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Commodities

Learn Top-Down Analysis | The Best Trading Strategy 🏆 Hey traders, 🔝Top-Down analysis is one of the most efficient ways to analyze & trade different financial markets. In this post, we will discuss the time frames to watch and the main steps to go through to execute a Top-Down trading strategy properly. Being a Top-Down trader your task is to assess the global market perspective and identify the zones, the areas from where it will be relatively safe for you to trade it following the trend or catching the reversals. ➖Weekly time frame shows you the price action during the last couple of years. It unveils the major zones of supply and demand and indicates the long-term direction of the market. Your task is to spot these zones and underline them. The strongest market moves most of the time initiate from these zones. At the same time, you must remember that on a weekly time frame the market is extremely slow. Being beyond the key zones 90% of the time, it takes many weeks, even months for the market to reach them. ➖Once you completed a weekly time frame analysis, the next on your radar is a daily time frame. Daily time frame shows you 1-year-long price action. It indicates a mid-term sentiment. And again, here your task is to simply identify the market trend and underline major key levels. *It is highly recommendable to apply different colors for highlighting weekly/daily levels. Completing weekly/daily time frame analysis, your task is to set the alerts on at least two closest support/resistance clusters. You must patiently wait for the moment when the price reaches one of them. Once the underlined key level is reached, you start the analysis of intraday time frames. ➖The intraday time frames on focus are 4H/1H. Your task here is to spot the price action/candlestick patterns. With such formations, the market unveils its reaction to the key level that it is approaching. You are looking for a pattern that confirms the strength of the level. Spotting the pattern you are looking for a trigger to open a trading position. Most of the time it is a breakout of a trend line or a horizontal neckline. The breakout confirms the willingness of buyers/sellers to buy/sell from the underlined support/resistance. Only then a trading position is opened. Of course, in practice, Top-Down analysis is very complex and many things and concepts must be learned in order to apply that strategy properly. Follow the steps described in this post, learn to identify key levels and recognize the price action patterns and you will see how efficient this strategy is. Do you apply a Top-Down trading strategy? ❤️Please, support this idea with like and comment!❤️
Education
by VasilyTrader
33
What Type of Trader Are You? 🤔 Hey traders, In this post, I decided to make a comparative analysis of three main trading styles: scalping, day trading, and swing trading. We will go throw the main pros and cons of each approach and discuss common misconceptions. 🏃‍♀️🏃 Let's start with scalping. I guess many of us were impressed by videos on youtube showing how a guy makes thousands of dollars applying a simple scalping strategy. Some of these videos get millions of views and excitement from the audience. No surprise the majority of newbies start their trading journey with scalping strategies. Practicing some of them and trading on a real account, these traders suddenly realize that the youtube videos barely reflect the reality of scalping. Scalping requires being extremely reactive, making trading decisions quickly, and constantly staying focused. Moreover, it turns out that this trading style is extremely risky, and occasional losing streaks become an essential part of the process. A pro scalper usually opens dozens of trading positions per day and manages many of them simultaneously. Even though it is a fact that a solid scalping strategy is a true cash machine, the constant pressure and high level of stress make many traders leave that game blowing their trading account. A true scalper is a guy with iron nerves and a sharp mind. It takes many many years to become a person like that. 🚶‍♀️🚶Intraday trading is a bit simpler. While quite often scalping gives a trader just a couple of minutes to react and make a trading decision, intraday trading gives the hours. Such a trading style is slower, the intraday perspective is not that chaotic and irrational. It takes many hours for the trading setup to play out making the trade management process not that time-consuming. Moreover, intraday trader tends to open much fewer trading positions than a scalper. Analyzing primarily 4h/1h time frames less trading setups meet the entry conditions. That primarily affects the potential gains though. Lesser you trade, the less money you make. I consider myself to be an intraday trader. Trading full-time of course I was trying different scalping strategies, but I must admit that I can’t make the decisions that quickly, I can’t constantly hold so many active trading positions in my mind, I need some time to think, I need some time to do other things, I want more freedom. For that reason, intraday trading is my choice. And let me be frank right here: I am not trying to say that intraday trading is simple, it is SIMPLER than scalping still remaining extremely complicated to master. 