments, structured products and choices.
It's building into a trading universe in a way.
And each market possesses unique characteristics influenced by distinct factors.
This diversity introduces complexity to trading strategies. And this requires traders to navigate a broad spectrum of instruments with different behaviors.
As long as there are new and improved assets, the markets will always change.
3. Long and Short Positions
Unlike in the past, where shorting certain markets proved challenging, the ability to go long (buy) and short (sell) has become more prevalent.
This flexibility allows traders to capitalize on both upward and downward market movements.
With the ability to go long and short a variety of markets, this is changing the financial landscape of the markets.
Price action no longer moves in a Zig Zag 45 degree motion.
There are more dips and rallies without strong trends, like in the past.
All because of the intrciacies of long and short positions also adds intricacy to risk management strategies. talking about algorithms.
4. Rise of Algorithmic Trading
Algorithmic trading has emerged as a game-changer in financial markets.
This involves using computer programs to execute trades based on predefined criteria.
The influence of algorithmic trading is profound, contributing to increased liquidity, faster execution, and the development of innovative trading strategies.
As algorithms evolve each year, they continually reshape the dynamics of the trading landscape.
5. Market Participants and Strategies
The composition of market participants has evolved, with institutional investors, hedge funds, high-frequency traders, and retail traders all playing pivotal roles.
All of a sudden we've seen a spike in the new trend of trading with Smart Money Concepts and Inner Circle Trading, in the last two years.
These changes in the behavior and strategies of these participants can swiftly impact market trends and volatility.
The influx of retail traders, facilitated by online platforms, further adds new dynamics to the markets.
So once again, the only constant for traders is the change that is taking place in the financial landscape and market universe.
Traders who evolve, adapt, acknowledge and respond effectively to the perpetual state of change are better positioned for success in this dynamic and challenging environment.
9 Elements to Master Algo-TradingThere are two types of trading.
Discretionary where you buy and sell based on variable factors.
Mechanical where you buy and sell on fixed factors.
If you want a strong edge with the markets, then you’ll need to consider the latter.
And hence we have algorithmic, or algo trading.
Algo trading, or algorithmic trading, is the use of computer programs to automate the process of trading financial assets.
These programs, or algorithms, execute trades based on predefined rules and criteria.
Now when you dissect algo trading to its core, you’ll realise there are important elements you’ll need to consider to master it.
Element #1. Database Management & Analysis
Algo trading simply begins with a whole bunch of comprehensive and organised data management.
You’ll use the financial markets to generate vast amounts of data, including historical price movements, trading volumes, and momentum indicators.
Basically, you’ll need this database to create a strong back tested analysis.
That way you’ll be able to get the accurate data to tell you how it’s performed, the expectations and the best and worst case scenarios.
Element #2: Statistical Analysis
Once you have the database of tested information.
You’ll be able to work on your statistical analysis to see the inner workings of the system in action.
Win & loss rate
Best & average winners and losers
Drawdown averages
Average trade
Expectancy formula
Biggest and smallest winner & loser
Average week, month, quarter and year
Basically, all the stats you need that forms the bedrock of successful algo trading strategies.
When you have this data you’ll be able to spot trends, correlations, and anomalies within financial data.
Element #3. Pattern Recognition Skills
Pattern recognition is a core competency in algo trading. We aren’t fully there yet with AI, Machine Learning and Deep Learning. But we’re getting there.
With trading expertise combined with algorithmic precision – this will allow computers to find recurring chart patterns, candlestick formations, and technical indicators.
These patterns often help give trends, reversals, potential market movements, and opportunities to enter or exit a trade.
E lement #4. Machine Learning
Machine learning, a subset of artificial intelligence.
By using historical data, machine learning algorithms can adapt and improve trading strategies over time.
So whether you have a moving average, chart patterns, Smart Money Concepts, Fibonacci or any other trading system.
With Machine Learning, it will input more data and will be able to change, add, remove and optimise elements in your strategy to make it MORE successful.
In just no time at all, these algorithms will learn from past successes and failures, fine-tuning trading parameters and strategies to optimise your trading performance.
E lement #5. Trading EA Strategies
Expert Advisors (EAs) are your everyday trading robots.
These are algorithmic programs that are developed for trading platforms like MetaTrader and soon TradingView.
These EAs help you to execute trades based on your pre-defined rules and criteria.
You’ll then be able to design and backtest these strategies to make sure they are viable and profitable in REAL market conditions.
