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Derivative_analysis

Catching Boom and Crashe on Deriv Tradingview using TrendlinesCatching booms and crashes on Deriv using TradingView involves utilizing trendlines to identify potential reversal points and breakouts. Here’s a short guide on how to do this: ### 1. Understanding Boom and Crash Indices - **Boom Index**: Represents a market where prices tend to spike upwards occasionally. - **Crash Index**: Represents a market where prices tend to spike downwards occasionally. ### 2. Setting Up TradingView - Open TradingView and ensure you have the Boom or Crash index loaded on your chart. ### 3. Drawing Trendlines - **Identify Highs and Lows**: Start by identifying significant highs and lows on the chart. - **Draw the Trendline**: Connect at least two significant highs for a downtrend line and at least two significant lows for an uptrend line. ### 4. Analyzing Trendline Breaks - **Downtrend Breakout (Boom Index)**: Look for points where the price breaks above a downtrend line. This can indicate a potential upward boom. - **Uptrend Breakout (Crash Index)**: Look for points where the price breaks below an uptrend line. This can indicate a potential downward crash. ### 5. Confirming the Breakout - **Volume**: Higher volume during the breakout can confirm the validity of the trendline break. - **Candlestick Patterns**: Look for reversal candlestick patterns near the trendline to increase the accuracy of your prediction. ### 6. Risk Management - **Stop-Loss**: Set a stop-loss slightly below the breakout point for booms and slightly above for crashes. - **Take-Profit**: Determine your target based on previous highs/lows or use a risk-reward ratio. ### Example: 1. **Boom Index**: - Identify recent highs and draw a downtrend line. - Wait for a candlestick to close above the trendline. - Confirm with volume and possibly a bullish candlestick pattern. - Enter a buy trade with a stop-loss below the trendline and a take-profit at a previous resistance level. 2. **Crash Index**: - Identify recent lows and draw an uptrend line. - Wait for a candlestick to close below the trendline. - Confirm with volume and possibly a bearish candlestick pattern. - Enter a sell trade with a stop-loss above the trendline and a take-profit at a previous support level. By carefully analyzing trendlines and confirming breakouts with additional indicators, you can effectively catch booms and crashes on Deriv's Boom and Crash indices using TradingView.
OANDA:XAUUSDEducation
by FrankFx14
Trading Volatility 75 Index Using Trendlines Deriv TradingViewThe Volatility 75 Index, also known as VIX, represents the market's expectation of 30-day forward-looking volatility and is a popular instrument for traders looking to capitalize on market turbulence. Trading the Volatility 75 Index using trendlines on Deriv TradingView can be an effective strategy for identifying and acting on market trends. Here's a step-by-step guide to help you get started. #### 1. Understanding Trendlines Trendlines are straight lines drawn on a chart that connect two or more price points, usually to indicate a trend direction. An upward trendline connects the lows in an uptrend, while a downward trendline connects the highs in a downtrend. These lines act as support and resistance levels, providing traders with visual cues for potential trade opportunities. #### 2. Setting Up Your Trading Environment **Step 1: Access Deriv TradingView** Log in to your Deriv account and navigate to the TradingView platform. Ensure that you have selected the Volatility 75 Index chart for analysis. **Step 2: Choose the Right Timeframe** Select an appropriate timeframe for your trading style. Short-term traders might prefer 1-minute or 5-minute charts, while swing traders may opt for 1-hour or daily charts. #### 3. Drawing Trendlines **Step 1: Identify Key Points** Identify significant highs and lows on the chart. In an uptrend, look for a series of higher lows. In a downtrend, look for a series of lower highs. **Step 2: Draw the Trendline** - **Uptrend:** Click on the trendline tool and connect at least two significant higher lows. - **Downtrend:** Click on the trendline tool and connect at least two significant lower highs. Ensure that your trendline is not cutting through the candlesticks and that it aligns well with the price movement. #### 4. Analyzing Trendline Breaks Trendline breaks can signal potential trading opportunities. When the price breaks above a downward trendline, it might indicate a bullish reversal. Conversely, when the price breaks below an upward trendline, it might indicate a bearish reversal. **Step 1: Confirm the Break** Wait for a candlestick to close above or below the trendline to confirm the break. This reduces the risk of false signals. **Step 2: Use Volume for Confirmation** Increased trading volume can validate the trendline break, suggesting stronger market conviction behind the move. #### 5. Placing Trades **Step 1: Set Entry Points** - **Long Trade:** Enter a buy position when the price breaks above a downward trendline and the breakout is confirmed. - **Short Trade:** Enter a sell position when the price breaks below an upward trendline and the breakout is confirmed. **Step 