🕴🕴 If you want trading to become your side income if you have a full-time job and just a couple of hours per day for charting, I believe that intraday trading/scalping are not appropriate for you. In your situation, I would consider swing trading. Swing trading is extremely slow. Being primarily focused on weekly/daily time frames a swing trader tends to hold trading positions for weeks, sometimes even months. Moreover, it takes many days for a swing trading setup to form and the market gives a trader much time for reflection. Of course, that primarily affects the potential gains: I believe that among the 3 trading styles that we discussed, swing trading generates the lowest returns. Swing trader is the best starter for newbie traders. Analyzing higher time frames they can constantly follow the market and don’t miss the major moves. Just 1-2 hours per day are enough to follow dozens of financial instruments. Only by becoming a consistently profitable swing trader, one can try himself in intraday trading. Working with hundreds of struggling traders from different parts of the world I realized that the majority has the inverted perception of scalping/intraday/swing trading. I hope that this article will shed a light on that topic. What trading style do you prefer? ❤️Please, support this idea with like and comment!❤️
OANDA:XAUUSDEducation
by VasilyTrader
38
Asset Classes - Part 3 - For beginnersToday we prepared for you 3rd part of our paper on asset classes for beginners. Purpose of this paper is to concisely detail futures contracts, forwards, swaps and options. Asset Classes - Part 1 and 2 - For beginners Feel welcome to read part 1 and part 2 if you have not yet. Derivative Derivative is a type of financial asset which derives its value from an underlying asset or group of assets, or benchmark. Underlying assets for derivative contracts can be, for example, stocks, commodities, currencies, bonds, etc. Derivatives are traded on a stock market exchange or over-the-counter (OTC). They can be used as investment vehicles, speculative vehicles and even as hedge against the risk. Additionally, derivatives often allow for use of leverage. Most common derivatives are futures contracts, options, forwards and swaps. Illustration 1.01 Illustration 1.01 shows the daily graph of gold in USD. Futures contracts Futures contract is a standardized derivative that is publicly traded on a stock market exchange. It binds two parties together which are obligated to exchange an asset at a predetermined future date and price (without regard to current value). Expiration date is used to differentiate between particular futures contracts. For example, there may be a corn futures contract with expiration in April and then another corn futures contract with expiration in May. On a day of expiry, also called delivery, the exchange of an asset between the two parties is enforced. Underlying assets for futures contracts can be stocks, commodities, indexes, etc. Forwards Forward contract is a derivative contract between two parties to buy or sell an asset at a specified price on a future date. Unlike futures contracts, forward contracts are not standardized. They are customizable and traded over-the-counter rather than at a stock market exchange. Illustration 1.02 Illustration above depicts the daily graph of continuous futures for gold. It is clearly visible that the gold chart in USD and gold continuous futures chart are resemblant. Swaps Swap is another form of derivative contract that binds two parties to exchange cash flows. There are currency swaps and interest rate swaps. Currency swap is defined as the exchange of an amount in one currency for the same amount in another currency. Interest rate swaps are defined by exchange of interest rate payments. Illustration 1.03 Picture above shows daily graph of S&P500 continuous futures. Options Option is a type of financial asset that gives a buyer the right to buy or sell an underlying asset at a predetermined price and date. Options differ from futures contracts in that they do not oblige parties to exchange an underlying asset. There are European-style options and American-style options. European-style options can be exercised only on a date of expiry while American-style options can be exercised at any time before this date. Options that give a buyer the right to buy an underlying asset are called call options. Contrary to that, the put options give a buyer the right to sell the underlying asset. Options are very complex as they involve option risk metrics, so called greeks. DISCLAIMER: This content serves solely educational purposes.
