✅ THE ULTIMATE BEGINNER'S GUIDE TO INVESTING 👊There are a lot of myths surrounding investing. Some say that it is too complicated for a beginner, and you can't figure it out on your own. Others portray the image of a successful investor who travels all the time and does almost nothing. So, let's find out how things really are.
What Is Investing?
Investment is the long-term investment of funds, finances and other capitals in a variety of instruments in order to generate income in the future. Furthermore, there are two types of investments in relation to objects of investment. The first type is investment in the real sector (real investments). However, the subject of today's article is related to the second type of investment - financial investments, not investments in the real sector. Let's dot all the i's and and cross the t's to define with you what we mean by financial investments.
Financial investments are long-term investments of finances in securities, shares, bonds, mutual funds, precious metals and other derivative instruments of securities.
Financial investments are also called portfolio investments. Portfolio investing means that an investor can invest in several financial instruments at once, thus forming a specific "portfolio of investments. A portfolio helps an investor to diversify his risks, that is, even if there is a completely failed investment, the investor is able to offset his losses at the expense of more successful instruments from his portfolio.
Structure Of The Financial Investment Market
Before considering investing and financial instruments, it is necessary to understand how this market is structured. The structure of the financial market can be divided into three main segments:
-Stock market
-Debt market
-Foreign exchange market
The stock market is where shares of various issuers and other derivatives that give the right of ownership are traded. The debt market, also called credit market, is characterized by investments in debt instruments, such as government and corporate bonds. It is generally believed that the debt market is the most risk-free and conservative, but low-yielding way of investing, the yield on which will not exceed, and often coincide with the yield on a bank deposit. Here much depends on whose bonds you invest in and at what point. The third and extreme segment in this classification is the foreign exchange market, where it is possible to purchase contracts (both options and futures) for the purchase of currency in the forex market.
In addition, in recent years, a new market is beginning to take shape - the cryptocurrency market. Due to the popularity and rise in the value of Bitcoin, this market has expanded significantly in 2016-2017 and more and more types of cryptocurrencies are coming to the market.
Why Should You Invest Money?
The question of why to invest in various financial assets often arises in people who are just beginning to become interested in ways of making passive income. One could say that this skill belongs to the obligatory skills of a person who wants to come to success, just as one used to need to know how to speak French or ride a horse.
Another thing is that the vast majority of people spend almost all of their money on daily expenses - food, clothes, rent, and often credit as well. This is a kind of dependence on the bank, the state, and the place of work. And professionalism in one area or another is not yet a guarantee of good profits.
Everyone in the modern world just needs to learn how to manage their finances and how to multiply them. Almost everyone periodically thinks about saving and achieving financial freedom, providing a peaceful old age, and investing in the future of their children.
A certain role is played by the state, allocating pensions to elderly people from the pension fund, in which accumulated amounts of deductions from wages for a lifetime. However, the size of pensions is known to all - it is simply impossible to provide a decent old age for them. Many pensioners who have worked all their lives live on the brink of poverty.
Why is the situation different in developed countries? Older people travel around the world and live life to the fullest. And these are not celebrities or oligarchs - they are ordinary average people.
The answer lies in the fact that investments play a huge role in people's lives in developed countries. Up to 80% of Americans invest in shares of large companies and receive dividends on them.
The question of why they need to invest does not arise there - they start investing at a young age. It is enough to look at the figures:
In the US the volume of investments in investment funds is twice as much as the volume of bank deposits;
In Europe, the volume of investments in investment funds is five times less than the volume of bank deposits.
Moreover, do not forget that the investor gets an opportunity to receive dividends from shares - investment income, which in the long run may exceed salaries by several times.
Investing For Beginners: The Power Of Compound Returns
In simple terms, compound return is the re-investment of profits earned during previous successful investments. The process can be represented as the use of dividends, interest paid, and other income distribution options.
Depending on the share of reinvested funds from the total amount of profits, a distinction is made between full or partial reinvestment. It is impossible to predict in advance the profitability of reinvestment, but the investor can control the process by adjusting the timing, amount, selected instruments, and external circumstances.