And when it’s time to take trades, EAs do it for you.
They will be able to automate the execution process – with no emotions or hesitance.
This will allow you to capitalise on opportunities 24/7 without any human intervention.
And you no what that means. It’s going to do the job!
Element #6. Problem-Solving Skills
You are going to hit a bunch of obstacles in the way.
There are major challenges when it comes to algo-trading.
And you’ll need to have strong problem-solving skills to overcome them and succeed.
Just like programmers deal with bugs, glitches and problems with code.
You’ll also find problems with paramaters, markets, rules, criteria and risk management calculations.
If you have strong problem-solving skills you’ll be able to quickly identify and sort out the issues, diagnose causes, and find and implement solutions to maintain consistent performance.
Element #7. Attention to Detail
You need to have an eye for algo-trading.
When the smallest discrepancies or inaccuracy can have major consequences for your portfolios performance.
You’ll need to consistently review your strategies, parameters, and data inputs.
That way it’ll help to make sure your system is accurate, reliable and trustworthy.
Element #8. Risk Management
It’s not just about creating a solid trading strategy and system.
You’ll need to have effective risk management too.
With Algo trading, you’ll need to employ a couple of money management techniques like:
Position sizing
Stop-loss orders and criteria
Portfolio diversification
When to close based on over time
When to adjust your positions
When to risk a certain percentage based on different market environments
This will help you to protect, preserve and prosper with your portfolios.
Element #9. Market adaptability
Markets are dynamic.
Markets trend.
Markets move sideways.
Markets jump in irrational circumstances.
As an algo trader, you’ll need to find a way to adapt your system into the programme to identify these market environments.
E.g. When the main market is above the 200MA only look for longs
When the main market is below the 200MA only look for shorts.
When the market is within a box range – Don’t look for any trades.
As you can see, there are many elements to being a successful algo-trader.
It also takes a ton of innovation.
But have this article with you, for when technology and developments improve – You’ll have certain ideas and steps to take to improve your algo trading.
Let’s sum up the important elements to algo-trading…
Element #1. Database Management & Analysis
Element #2: Statistical Analysis
Element #3. Pattern Recognition Skills
Element #4. Machine Learning
Element #5. Trading EA Strategies
Element #6. Problem-Solving Skills
Element #7. Attention to Detail
Element #8. Risk Management
Element #9. Market adaptability
Do you use Algo-Trading with the markets?
Q&A MARGIN CALL - Everything you need to know Today's Q&A I want to answer the most common questions I get about Margin Calls.
Let's begin.
Q. What is the Margin Call?
A margin call is a situation where a trader does not have enough funds in their account to keep a trading position open.
Your broker will either phone you or you'll receive an automated message with a margin call warning.
Q. What can you do when you hit a Margin Call?
If you are ever in this situation, you will be instructed to do two things.
Deposit more funds into your portfolio to keep your trading positions opened.
Close your current open position/s that are running at a loss, before your trading platform closes them out for you.
Tip: When setting up a trading account with a broker find out what their minimum margin requirements are.
Q&A: Can you show an example with a Margin Call?
Let’s look at an example with a Margin Call
Here are the specifics:
Equity portfolio: R10,000
Initial margin deposit: R5,500
You buy a CFD trade which says you need to have at least 30% of the margin (initial deposit) in your account, to keep the trade opened.
This means, you need R1,650 (30%) in your account to keep your trade opened.
The next day comes and the market crashes below your stop loss.
Your new account balance is now R1,500…
Unfortunately, you’ll hit a Margin Call as your portfolio only has 27% of the initial margin of your trade.
= Equity ÷ initial margin deposit
= R1,500 / R5,500
= 27%
27% is less than 30% of what you need to maintain an open trade.
The broker now has the right to close the trade and to send you a notification about what happened.
You will receive a margin call to instruct you to deposit more money into your account or to close your trading positions.
Q&A: What if I can't pay back the money when I hit a Margin Call?
Essentially, you will be owing the broker as they will not be carrying the risk.
If you cannot pay it or refuse to clear the negative balance, you will not be allowed to trade with the broker and/or trading platform again until you pay what you owe.
Depending on the size of the debt, if you refuse to pay it then some brokers may have the legal right to pursue the outstanding debt through legal means.
This means they could file a lawsuit.
They could even take the matter to court, where a judgement may be issued where the trader will be required to repay the debt.