CME_MINI:NQ1!Education
by Tradersweekly
2
My rules for Reversal Watch CriteriaA couple of weeks ago I noticed the front page of the Economist publication, which had a front-page title – ‘The energy shock’ and it reminded me that market psychology plays a huge part as one of my reversal watch criteria. After all once a market starts moving a lot and grabbing more headlines, more and more people jump on that trend and once it gets to the front page of newspapers or publications, like The Economist, it is generally a good indication that a move is either at or very near the end of its move. I have for many years worked on the trading floor of several large banks and have always found this to be a good indication of market in general. A few years ago I had a strong view on the fixed income markets as I had noted that the US 10Y yield had reached my long term downside target. I duly went off to tell the traders that the market had got to its target and they might like to think about covering their long positions on Fixed Income futures and not only was NO-ONE interested in hearing my view they simply told me to get lost – they had made money all year being long fixed income futures. So, I went and sat back down and thought hang on if all these guys are already long, who is left to buy? Within a couple of days the market had turned lower very quickly with absolutely no new news or any fundamental reason that I could determine. This is something I have observed over the many years in the business. But it does kind of makes sense as well, for a market to go up aggressively it takes a lot of buying and if most people have already bought who is there left to buy? For a market to go down, it does not have to be a change in fundamentals, it can just be a lack of buying…. So, if one of my reversal watch criteria is market psychology what are the other criteria? 1. The market is approaching a significant target area 2. The market is over-stretched or runaway ahead of target 3. We have heightened intraday volatility 4. We have Newspaper articles 5. All dealers/articles/people you speak to have the same view We saw these conditions met recently on the Oil market. It is always extremely hard to cut a position that you are making money in and it helps when you have a list of criteria that you can watch. Once these criteria start to be met, it is a good idea to tighten up stops and think about lightening a position. Disclaimer: The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
NYMEX:CL1!Education
by The_STA
TRIPLE TOP PATTERN. Tips on how to trade it 📚 🟢The triple top is a very powerful reversal pattern. Visually, it represents three consecutive peaks approximately equal in height. Formally, it can be considered as a special case of the head and shoulders formation, whose head height is approximately equal to the shoulders. Moreover, the differences between them are purely academic, since, from a practical point of view, both of them indicate a change in the uptrend to a downtrend. ✅The pattern reflects three consecutive unsuccessful attempts to break through a certain resistance level. At the same time, each subsequent unsuccessful attempt indicates a weakening of the bulls and increases the likelihood of a future reversal. ❗️To correctly identify the pattern, the analyst should pay attention to the following conditions. 1️⃣The formation of a triple top should be preceded by a solid upward (bullish) trend, which should last at least a month, and preferably several months. 2️⃣Three consecutive tops must be clearly expressed and be approximately the same height. Through their maxima, the upper resistance level is built. The maxima should differ from each other by no more than 1-2%. 3️⃣ The lower support level is built through the minimum of the retracement after the first and second peaks depending on which of them will be lower. 4️⃣ As the triple top forms, there should be a gradual decline in trade volumes. At the same time, a local increase in trading volumes in the area of a top formation is considered acceptable. This is a confirmation of the gradual weakening of bull pressure on the market and a sign of an approaching trend reversal. 5️⃣ The triple top gives its final confirmation only after breaking through the lower support level after the formation of the third top. The breakout should be accompanied by a significant increase in trading volumes, and the appearance of price gaps on the chart is also desirable. After breaking through, the support level becomes the resistance level, in the area in which subsequent corrective price movements are possible. 6️⃣ To determine the goal of the price movement, it is necessary to measure the distance between the lower support level and the maximum point of the triple top. Then this distance should be projected from a broken support level to the downside. 7️⃣ The reliability of the patterns directly depends on the duration of the period during which it was formed. It should be at least several months. ⚠️In technical analysis, the triple top is one of the most difficult to recognize and "insidious" figures for an investor. Until the third top is formed, this figure looks like a classic double top. Also, three consecutive peaks of approximately equal height are characteristic of the ascending triangle and rectangle patterns, which are trend continuation formations. Thus, the final confirmation of the triple top is received only after a consequent breakout of the lower support level, which should be accompanied by a sharp increase in trading volumes. Do you trade triple top?🤔 ❤️ Please, support our work with like & comment! ❤️