Reinvestment is the practice of using dividends, interest, or any other form of income received as a result of investments, to obtain new profits through the purchase of shares, units, or other assets, instead of just spending what is earned.
Let's take a closer look at the principles of reinvestment and the factors that affect its result.
If you're planning to reinvest profits to increase your overall income, consider how to do so with minimal risk of loss while earning a steady income. To increase the chances of successful reinvestment, stick to three basic principles:
Use only available funds to invest. If you're not sure you'll need some or all of the money you're investing shortly, don't reinvest profits. For reinvesting, take as much money as you can set aside for the long term.
Diversify your investments. The golden rule for investors is to diversify their capital by diversifying their financial instruments. A balanced portfolio is the best protection against sudden market movements and losses. While one asset falls in value, the rest grow and generate income.
Make sure that investments generate income without exposing your entire capital to excessive risk. A professional investment manager can help with the selection of tools and investment strategies if there is no possibility to study the intricacies of stock trading independently.
As in the case of initial investment, reinvestment should be made competently, choosing the safest and most promising assets, and avoiding excessively risky transactions.
Any action by an investor must produce an ultimate return. You can receive dividends and spend them on your personal needs, or use the extra profits to multiply your invested capital.
Sometimes the external conditions for investments are not so favorable, and an investor prefers to wait out a dangerous period, withdrawing all assets into currency. Such behavior was demonstrated by Warren Buffett, 89, who decided in 2020 to get rid of assets, including investment bank Goldman Sachs, American carriers, and go into "cash", despite positive market dynamics and a relatively weak dollar. This decision analysts explain the preparation of the guru of investments to the stock crash, incomparable even with 2008 when Buffett has maintained an optimistic view of U.S. assets.
The decision on the advisability of reinvestment is based on some factors:
Inflation rate. If money is depreciating rapidly, reinvesting means trying to catch up with inflation while trying to maintain the same capital value. In a hyperinflationary environment, it makes no sense to wait for an investment to yield a limited return or to result in a loss due to the loss of value of the money invested.
Affordable financial instruments. The recent top assets for reinvestment include real estate, currency, and deposits. As the stock market develops, the center of attention has shifted toward stocks, bonds, and indices. U.S. stocks are growing in popularity, with different stock exchanges providing access to them.
Risk appetite. Some companies prefer to close their positions or limit investments to reduce possible negative consequences. Others are prepared to keep risking for the sake of profitability.
Every financial instrument has its profitability and risk limits. The higher the projected return on reinvestment, the more justified this step is.
The situation in the economy can facilitate or limit opportunities for investing and reinvesting. The worse things are in the country's economic sector, the less reason to reinvest profits.
In addition to objective factors that influence the decision to reinvest income, there are subjective features of a person and his circumstances that make him agree or refuse to make further investments.
A person invests his earnings where he can earn the most profit. As a rule, the decision to reinvest is made based on an analysis of alternative returns. If a person buys a car for $100,000 instead of opening a bank deposit with the profits he earns, it means that in addition to that amount over the 5 years the car will lose the amount of unaccrued interest - for example, 5% for each year. And instead of owning a car worth $100,000, one could earn $128,000.
Timing The Market: What Investment Returns Can You Expect?
On the whole, we can say that the world economy is growing at about five percent a year. Of course, in dollars.
Slightly lower should be the currency yield from investments in bonds, but their use is assumed only as a reserve, not strategic growth.
Is it possible to earn more? Yes, if something important happens: technological advances, breakthroughs in new industries - and the investor is at the root of it. Those who first appreciated the prospects of switching from coal to oil in the past are some of the richest clans on the planet today, such as the Rothschild clan. You do not have to go far, it was enough to assess the prospects for the development of electronics and, in particular, computer technology thirty years ago - and we can say a billion is already in the pocket.
Let's look at examples, of how much could be earned on different types of investments. The average annual return on the S&P 500 over the past ten years is about 13.6%. Thus, if an investor were to put into his portfolio the same securities that make up the index, he would get a much higher return than on a deposit in a bank.