2: Set Stop-Loss Levels** - Place a stop-loss below the most recent swing low for long trades. - Place a stop-loss above the most recent swing high for short trades. **Step 3: Set Take-Profit Levels** Use previous support and resistance levels or employ a risk-reward ratio (e.g., 1:2 or 1:3) to determine your take-profit points. #### 6. Managing the Trade - **Monitor the Trade:** Keep an eye on the trade and adjust your stop-loss to lock in profits as the price moves in your favor. - **Be Prepared for Reversals:** Market conditions can change rapidly, especially with an instrument as volatile as the Volatility 75 Index. Stay alert and be ready to exit the trade if the market reverses. #### 7. Additional Tips - **Combine with Other Indicators:** Enhance your trendline analysis by using other technical indicators like RSI, MACD, or moving averages for additional confirmation. - **Stay Informed:** Keep an eye on market news and events that could impact volatility. - **Practice Risk Management:** Never risk more than a small percentage of your trading capital on a single trade. This helps in managing potential losses and staying in the game longer. #### Conclusion Trading the Volatility 75 Index using trendlines on Deriv TradingView can be a powerful strategy when executed with precision and discipline. By identifying and drawing accurate trendlines, confirming trendline breaks, and managing trades effectively, traders can navigate the volatile nature of the VIX and capitalize on market movements. Always remember to practice good risk management and continuously improve your trading skills through education and experience.
OANDA:XAUUSDEducation
by FrankFx14
Trading 101 - What is a Derivative & why are they revolutionary?Derivatives trading! What I believe has been the absolute market revolution since shares. Derivatives might sound complicated and something you would hear from a professor or a know-it-all businessman – but they’re really not. I am no academic or even remotely one of the smartest guy’s in the world. And if I can grasp the idea and understanding of derivatives, I pretty much guarantee you will too. Also, if you want to take trading seriously and really make a living with it, you’ll need to understand derivatives trading sometime in your career. Let’s start at the very beginning. What is a derivative? – Collins English Dictionary – ‘A derivative is an investment that depends on the value of something else’ When it comes to trading, a derivative is a financial contract between two parties whose value is ‘derived’ from another (underlying) asset. Let’s break that down more simply: A derivative is a financial contract (CFDs, Spread Trading, Futures, Forwards, Options &Warrants) Between two parties (the buyer and seller) Whose value (the market’s price) Is derived (depends on or comes from) Another underlying asset (Share, index, commodity, currency, bond, interest-rate, crypto-currency etc…) You’ll find that the derivative’s market price mirrors that of the underlying asset’s price. Why trade using derivatives? The absolute beauty about trading derivatives is that they are a cheaper and a more profitable way to speculate on the future price movements of a market without buying the asset itself. You don’t get all the benefits with derivatives What’s probably important to note with derivatives, is this. When you buy a derivative’s contract, you’re not actually buying the physical asset. You’re simply making a bet on where you expect the price to go. EXAMPLE: When you buy actual shares of a company, means you’ll be able to attend AGMs (Annual General Meetings), Vote and claim dividends from a company. When you trade derivatives on the underlying share, means you’ll be exposed to the value of the shares and the price movements – and that’s it! As a trader, when you buy or sell a derivative, you’re not actually investing in the underlying asset but rather just making a bet (speculation) on where you believe the market’s price will head. This gives you the advantage and opportunity to: Buy low (go long) a derivative of the underlying asset and sell it at a higher price for a profit or Sell high (go short) a derivative of the underlying asset and buy it back at a lower price for a profit Remember when I said it was cheaper and more profitable? You can thank margin With derivatives, you’ll normally pay a fraction of the price of the total sum and still be exposed to the full value of the asset (share, index, currency etc…) The fraction of the price paid is called ‘margin’. EXAMPLE: To buy and own 10 Anglo shares at R390 per share will cost you R3,900 (R390 per share X 10 shares). To buy and be exposed to 10 Anglo shares using derivatives, and the margin of the contract is 10% per share, means you’ll only pay R390 (R390 per share X 10% margin per derivative X 10 shares). I’m sure you can see that with derivatives, you’ll be exposed to more and pay less which will gear up your potential profits or losses versus when trading shares. This is why we call derivatives, geared financial instruments. Enjoyed the article comment below and follow for more... Trade well, Live free Timon MATI Trader Also my socials are below thanks to Trading View.
JSE:J200Education
by Timonrosso