Education
by SignalProvider
9
WHY 95% OF TRADERS FAIL | Top 6 Mistakes to Avoid 🙅‍♂️🙅‍♀️ Hey traders, That is the absolute fact: 95% of traders will fail. Working with hundreds of struggling traders from different parts of the world, studying their trades & following their reasoning I found a lot of commonalities. In this post, we will discuss the top 6 mistakes to avoid to succeed in trading. 🤖 Rather than studying the market structure, rather than learning price action, many traders are looking for a "secret indicator". The one that will accurately indicate when to buy or sell the market. Failing to find the one, they start looking for a set of indicators giving them magic profit formula. At some stage, they stop analyzing the chart at all. They become obsessed with the indicators. Remember, naked chart analysis always goes first. The indicator is the tool in your toolbox that is applied as one of the confirmations. 💫 The expectations & mindset play a very important role here as well. Many people come in trading with a desire to become rich quick. To buy a subscription to some signal service promising them thousands of pips monthly and quite their 9:5 job. Or to watch a couple of educational videos about trading and after a couple of days of practicing become a whale of Wallstreet making thousands of dollars with a single trade. Such a mindset is completely wrong. Instead, you must realize that trading is extremely hard. It will take many years and a lot of blown trading accounts before you get how to trade properly. Moreover, even once you mature, you won't make millions of dollars. Professional trading is simply about winning slightly more than you lose and then living on a margin. 📉 Poor risk management is the primary reason for blown trading accounts. And here I am not talking about some "advanced" risk management techniques. Many traders simply trade with oversized lots. Having high leverage & 1000$ deposit at hand the one can simply open a trading position with 1 standard lot and be kicked in by a spread. Or they open a trading position without a stop loss. Being wrong in their predictions instead of closing a losing position they keep holding it. And while the market keeps going against them they pray the God for a market reversal. At some moment they get the margin call. You must learn to calculate a lot size for all your trades. Instead of risking a huge portion of your trading account, learn to set a stop loss and risk no more than 1% of your deposit. 📝 Lastly, discipline plays a crucial role in your success in trading. Once you developed a trading strategy & backtested that you must learn to follow its rules no matter what. Usually, once traders catch a losing streak they start changing their rules, they start adjusting their trading strategy. Remember that losses are inevitable. The only correct way to stay afloat is to be consistent and don't break the rules. Avoiding these common mistakes your chances to succeed in trading will increase dramatically. I wish you be among 5% of traders who made it. Did you make these mistakes? ❤️Please, support this idea with like and comment!❤️
COINBASE:BTCUSDEducation
by VasilyTrader
30
Traders Dynamic Index (TDI) indicatorTraders Dynamic Index (TDI) indicator is a complex indicator that consists of the following indicators: RSI (Relative Strength Index) Moving Average To smooth RSI Bollinger Bands (BB) Or in this case we should only refer to them as volatility bands RSI helps us with: 1. Trend recognition: trading in the direction of the trend 2 Overbought and oversold entry signals MA helps us with: 1. Smoothing RSI Volatility bands help us with: 1. Trend straight recognition 2 Trend direction
Education
by apadanaforex
⚡️♦️Breakdown of the Big Gold Short♦️⚡️Greetings To You Traders ▫️Let’s break down this superb trade timeframe by timeframe ▫️One of the the most important factor in our lives is Time. ▫️It also proves to be very important In our trades as well I will break down this trade in the same way I did when I took it on Friday I use just 4 things in my trading: 1. Recent price Structure ( Supply and Demand) 2. Overall Structure (Support and resistance) 3. Structural moves ( Higher Highs/ Higher Lows ( Uptrend) 4. Structural moves( Lower Highs / Lower Lows ( Downtrend) ▫️First Time frame : Daily Key factor : Resistance level Looking at the daily timeframe you could see that price had reached a previous support now turned into resistance This is a textbook market structure move and is very profitable if traded well ♦️♦️♦️♦️♦️♦️♦️♦️♦️♦️♦️♦️ ▫️Second Time Frame : 4 Hour Key factor : Supply Zone Looking at the 4 Hour time frame I saw a nice supply zone and all I was waiting for was the wick rejection and entry on smaller TF ♦️♦️♦️♦️♦️♦️♦️♦️♦️♦️♦️♦️ ▫️Third time Frame : 1 Hour Key factor : Structure move ( lower lows ) Look at the 1 hour time frame I observed that the market was now making lower lows Very typical for price to do so in a down trend and that is when I started loading up my lots My stops were above structure and I took the plunge ♦️♦️♦️♦️♦️♦️♦️♦️♦️♦️♦️♦️ ▪️I hope this breakdown can help you in executing your own trades too and using multi time frame analysis ▪️Be kind and leave a like and a follow : ) God bless you all Slick✨
OANDA:XAUUSDEducation
by Slickpapi
7