During the same period, credit institutions attracted deposits at 4-5 percent. And in the bond market for government securities, the yield was, as we see from the previous example, 5.2 percent per annum. The yield on corporate bonds was even higher - 6-10 percent, depending on the reliability of the companies.
Thus, having placed money through a broker at the exchange, the investor could count on the bond market, if not twice, but one and a half times more than in the bank. At the same time, of course, such investments are not subject to deposit guarantees.
But, on the other hand, if you buy bonds from major companies, their existence is ensured at least access to raw materials. Behind them, unlike credit institutions, there are usually real production assets that generate stable revenues.
And what about other types of investments? Analysts of the real estate market say that properties have risen in price by more than 16% over the year. But these figures should be treated with extreme caution:
Firstly, realtors always, under all circumstances, claim that prices are going up, even if the trend is the opposite.
Secondly, the posted proposals - it is not the real price of an object, to sell something, the cost must be discounted, which remains at the level of non-public agreement between the seller and the buyer. The real estate market is much less transparent and not as liquid as the stock market.
In addition, the cost of admission varies significantly. Investments in real estate most often require at least a few hundred thousand, if it is not a collective scheme, while for the purchase of the same bond on the New York Stock Exchange just a thousand dollars is enough.
It must be said that one of the most profitable types of investment in 2021 was simply buying foreign currency. The dollars rose by more than 20% and the euro by almost 30%.
This suggests that those who invested money in instruments denominated in foreign currencies managed to make the most money on investments. Even though the interest initially looked more than modest.
How Much Money Should Beginners Invest?
The fact is that any investment activity involves a certain risk. Therefore, before engaging in investment activities, it is necessary to create the proverbial financial safety cushion.
This should include all mandatory payments, medicine, food, and even entertainment. Otherwise, an unsuccessful start in investing and the difficulties you will encounter in the absence of a "cushion" will most likely discourage you from continuing to learn to be an investor, and it rarely works out well for anyone the first time.
So, you already have a financial safety cushion. Now you need to invest the first sum of money. But the size of that amount will predetermine the type of instruments available to you. If the bonds have a face value of 50 dollars (please note that we will not take into account brokerage commissions, because our discussion is about the principle of approach to the first investment), then having this very $50, you can go and buy bonds? No, not really! The minimum investment required to purchase a single bond is about $1,000, though bonds are generally sold in $5,000 increments.
You can buy shares for $500 since their prices can start from $10. However, it would be rather unethical of us to recommend to a beginning investor to start investing in such a risky instrument as stocks. The dividend yield on them is not guaranteed, and no one can promise an increase in the price.
This is why our logic leads us to believe that one should begin investing with an amount of about $1000-$3000. Moreover, we advise such a trick. Put every "extra" amount of money on a separate account, not a brokerage account, but a time deposit account with the ability to deposit and withdraw partially, you can even do it on the same account where you "lay" a safety cushion. As soon as you manage to accumulate "extra" $3000, i.e. you don't need them for other vital necessities, you have to withdraw them, transfer them to the brokerage account and buy the next portion of the securities.
Yes, stocks are cheaper and sometimes sold by the lot, but we wouldn't recommend starting with them. Start filling your portfolio with corporate bonds, and try investing some in stocks, let's say 10% of your capital. 10% is an insignificant amount in case of loss, but in case of high returns, can significantly raise the average return of your portfolio.
How Can You Start Investing?
When you finally decide to start investing, you might be wondering what steps you should take. Here are our recommendations:
Decide on an investment horizon. When it comes to bonds, the stock market has a conventional division into short-term securities and long-term securities. For example, Federal Loan Bonds are limited to a specific term (3, 5, 7, and even 10 years). Shares, on the other hand, are considered indefinite assets. They exist as long as the company operates and remains public.
Choose an investment instrument. Decide where best to invest your money. An investor decides which securities he will buy, whether he will invest in business development, entrust his savings to a mutual fund and management company or simply open a deposit in a bank.
Be guided by risk and return. Fixed-income securities (like federal bonds) are considered less risky than stocks and bonds issued by businesses.