What Q&A would you like to see next?
If you enjoyed it or found this useful let me know so I can do more for TradingView...
Trade well...
Stop Multi-Tasking and Start Mono-Tasking! – 8 Trading ReasonsYou’re risking your own money when trading.
You realise that?
And in this fast-paced world, it takes a split second to break a fortune.
It takes a split second to miss an opportunity.
It takes a split second to lose focus.
And it’s all down to one trait that is actually detrimental to your trading.
Multi-tasking.
Here’s why.
Reason #1: Missed Opportunities
When you try to juggle too many charts, markets and tasks at the same time – it’s risky.
And if you distract yourself at the same time with social media, your cute cat, the news and hype…
It makes it a whole lot worse.
You might miss the best and highest probability trades – that you need to grow your account.
If you want to really dig into finding the best opportunities you need laser focus and tunnel vision.
So stop multi-tasking and instead stick to mono tasking.
Reason #2: Delays in Priorities
If you multi-task, it can lead to a delay in focusing on high-priority tasks.
Any delay, can result in:
Catching the trade too late
Skipping the trade completely
Forgetting what you need to execute
Taking an unnecessary loss
You need to stop diverting your attention away from urgent market developments.
Instead, make it a priority to focus on finishing that one task.
And make sure you do it with your undivided attention.
Reason #3: Elevated Stress Levels
As traders, we’re not only working on our method and money management – but also our mindset.
Financial trading and risking money is already stressful alone.
So, multi-tasking can only exacerbate this stress.
And when you get stress you don’t need me to remind you what happens:
You see red
Your judgement becomes cloudy
You make impulsive decisions
You make wrong decisions
Your emotions override your logicality and rationality.
You can get stress all because you’re doing too many things at once.
Keep to one thing and compartmentalise the others. This will do wonders for your stress levels.
Reason #4: Drop in Productivity
You’d think if you do more, it’ll enhance productivity.
Because you’ll get stuff done right?
Um no.
With complex instruments analyses and risk management principles, trading needs deep analysis, strategic planning, and quick execution.
With multi-tasking, you’ll most likely shift between tasks rapidly.
This will not only disrupt the flow of concentration you need for one task at a time.
It could also reduce the efficiency and suboptimal outcomes for every task you take on.
Reason #5: More Mistakes
To err is human.
And if you multi-task and take on too many things, this will increase the likelihood of errors in trading.
You might enter the wrong amount.
Get in at the wrong prices.
Get your volume wrong.
But more likely, you’ll misinterpret good market signals.
Each mistake has the potential to reduce your profits and damage your reputation.
Reason #6: Reduced Learning Opportunities
Successful trading is an ongoing learning process.
When you multi-task, it hinders you from fully engaging with market trends, historical data, and educational resources.
When you’re learning one thing – stick to one thing.
Or it’s going to go in the one ear – out the other.
Be passionate and fully immerse yourself in the one thing you’re learning at a time.
You’ll find you’ll get a better and deeper understanding which is critical for your learning journey.
Reason #7: Loss of Concentration
Multitasking fragments attention.
This makes it super difficult to maintain the level of concentration you need when trading.
When you jump from one thing to another.
This rapid task-switching, diminishes the brain’s capacity to keep focus.
And this could lower your analytical attention.
Reason #8: Overwhelm and Burnout
We’ve spoken about how multi-tasking increases stress and cortisol levels.
But if you fail to work on it, you’re going to eventually go kaput.
This is a forever game.
The last thing you want to do is burnout in the journey.
The last thing you want to do is develop a mental fatigue.
The last thing you want to do is fail because you quit.
Final words.
Stop multi-tasking and start mono-tasking.
Your singular focus will show you amazing, productive, optimal and efficient results.
Not just with trading, but every task you set your heart and mind to.
Let’s sum up the 8 reasons why Multi-Tasking is an absolute NO when trading.
Reason #1: Missed Opportunities
Reason #2: Delays in Priorities
Reason #3: Elevated Stress Levels
Reason #4: Drop in Productivity
Reason #5: More Mistakes
Reason #6: Reduced Learning Opportunities
Reason #7: Loss of Concentration
Reason #8: Overwhelm and Burnout
JSE ALSI Rally on track to 76,185 with Interest Rate out the wayCup and Handle and Triple Bottom has formed on ALSI over the past two months.
Sentiment has been turning bullish with international factors.