COMPOUND INTEREST. Time is on your side📚 ❗️As it turned out, not all traders are familiar with such an important concept as compound interest. Meanwhile, the use of compound interest in trading can be a very effective tool for making a profit. In short, compound interest is the accrual of interest on interest, and if in detail, then read on. ✅The formula for calculating compound interest has the form: Compound percentage = (P (1 + g)^ n) – P, where P – the amount originally invested; r – interest rate; n is the investment period. Let's say you invested an amount of $ 10,000, every year the interest received is added to the principal amount, and new interest is accrued for a larger amount. If the investment period is 5 years, and the interest rate is 10% per annum, then after the specified period, taking into account the compound interest, you will receive a profit in the amount of: (10000(1+0.10)^5)-10000=6105.1$ And without taking into account the compound interest, the profit for the same period will be: 10000*5*0,10-10000=5000$ As you can see, using compound interest (or in other words reinvesting profits) brought additional income in the amount of: 6105.1-5000 = 1105.1 $. ✅It seems that the figures presented above are not impressive, but the use of compound interest in trading can truly work wonders. In what way? Let's take another look at the compound interest formula described above. It is obvious from the formula that you can increase profit by increasing any of its components. Let's not touch the amount originally invested, but play with the value of the investment period and the interest rate. To begin with, let's imagine that we will reinvest the profit not every year, but every month. Then the investment period will be 12 *5 = 60 months. The interest rate corresponding to this investment period will be equal to: 10%/12=0.833%. Let's substitute these values into the formula for calculating the compound percentage: (10000(1+0.00833)^60)-10000=6449,8$ As you can see, under the same conditions, but with monthly reinvestment of profits, the income will already be $ 6449.8- $6105.1 =$344.7 more. Well, if the trader's income is not 0.833% per month, but, for example, 5% monthly, then under the same conditions and for the same period, the profit will already be: (10000(1+0.05)^60)-10000=176791,86$ Felt the difference, impressive, isn't it? And what if you reinvest profits not monthly, but daily? Let's figure it out. With an average yield of 5% per month, the average daily yield will be 5%/21= 0.238% (here 21 is the number of working days in a month). The investment period will be 5*360=1800 days. Let's substitute the data into the compound interest formula: (10000(1+0.00238)^1800)-10000=711617,5$ This is already 711617.5-176791.86 = 534826 $ more than with monthly reinvestment of profits. More than half a million dollars (and this with an initial investment of only ten thousand)! That's impressive. That's what compound interest is in action. ⚠️This is about theory. In practice, it is impossible to achieve a constant percentage of profit every day. Some days a trader inevitably ends up with a loss, some with a profit, and the size of these losses and profits is always different. So it is unlikely to substitute the value of the percentage of profit per day in the above formula. However, the very essence of compound interest, clearly shown above in figures, gives the trader a fairly powerful tool for earning. A trader can and should use compound interest when creating his own money management system. ❤️ Please, support our work with like & comment! ❤️
OANDA:XAUUSDEducation
by UnitedSignals
6
Pivot Points StrategyPivot points can be used as entry points for new trades or as a close signal for the existing ones. There are different types of pivot points with a different mathematical formula or simply using previous highs and lows. HOW TO TRADE PIVOT POINTS The following scenarios work with the Traditional Pivot Points For the Camarilla version normally R and S are closer to the price and we use a different setup. Trading setup #1 (Not so strong trend): Open price is between R1 and S1 Long when the price moves back above S1 after going below S1. Target will be P, R1, R2, .. levels. Place Stop loss at the S2 level Wait for the price to go above R1 and then when it moves back below R1 again, go short. Profit target will be P, S1, S2 S3 levels and stop-loss above R2 Trading setup #2 (Normally very trendy bullish markets): Open price is between R1 and R2 Buy or go long when the price moves back above R1 again after going below R1. Target will be R2, Place stop loss at R1 Wait for the price to go above S1 and then when it moves back below S1 again, sell or go short. Target will be S2 levels, and the stop loss will be above P. Trading setup #3 ( Very trendy bearish market ): Open price is between S1 and S2 Wait for the price to go above S1 and then when it moves back above S1 again, then go long. Target will be P, R1, R2 levels, and stop-loss below S2. Wait for the price to go below S4 and then when it moves below S2, go short. Place stop loss above S1. Trading setup #4 (High probability for a trend reversal or correction): Open price is above R2 Buying can be risky at this level. Wait for the price to go below R2. As soon as the price moves below R1. go short. Place stop loss above R3. Target S1, S2, or P Scenario #5 (High probability for a trend reversal or correction): Open price is below S2 Selling could be risky at this level as the price has opened with a big gap down. Wait for the price to go above S1. When the price moves above S1, buy Place a stop loss of S2. Target R1, R2, and P.