To make it easier for you to choose the right investment instrument, first determine your risk profile. This is the type of behavior you have in the financial market. It will take into account your goals, desired returns, investment horizon, and risk tolerance. Depending on your risk attitude, your risk profile may be conservative, rational, or aggressive. Conservative investors prefer low-risk instruments with small returns, aggressive investors are willing to risk capital for the sake of high potential returns, and rational investors choose the golden mean.
The Beginner's Guide To Where To Invest Your Money
By definition, it is necessary to invest in something. There are a great many options where you can invest your capital. Among the most common instruments, we should note the following:
-shares
-bonds
-investment funds
-real estate
-own business
Let us consider different ways to invest your capital according to the risk appetite.
Instruments for the conservative investor
A conservative investor who is not prepared for possible losses can include low-risk instruments in his investment portfolio: bonds, bond exchange traded funds (ETFs), real estate investment funds, deposits, as well as structured products with full capital protection and ISH.
Most often, it is recommended that beginning investors work with conservative instruments at first, and then add other instruments to their portfolios over time.
Instruments for the aggressive investor
Aggressive investors, i.e. investors who are ready to risk a considerable part of their capital for the sake of high potential profitability, invest their entire portfolio in stocks, derivatives (futures, options) and structured products without capital protection.
Such investors often have extensive experience in the stock market, a large amount of capital and will be able to survive a failure painlessly.
Instruments for the moderate risk investor
An investor with a moderate risk profile combines high-risk instruments with conservative ones. Adding conservative instruments to the portfolio reduces risks, while high-risk instruments allow for higher returns. The classic scheme: 50% of the portfolio in conservative instruments, 50% in high-risk instruments.
In addition to the above, the portfolio may also include precious metals in an investor-friendly form, equity ETFs (due to the greater number of shares in one ETF, equity funds are less risky), structured products and ISMs with partial capital protection.
With knowledge of all available financial instruments, each investor can choose the most appropriate ones for his level of expertise and experience, as well as for the comfortable riskiness. The main thing is to approach investments consciously, correlating each instrument to your financial plan and investment objective.
Potential Risks Of Investing
Risks can have an internal or external nature and are not always predictable. Their main types are:
Liquidity risk - the risk that interest in an asset will plummet and the value will be well below the purchase price;
Inflation - decrease in purchasing power and loss of liquidity of all assets;
Currency risk - decrease in the value of assets that are related to foreign currency;
Legal risk - change of risks as a result of changes in the regulatory framework.
There is also the possibility of force majeure, for example, man-made or natural factors. As a rule, they are stipulated in the contract with the investor as separate clauses. Other risks can be adjusted if you constantly monitor changes in the global and domestic financial markets. Another rule that can help reduce the likelihood of losses is the creation of an investment portfolio and its timely adjustment.
Still, there are some ways to reduce the possible risks.
It is easier to manage risks at the planning stage of a portfolio. It's impossible to reduce risks to zero, but a few simple principles will keep your investors and their capital as safe as possible:
Invest evenly in different types of assets. If you choose to invest in securities, invest in different areas.
Don't invest the last of your money. Always leave savings-a "safety cushion." If your assets depreciate, no one will pay you insurance.
Examine projects and assets carefully before investing. Invest in projects that have positive feedback from past investors.
Do not work with those who promise you huge earnings with no risk.
Do not give in to emotions. Act decisively and sensibly, without panicking at the slightest price movement.
Set yourself a limit on the maximum losses. Let's say you choose 25%. If your assets fall in price by 25%, you will sell them to avoid even greater losses.
The key to successful investing is to choose quality assets (reliable stable securities). You should not give in to gambling and invest all of your capital in risky projects.
What To Look For When Choosing An Investment Broker
Before deciding which broker will provide you with services, decide on your investment objectives: have you already decided what markets you are going to enter, and what assets would you like to trade? Before taking any step in investing, it is better to define your goals precisely. Now let's see what to consider when choosing a broker.
Step 1: Check the license
You need to start by checking if your broker has a license. Central banks regularly check the compliance of brokers and can revoke the license if any violations are found. If the license is revoked, the broker will suspend its work and must return the invested funds to the clients.