On the one hand, America has paused interest rate hikes which is leading to a global rally.
Four main reasons why a drop in Interest rates causes a market rally namely:
1. Cheaper borrowing for companies
2. Higher company profits and less cost for repaying debts
3. Better Investment Returns for investors exiting from their low interest bearing assets
4. More spending by consumers
On the other hand South Africa's Interest Rate:
The South African Reserve Bank kept the repo rate at 8.25% ... this means the prime lending rate of commercial banks also remains unchanged at 11.75%.
So we are enjoying the rally and we are slowly weeding out of the shorts as the market is trying to choose an optimistic direction.
It's been a very tough environment and those who followed strict money management rules, suffered less. But whent the market does rally or at least choose a solid direction, we will be in it for the medium to long run.
Remember “MARKETS TAKE MONEY FROM THE IMPATIENT RISKY TRADERS AND GIVES IT TO THE
PATIENT RISK AVERSE TRADERS”
Other signs are also showing upside to come:
7>21 - Bullish
Price<200MA - test
My first very positive target and might be over stretched is 76,185.
What do you think?
How to Stop Trading Pocrastination – 8 WaysIf you find it hard to press the trigger, you may be suffering with…
Trading procrastination.
This is definitely a major hurdle with trading well.
The good news is that, this is a temporary problem that you can fix today.
With the right strategies and mindset, you can overcome this challenge.
I have a few ways you can stop procrastinating.
#1: Choose Your Trading Days
One of the first steps is to get your schedule right.
If you’re trading stocks, indices, forex, commodities or crypto – choose the days you want to trade each one.
First you’ll need to analyse the markets and your watchlist.
Write down the trades that are most likely going to line up.
And then, you’ll be able to condition your mind to prepare for trading on designated days.
This will take away the analyses paralyses and overwhelming effect of looking at too many markets at once.
#2: Set Smaller Tasks
When you have gone through your watchlists on your charting platform.
Plot all the potential entries and exits and write down notes on what you will be trading.
This will help you remind you what you’ll need to take action with.
#3: Track Results on a Specific Day
You don’t have to review and track your performance everyday.
Trading is a medium to long term approach.
So, maybe choose a Friday or Saturday to go through your track record and see how you performed or are performing.
It will also tell you which trades are working in your favour or whether you’re in a drawdown or not.
A regular check-up with your performance, can serve as a powerful deterrent to procrastination.
#4: Remove Distractions
You need to create a calm and serene environment when you trade.
Clear your desk, close your tabs, switch off your TV.
Create laser focus and it’ll help you be more inclined to act on what needs to be done.
If you lower the interruptions, your productivity and alertness will also pick up.
#5: Self-Talk
Trading is a mindset game.
Sometimes, you need to have a few conversations with yourself.
And there needs to be positive reinforcement and self-talk to overcome procrastination.
Say things like:
~ This is a high probability trade lined up according to my strategy – I need to just take the trade.
~ I only have 2% of my portfolio to lose – so I am prepared.
~ The trading portfolio is not going to grow by itself – I need to act.
Train your mind to recognize negative thoughts and replace them with affirmations that boost your confidence and belief in your trading abilities.
Build a strong self-belief system with strong action points and it will help you tackle challenging trading situations head-on.
#6: Reward Yourself
If a trade lined up and you get in – reward yourself.
If you took your take profit according to your strategy – reward yourself.
If you stuck with your guns and took the loss according to your system – reward yourself.
If you need to adjust a trade according to your rules – reward yourself.
Go for a walk, grab a drink, make a meal, smoke a cigar or whatever you enjoy.
You need to celebrate the small things to help with your trading accomplishments.
Set up a reward system to recognize your efforts and achievements.
This will motivate you to stay on track and keep going.
#7: Visualize Success
If you have your trading plan and strategy in place, you have the game-plan.
Close your eyes and envision when the days are good and when your portfolio heads up to all time highs.
Visualizing successful trading outcomes can be a powerful motivator.
Embrace the feeling of achievement and success, as this mental rehearsal which can positively impact your actual trading performance.
#8: Learn from Mistakes
When you learn something new from trading.
Jot it down with strong lessons to apply in the future.
Also, analyse your past mistakes and use them as stepping stones toward improvement.
Adopt a growth mindset to help empower you to make proactive decisions and drive your trading progress forward.
FINAL WORDS:
You can conquer procrastination, one step at a time.