UEducation
by apadanaforex
Why Do You Need a Trading Journal? 📝 Hey traders, 📖 Trading Journal is a crucial element in your trading education. Even though the majority tends to neglect it, in fact, it is considered to be the essential part of a daily routine of a professional trader. In this post, we will discuss why you should keep a trading journal & how it enhances your trading performance. Let's start with the obvious: ✍️ Trading journal is applied for recording your trading positions: winning and losing ones. With that, you can monitor your current performance, identify the mistakes that were made and examine your decisions. ❌ Analyzing the errors you learn your weaknesses & the situations when it is preferable not to trade. You adjust your trading strategy accordingly in order to avoid similar mistakes in future. 💪 Examining the winning trades you learn about your strengths. You identify the trading instruments, the trading setups where your strategy reaches the highest accuracy. ⚖️ Working with the numbers you can measure your investing exposure and calculate your account drawdowns. You can analyze your losing streaks & your long-term/mid-term/short-term account statistics. 📈 Analyzing the figures you can measure your progress over time by comparing your current results with the old ones. 😡 Keeping the record of your emotions, you can measure & quantify the psychological element of your trading. You may calculate the percentage of emotional decisions being made and their effect. 🌟 Consistent journaling makes you disciplined. It teaches you to strictly follow the rules of your trading plan & constantly learn from your mistakes in order to hasten the path towards a more disciplined and profitable trading career. A trading journal should be simple and tailored to your specific trading style and the goals you would like to achieve. I hope that my words will inspire you to keep a trading journal! Do you have the one already? ❤️Please, support this idea with like and comment!❤️
OANDA:XAUUSDEducation
by VasilyTrader
102
Gold: 8 Factors You Must Know, If You Trade Gold8 Factors You Must Know If You Trade Gold Gold has been a favorite of many for centuries. It's used as an investment and holds sentimental value all over the world. Let's take a closer look into some factors that affect these changes: supply & demand dynamics between countries holding large amounts while wanting lower rates so they won't have trouble selling off inventories; economic stability decides whether there'll be. Wh at Moves the Gold Price? There are many reasons plays behind the gold price. Let's discuss some. Supply and Demand Demand and Supply are two forces that constantly affect the price of Gold. When demand for this precious metal increases, its value goes up too. When there's less interest in purchasing or holding onto it, prices will naturally decrease over time due to supply constraints. That means you can buy more at any given moment without worrying about getting stuck paying the total retail cost later. Inflation Gold has been a good hedge against inflation for many years. When prices go up in an economy, people tend to invest their money into Gold and not a currency. Because it's considered stable over time while maintaining its value even when currencies change significantly from one day or year-to-year ranking/rating changes due to economic factors. Such as high unemployment rates, which increase demand by consumers looking for safe-haven assets. Central Banks Decision Gold is typically bought in large amounts by governments and institutions who view it as an essential store for wealth preservation. But this can also mean traders take notice. Central banks worldwide have recently been buying substantial quantities because they want to diversify their reserves away from US dollars which currently make up most international finance markets valued at close to $200 trillion (€170 T). The result has already shown itself, with spot prices rising 6 percent higher than last year despite economic uncertainty following recent hikes on interest rates over America's quantitative easing program. Interest Rates Interest rates are the driving force behind Gold's price movements. When interest rates increase, people sell their assets to earn higher returns on existing investments. At the same time, at other times, they might buy back in if prices have fallen too far for them not to make up that loss with purchasing power today - this increases demand for precious metals like never before. The relationship between these two economic indicators means different things depending upon one another. For example, when there is inflation (worst-case scenario), investors seek out safe-haven currencies such as Gold, which protect wealth against devaluation or hyperinflationary policies imposed by countries worldwide seeking currency stability through international agreements like SDRs. Central Banks Reserve The government holds a large number of gold reserves. Therefore, when most of the Reserve Banks worldwide start to buy Gold more than they sell. The gold prices increase because there will be insufficient supply in the future and vice versa when central banks sell greater quantity than it buys; therefore, these transactions result in currency rates against other currencies. Currency Fluctuations Gold is traded on the international market in US dollars. When you convert your currency from USD to any other currencies during import, it becomes more expensive as the price fluctuates concerning both currencies. Let's compare prices between countries like the United States and Saudi Arabia, where one has a more robust economy than others do. There can be a hike of up to 30 – 50% extra cost for purchasing an item because these economies have been performing better over recent years, meaning they provide higher rates of return that give them power over minting new coins. In contrast, some country's revenue may only last one year before another recession strikes, making importing items not profitable anymore. A co-relation with other asset class Gold is a highly effective portfolio diversification because of its low negative correlation to major asset classes. In addition, when shares fall in companies, there's an inverse relationship shown between Gold and equities. This makes it easy for investors looking at their investments from either side to have peace of mind when they know that one goes down. Then others will likely recover - especially considering how much more stable stocks tend towards being over time than fluctuating prices do. Geopolitical Factors Gold has often been seen as a haven during times of political and geopolitical turmoil. During such periods, Gold does well compared to other asset classes due to an increase in demand from investors who won't keep their money away from unstable markets or currency values that could change at any moment.