Step 2: Gather information from open sources
Familiarize yourself with the broker's website. It will be good to check the organization's data on financial performance. A little dive into the history of the company will not be superfluous. Check if there have been any legal proceedings, malfunctions, license suspensions - and for what reasons.
Check what has been written about the broker in the industry media, but do not forget to do fact-checking, i.e. pay attention to the reliability of the source and double-check the data.
Step 3: Check the fees and commissions
Brokers receive a commission on the amount of a transaction. Study the rates on the websites of different brokers. Large organizations usually offer several rate plans. To choose the most appropriate one, determine in advance what markets you plan to trade (stock, futures, over-the-counter) and how often.
Brokers may charge not only transaction fees, but also commissions for depositing and withdrawing funds, using a trading platform, submitting phone orders, and other fees. In addition, it is important to remember the existence of a subscription fee - if there is one, the broker will earn even in the absence of transactions. Consider custody services, which may be fixed and included in the brokerage fee or may vary depending on the number of securities.
Step 4 . Evaluate the convenience of the service
If you are planning to use a trading terminal, i.e. software for making transactions at the exchange - look at what kinds there are and how they work, which one is offered by the broker and whether you understand its interface.
Brokers now have mobile applications for trading. If they are available in the demo version - download and try it, in this way you will understand if the interface is convenient and if you feel comfortable working with the application.
Step 5: Check out the education and analytics sections
Training materials, investment ideas, analysis, and research articles and forecasts are useful for beginners and more advanced investors alike. Many brokers now offer articles, webinars, podcasts, video courses, and more to clients. This can be another factor that will make you pay attention to this particular organization.
Beginner's Tips To Get Started With Investing
It is impossible to completely avoid risk while investing in the financial market. Therefore, the investor is faced with the task - to minimize possible losses, at an optimal level of profitability concerning the goals and horizons of their achievement. For this purpose, studying the experience of famous investors and financiers is suitable. Here are a few tips to help avoid unnecessary mistakes.
Discipline
Even with minimal investments, a sequence of steps, analysis of the situation, and regular additions to the portfolio will lead to the desired income. Do not relax when you get the first earnings - it is better to reinvest them to achieve the goal as soon as possible.
Persistence and calmness
Everyone's journey is a series of ups and downs. Investors are no exception. A cool mind and control of emotions will not allow you to make mistakes in a critical situation. And the accumulated experience will help to avoid their repetition in the future.
The right environment
Communication with like-minded people will put you in the right mood, and monitoring market information and not only - will help you to navigate faster in the situation and make the right decisions. Reading professional literature, visiting topical forums and social networking pages - all will form your thinking.
Constant learning
The world does not stand still, and the world of investments is no exception. Self-education, observations of experienced colleagues, and reading financial literature will expand opportunities and open new promising directions.
Mistakes of beginning investors
It is not possible to avoid mistakes altogether - as in any business in which you are just starting. However, they can be minimized.
Lack of a safety cushion.
No one can guarantee your success in investing. If unforeseen circumstances arise, you must have a safety cushion of 3-6 months' salary.
Lack of funds for the beginning
Often brokers offer to begin from the minimum amount, say 300 dollars, however, such investments without additional permanent deposits will not be effective.
Lack of basic education
After studying, say, three books on the securities market and an economics textbook, many people start to feel self-confidence in the market. This is where the first serious errors begin, such as underestimating the risks or choosing sub-optimal instruments. Remember - knowledge must be gained, updated, and constantly expanded.
The desire to get rich quickly
In the search for super-profits, private investors can often meet crooks and all sorts of fraudsters on their way. A reasonable assessment of the prospects of income and the choice of well-known intermediary companies will reduce the risks as much as possible.
Using substandard sources
Sources of quality information are not difficult to find - to date has written many useful books and created a huge number of training materials.
Compound
THE MAGIC OF COMPOUND INTERESTEach of us wants to get rich in order to fulfill our dreams: to fly around the world, buy a car or a house, and maybe even buy a plane.
Investing can help make a dream come true, but not everyone has enough knowledge to make money trading.
And what to do?
Capitalization magic increases numbers to high values very quickly. Naturally, it also works with money, but a little slower. This is called compound interest, and that's what we can use now, no matter how deeply you understand investments.