Take action.
Stay consistent.
Attain and measure attainable goals.
Never give up.
Let’s sum up the actions you can take to stop procrastinating.
#1: Choose Your Trading Days
#2: Set Smaller Tasks
#3: Track Results on a Specific Day
#4: Remove Distractions
#5: Self-Talk
#6: Reward Yourself
#7: Visualize Success
#8: Learn from Mistakes
If this resonated with you let me know :)
Why you Are a Mass Procrastinator – 7 ReasonsAre you stuck in a trading rut?
Have you thought to yourself.
You have all the knowledge, tools, skills, strategies etc…
And yet you don’t believe you’re getting the trading results you expected?
I think it’s because of the ‘Procrastination Gremlin”.
It’s a common issue. For three years during my trading career I was a mass procrastinator.
I never took trades when they lined up.
I never deposited more money to grow my account.
I never tracked and reviewed my trades on a weekly basis.
It became a disease as well as a comfort zone.
But what you might realise is when you LEAVE that comfort zone of procrastination, you might find it was never comfortable to begin with.
It slowed down your growth and progress as a trader.
So if you can relate to some of the things I’ve mentioned already, this article is for you.
Let’s explore if you’re a mass procrastinator.
You Doubt Trades
One of the most common forms of procrastination is when you doubt taking trades.
You hesitate and find every excuse to not trade for the day.
The problem is this.
Doubt slows down your decision-making process, and causes missed opportunities.
If you have a winning and proven system and you have money you can afford to trade with great money management principles.
Just Take The Trade!
Skip Trades
Ahhh, I’ll skip this trade and take the next.
Skipping trades is another form of procrastination.
What are you waiting for?
The “perfect” trading setup, the right “timing”, the right gut (gat) feel?
Stop skipping.
Remember, in trading, there’s no perfect moment. You are bound to take trades with losses. So if you’ve incorporated them into your trading, why are you skipping the trades?
Worst case scenario, you take a small loss.
Best case scenario, you ban a whopper of a winner.
Listen… Consistency and resilience are what brings success.
Stop skipping trades when they line up. J.T.T.T
Skip Days
I get this.
Monday is a storm of a day after the weekend.
Friday is a calm day to prepare for the weekend.
That’s what I’ve gathered over the years.
But it doesn’t mean I skip trades. If they line up (Monday or Friday or any other day, just take it).
Successful trading requires regular market analysis and being persistent with your trading.
Stick to a routine, check the markets and try not to skip days.
Forget Tracking
If you also forget to track your trades, this is another sign of procrastination.
Tracking helps you analyse your performance, learn from your mistakes, and make informed decisions.
Every time you take a trade, plot it in your journal.
At the end of the week, go through the journal to see how your trades are looking.
Go through the open trades, to see how they’re performing.
Also maybe see if you need to make any adjustments.
Don’t neglect this crucial task.
Forget Setups
You might have written your trading setups for the week.
And then you don’t take them.
You’re procrastinating your success.
Be more accountable and responsible with the trades that are lining up.
Write it on sticky notes.
Put them on your fridge.
Set alerts on your trading and charting platform.
Set reminders on your phone!
Do whatever you need to to NOT forget the setups that are nearly ripe for the picking.
Neglect Self-Education and adaptation
As I’ve said often.
Trading is an adapting and ever-evolving game.
You need to:
~ Keep learning and revising
~ Be up to date with new markets
~ Adapt your strategies
~ Add or remove from your watchlists
~ Update yourself as a trader
Procrastinating on Diversification
If you’re only trading one type of asset, you might be in trouble.
You’re delaying portfolio diversification.
There are so many new stocks to apply.
There are new algorithms with indices, commodities, Forex and Crypto.
If they work with your system, diversify and hedge.
Don’t be a dinosaur and stick to what was instead of what there is!
Start researching other asset classes today.
Final words:
You’re your own worst enemy with trading.
Not any trader, analyst, company… You.
You need to stop procrastinating and start doing.
Only then you’ll see improvement, development and even mindset growth.
Let’s sum up potential reasons why you might be a mass procrastinator.
You Doubt Trades
Skip Trades
Skip Days
Forget Tracking
Forget Setups
Neglect Self-Education and adaptation
Procrastinating on Diversification
JSE Relative Sector RatingsMonday 20-November-2023, 06h30 JSE Relative Sector Ratings, as of Friday's close.