TVC:GOLDEducation
by Gold_Trading_Expert
CHFJPY - Identify These Moves - FULL Breakdown 📚A key part of technical analysis is to identify the different phases and patterns in the market. So, what can we see? - We can see that we're within a major ascending parallel channel and price has been respecting it. When price approaches either extremes of the channel, it rejects aggressively. - There are 2 key phases at play here. The blue phase is the impulse and the red phase is the correction. - The impulse phase is an upward movement and the corrective phase is a downward move After identifying these phases, what next? - So now that we know that the impulse phase ends at the upper limit of the channel, we know there's a corrective move coming back down to the channel support. - If there's enough momentum, we can break the channel support and keep falling. As we're in an ascending channel, it is often a reversal pattern = there's a high chance that CHFJPY can come back down all the way to 109 - Now we need a trading plan to enter this trade How do we trade it? - The risk entry would have been at the rejection of the channel resistance - The safe entry would be to identify when the impulse has ended. One way we can do this is by identifying when the uptrend has ended. This can be done by using a trendline (like the one we have) and watching for a break to indicate that the uptrend has ended and the next phase has begun. Trade Idea: Watch for the ascending red trendline to break and enter with stops above the channel. First Target: Target the channel support for first targets (500pips) Second Target: The bottom of the channel (1,600pips) Hope this breakdown was helpful. If so, do leave a like and comment what you think!
Education
by WicktatorFX
16
Asset Classes - Part 1 and 2 - For beginnersAsset classes - Part 1 - Stocks, Bonds, Commodities and Currencies There are several types of asset classes which group together investments with similar characteristics. However, each asset class also has its own particular features that it does not share with other asset classes. Most common asset classes are: equities, fixed income, real estate, commodities and currencies. Correlation between different asset classes within the same industry is common. However, asset classes in unrelated fields show very little correlation. Each asset class possesses a different level of liquidity; most liquid asset classes are equities, fixed-income securities, and commodities. Sub-asset class Asset classes can be subdivided into sub-asset classes; for example, commodities can be subdivided into lumber, metals, oil, etc. Sub-asset classes can be further subdivided into separate groups which show common characteristics while showing characteristics of the broad group at the same time. For example, metals can be subdivided into precious metals and industrial metals. Each group can be then divided even further to efficiently distinct between separate features of asset type. For example, precious metals can be divided into gold, silver and platinum. Illustration 1.01 Illustration above shows a daily chart of continuous CFD on WTI oil. Price made a low of 33.67 USD on 2nd November 2020 and continued to rise until it reached a high of 85.39 USD on 25th October 2021. Correlation Some assets tend to show correlation. Such correlation can be positive or negative. Positive correlation means that two assets behave in a similar way. For example, when gold rises then mining stocks rise as well. Contrary to that, negative correlation describes such behavior in which assets move in the opposite direction to each other. For example, when USDEUR declines then WTI oil tends to rise. Illustration 1.02 Illustration above shows the daily graph of Exxon Mobil Corporation which belongs to the oil mining and exploration sector. It made a low of 31.11 USD on 29th October 2020 and then continued to rise until 1st November 2021 when it reached a high of 66.08 USD. Positive correlation can be observed between CFD on WTI oil shown in Illustration 1.01 and Exxon Mobil Corporation stock. Stocks Stocks, also called equities, are normally issued by an eminent (company, state, etc.) as shares which give right of ownership to their holder. These shares are then sold by eminent (to investors) with the purpose to raise capital. Stocks are predominantly traded on stock exchanges and they can be either common stocks or preferred stocks. Common stocks entitle a shareholder to vote at shareholders´ meetings and to receive dividends being paid by a company. Preferred stocks differ from common stocks in that they usually come with limited or no voting rights at all. Though, preferred stocks have higher claims to dividends and distribution of assets by a company. This means that in case of liquidation of a company preferred stockholders have priority over common stockholders. In addition to that, preferred stocks can pay higher dividends than common stocks and because of that they are good for building passive income based on dividend payments which can be monthly or quarterly. Bonds Bonds are simply loans made by an eminent (borrower) which can be state, corporation, or any other legal entity. Bonds are considered fixed-income instruments because they come with interest payments being paid out to an investor. Owner of a bond is called debtholder while the issuer of a bond is called a creditor. Bonds are tradable assets and they have maturity. In addition to that, bonds come with risk of default. Because of that, higher yielding bonds usually come with higher risk of