The most frequent advice in the financial sphere is to accumulate your funds and invest them as early as possible. When you start accumulating as early as possible, time is on your side, and the accrual of compound interest plays a big role in this. The best way to demonstrate compound interest in action is the following example.
There is Louis and Jen, both 20 years old. They are given the opportunity to make a long-term investment with a starting capital of $ 5,000 at 10% per annum for the next 45 years. And they have to make a choice:
1. Annually collect the earned interest or
2. Reinvest interest income annually.
Louis likes to get paid. He already has ideas on how to spend the first interest payment. However, Jen is looking to the future. She decides to reinvest them.
Louis invests his funds and receives the same income of $500 every year.
Louis is happy to take his $500 every year. After 45 years, nothing changes for him. He still has his original $5,000 and 45 years of interest spent.
The power of capitalization
Jen is obsessed with savings. She knows that over time, interest will bring her much more money.
The first few years of capitalization are pretty boring, but Jen waits patiently, because every year her interest income is higher than in the previous one. Little by little, but the snowball effect is gaining momentum.
Around the ninth year, the picture becomes fascinating. Jen gets enough interest income to double her first deposit. Soon, the interest income exceeds her initial investment amount of $5,000. And she gets a percentage of her interest. This is the power of compound interest.
Imagine what Jen could have done if she had invested $5,000 in work every year for the same period of time. Currently, 10% look too optimistic, but let's take, for example, that she earned 6% annually on this money. At this interest rate, Jen's total income would be $1,196,363 (by the way, at a rate of 10%, her total income would be $4,318,429).
Rule 72
Rule 72 is a simple way to estimate the time required to double an investment based on a fixed rate of return. If you divide 72 by the rate of return, you get an approximate number of years during which the investment will double.
For example: if you invested $ 1000 at 4% per annum, then in order to turn your investment into $ 2000, you will need about 18 years (72/4 = 18).
Using this formula, you can also determine the rate of return needed to double your money in 10 years: divide 72 by the number of years, 72/10 = 7.2%.
Regardless of the investment instrument, whether it's bond yields or dividends, Rule 72 gives you an idea of how long it takes to double your money at a given interest rate.
Don't let it work against you!
No matter how good capitalization looks, there are 4 factors that weaken it and work against you:
• Inflation. There are ways to avoid or reduce this risk;
• Taxes. Taxes eat up profits, so use tax-advantaged accounts like IRA and 401k's;
• Expenses. For example, taxes, fees and commissions also eat up profits. The less you pay them, the better;
• Time. The longer you wait, the less profit is accrued to you under the compound interest system.
The basics of mathematics do funny things with money over time. In the early stages, compound interest acts slowly and brings little income, and this is probably why many people ignore it in the early stages. But once it starts, it speeds up exponentially the longer you let it go. If you don't have a billion dollar idea in your mind, then compound interest is the best thing you can use to increase your funds and achieve wealth.
Don't waste your time, be patient and use compound interest correctly.
educational 🧙 ♂️ Buying rumors and selling news to those who still don't know or follow me recently
Buying a rumor and selling the news is a trading practice
Rumors are an essential component of price action, and news is one that has the opposite effect. In other words, it will give the trader more focus on rumors rather than news. In addition, it will be the entry point when rumors emerge, and the exit point when news emerges.
This trading strategy places great emphasis on the timing of each trade as the rumors and news come in other than the technical analysis of the stock or asset.
Knowing that news and rumors are about to emerge, traders make important trading decisions after these events.
If you don't understand, then see the world upside down 😂😂
An example of simplification The market from the beginning of the week was expected to raise the interest rate, so gold is correcting downwards (this is a rumor buying)
While after the news is released, gold is expected to rise, and this is (selling the news).
educational A detailed explanation of the BUTTERFLY harmonic pattern 🦋
🔹 BUTTERFLY is a reversal pattern consisting of four waves, similar to the Gartley and Bat pattern.
They are X-A, A-B, B-C and C-D waves.
🔹 Helps you identify when the current price movement is coming to an end, this means that you can enter the market as the price reverses its direction.
🔹 There is a bullish pattern where you can open a buy position
And a bearish pattern where you open a short position.
🔹 BUTTERFLY is a reversal pattern that allows you to enter the market selling at the highest levels and buying from the extreme bottoms.
🔴 buying style:
1️⃣ We have a strong upward movement, which is the beginning of the pattern and is called the (X-A) leg.
2️⃣ The leg (A-B) must be 78% Fibonacci retracement of the leg (X-A)
3️⃣ Then the leg (B-C) and it should be between 38% and 88% Fibonacci retracement of the leg (A-B)
4️⃣ Then the leg (C-D) and it must be between 161% and 261% Fibonacci extension of the leg (B-C)
5️⃣ And the pattern (D) ends, which should be between 127% and 161% Fibonacci extension of the leg (X-A)
6️⃣ When the model is formed and its conditions are completed as we mentioned, the price will rise from point (D) and can benefit from buying from point (D).
🔴Selling style:
1️⃣ We have a strong downward movement, which is the beginning of the pattern and is called the (X-A) leg.
2️⃣ The leg (A-B) should be 78% Fibonacci retracement of the leg (X-A).
3️⃣ Then the leg (B-C) and it should be between 38% and 88% Fibonacci retracement of the leg (A-B).
4️⃣ Then the leg (C-D) and it must be between 161% and 261% Fibonacci extension of the leg (B-C).
5️⃣ And the pattern (D) ends, which should be between 127% and 161%, the Fibonacci extension of the leg (X-A).
6️⃣ When the model is formed and its conditions are completed, as we mentioned, the price will drop from point (D) and the sale can benefit from point (D).
below you can see other educational content
educational A detailed explanation of the SHARK harmonic pattern
The Shark model was discovered in 2011 by Scott Carney.
It is somewhat similar to the crab pattern, and the most important characteristic of this pattern is that it depends on the 88.6 Fibonacci correction ratio
This model was created by combining Fibonacci numbers with Elliot Wave Theory.
The shark model is characterized by the need to specify the points for determining the model points, which are x, a, b, c, and the beginning of the structure of the model is point 0. In the shark model, point B exceeds point x
buy style
1- There is no specific correction for A
2- Point B corrects 113 to 161.8 from XA
3- Point C of model completion at 88.6 to 113 0X and at 161.8 to 224 AB
sell style
1- There is no specific correction for A
2- Point B is a correction from 113 to 161.8 from XA
3- Point C of model completion at 88.6 to 113 from 0X and at 161.8 to 224 from AB
below you can see one of our trades on shark pattern , and other educational content and some other trades on it
educationalA detailed explanation of the harmonic model SHARK 🦈
The Shark model was discovered in 2011 by Scott Carney
It is somewhat similar to the CRAB model 🦀
🔹 The most important characteristic of this model is that it depends on the 88.6 Fibonacci correction ratio
This model was created by combining Fibonacci numbers and Elliot Wave theory.
The shark model is characterized by the need to specify the points of the model, which are X, A, B, and C
The starting structure of the model is point 0.
In the shark model, point B exceeds point X
🔴 bullish style
1️⃣ No specific patch for A
2️⃣ Point B corrects 113 to 161.8 from XA
3️⃣ Point C for model completion at 88.6 to 113 0X and at 161.8 to 224 AB
🔴 bearish style
1️⃣ No specific patch for A
2️⃣ Point B is a correction from 113 to 161.8 from XA
3️⃣ Point C for model completion at 88.6 to 113 from 0X and at 161.8 to 224 from AB
education5-0 . Harmonic Pattern
The 5-0 pattern was discovered by Scott Carney
🔹It was published in his book “Harmonic Trading, Volume Two.”
It is a unique model that has accurate Fibonacci ratio corrections to validate the model.
🔹Although the 5-0 pattern is considered a reversal pattern, because the 50% retracement level is the most important in the potential reversal area.
Correction ratios are slightly different from Bat or Gartley style.
🔹The 5-0 category is in the 5-point harmonic reversal family of models
🔹It is essentially defined by a point B, as is mandatory for all harmonic patterns.
The basic premise of the pattern is to determine the reactions after completing the opposite direction
5-0 patterns usually represent the first pullback of a major trend reversal.
🔹In many cases, the AB leg of the structure is the last failed wave of the trend.
AB = CD pattern education The lightning-fast pattern:
The AB = CD pattern is one of the basic patterns and was first discovered by Gartley in a book he published in 1935 entitled Profits in the Stock Market (also described as the lightning fast pattern).
In this pattern, the line connecting A and B represents the first price movement, and after the price makes a short correction move from point B and C, the pattern completes the line between C and D, which is the same line connecting AB with equal length.
Although the price movement is not always completely equal, the length of the two lines in the AB=CD pattern are very close in length so that through them the reversal points can be identified
📌 AB=CD Pattern Using Fibonacci Ratios:
🔹 This model requires the availability of the basic Fibonacci ratios, which are 61.8%, 78.6%, 127, 161.8%
🔹 Point C must be corrected by 61.8% on the Fibonacci scale of the AB leg, or by 78.6%.
🔹 Point D is achieved at the corrective level 127.2% or 161.8% of BC.
However, the following was noted:
🔹 When point C corrects by 61.8%, the extension of the CD leg reaches the 161.8% corrective level.
🔹 When point C corrects by 78.6%, the extension of the CD leg reaches the corrective level 127.2%.
⭕️ There are some cases in which the CD leg only corrects 100% of the Fibonacci scale, then the name of the pattern AB=CD is achieved and in this rare case it may be the classic “double top or double bottom” pattern.
The CD leg may equal the AB leg at the time.
Power of Small Consistent EffortsHello Traders, 👋
Today I would love to talk all about the power of putting in small consistent efforts. Furthermore discuss the power of compounding and compound interest.
Putting in small consistent effort is ideal for anyone, regardless of experience.
Whether you are new to trading, trade forex, trade crypto or even want to find a new hobby 🏑🏓🎺🎸
1.00
The first equation is simply the number 1 raised to the power 365.
The power 365 simply means 1 x 1 x 1 x 1 etc... 365 times. Anything multiplied by 1 remains unchanged, so the result is 1.
But what happens if we add 1% to that?
1.01
1% bigger than 1 is 1.01.
So if we take 1.01 and we raise that to the power 365 — so in other words, we multiply 1.01 x 1.01 x 1.01 x 1.01 etc... 365 times. You will be surprised that it equals 37.8 notice that this is almost 37 times bigger than the answer to the first equation above! 🤯
This is the result you’d get if you “did just 1% more than usual”.
The difference in effort is just 1% a day, it’s tiny!
If you can work on your trading 1% more than you are currently doing, every day. You will end up with a considerable amount of impact from that work.
Whereas if you don’t do that little bit extra every day, you will be making zero progress and contain the same knowledge as you did a year ago, maybe less.
Little steps, done consistently time and time again, compound into big, big differences. And not taking those little steps, makes the effect almost disappear.
"Compound Interest is the Eighth wonder of
the world.
He who understands it... Earn it.
He who doesn't... Pays it."
~Albert Einstein
In simple terms compound interest is earning interest on your interest.
For example
If you was trading with $1000 and you made on average 10% per month, you would reinvest your earnings each month to make interest on them. This is called compound interest.
+++++++++++++ Profit/Interest
Month 1 $1100 +$100
Month 2 $1210 +$110
Month 3 $1331 +$121
Month 4 $1464 +$133.1
As you can see each month your profit is increasing. This is because you are making profit on your profit.
The earlier you start compound interest the better. This is something millennials should learn in school!
I know most people want to jump on the million dollar deal and get rich quick.
But if you took a single penny and doubled it everyday, by day 30, you would have $5,368,709.12.
However, it's important to note that it's all about the power of doubling. If you asked the same question, but changed the doubling time to just 27 days, you would only have $671,088.64
If you are struggling on your trading journey, do not give up!
****The first step of every successful Trader : FAILURE****
Do not let a little failure scare you away from being consistent.
Thanks for taking the time to read my post! 💖
Please check out my other trade ideas!
🐱🏍🐱🏍🐱🏍