default. Bonds are great investment vehicles for building passive income, however, they generally underperform in terms of yield when compared to stocks, commodities and indices. Bond yield is negatively correlated to bond's price. Commodities Commodities are basic goods (such as gold, lumber, oil etc.) that are used in commerce. They are usually refined or used for production of other goods. Commodities can be traded on market exchanges where they must meet specified minimum standards like quality, weight, type, etc. Commodities are great speculative and anti-inflationary investment vehicles. Illustration 1.03 Illustration 1.03 shows the daily chart of CFD on WTI oil. On 20th April 2020 due to the WTI oil crisis at Cushing, Oklahoma price plunged below negative 36 USD (-36 USD per barrel). Unfortunately, that is not depicted on the chart (chart depicts lowest value at 0.00 USD). Currencies Currency has the role of a medium of exchange for goods and services in almost all economies around the world. There are many different currencies worldwide, however, predominantly used currencies are U.S. dollar (USD), Euro (EUR), British pound (GBP), Yuan (CNY) Ruble (RUB), Yen (JPY). Relationships between currencies are highly intertwined making the currency market very complex and hard to predict. Central banks can influence currency rates through monetary policies such as interest rates and quantitative easing. Similarly, a government can impact currency rate by enacting fiscal policies. These policies can have an impact on spending, import, export, etc.; which will, in result, influence currency rate. In addition to all of that, some currencies exhibit positive or negative correlation with commodities such as gold, oil, etc. Illustration 1.04 Illustration above shows the daily graph of EURUSD. It is observable that EURUSD made lows in March 2020 and then continued to rise towards November 2020. Only a month later in April 2020 oil bottomed out and then started to rise in tandem with EURUSD (depicted in Illustration 1.03). Asset Classes - Part 2 - Cryptocurrencies, ETFs, CFDs Modern technology along with financial evolution brought rise of new asset classes such as cryptocurrencies, exchange traded funds (ETFs), contracts for difference (CFDs) and options. These new financial instruments represent alternative investment to stocks, bonds, commodities and currencies. Additionally, some features within these products can help an investor to diversify portfolio, trade short and use leverage with ease of a few mouse button clicks. Cryptocurrencies Cryptocurrency is simply digital currency. Most cryptocurrencies are based on blockchain technology which acts as a distributed ledger that is run by a large number of computers that comprise decentralized structure. Normally, cryptocurrencies are not issued by central authorities (however, central banks around the world currently work on digital form of fiat currencies). Cryptocurrencies are encrypted by cryptographic methods which makes them very difficult to counterfeit and double-spend. These assets are considered to be more volatile when compared to stocks, bonds, commodities and fiat currencies. Another defining feature that sets cryptocurrencies apart from other assets is that they are traded non-stop (24 hours a day, including weekends). Most popular cryptocurrencies are Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), Ripple (XRP), Dogecoin (DOGE). Illustration 1.04 Picture above shows the monthly chart of BTCUSD (Bitcoin in USD). It is very easy to spot unbelievable growth of more than 862 000 % between August 2011 and November 2021. Exchange traded fund (ETF) Exchange traded fund is a type of security that is publicly traded on a stock market exchange and which tracks an index, stock, commodity, or other asset. Exchange traded funds can track either one asset or group of assets. This allows an ETF to be structured in such a way that it can reflect performance of a particular economic sector. Illustration 1.05 Illustration above shows the daily graph of JETS ETF which is an airline exchange traded fund. It has exposure to airline manufacturers, airline operators, airports and terminal services. Contract for difference (CFD) Contract for difference is exchange traded security that is cash-settled and which does not include delivery of goods. It simply pays the difference between the opening price and closing price. CFDs copy the price of other securities and they can be traded short, and also on margin. However, usually higher fees are associated with CFDs when compared to stocks, bonds, currencies and commodities. Illustration 1.06 Depiction above shows the monthly graph of CFD on USOIL. DISCLAIMER: This content serves solely educational purposes.
BITSTAMP:BTCUSDEducation
by Tradersweekly
34
Quality And Location Spreads Provide Fundamental CluesMy introduction to commodity markets came in the 1970s when I was invited to work for the summer for the world’s leading commodity merchant company. In the 1970s, Philipp Brothers’ headquarters were in the heart of New York City. The company had offices all over the world. Where it did not have an office, it had a network of agents. Philipp Brothers bought commodities from producers and provided financing for raw materials production and sold to consumers. In an era of rising inflation in the late 1970s, the company was so profitable that it bought the leading Wall Street, privately held bond trading and investment banking firm, Salomon Brothers. My first job was delivering telex messages to trading and traffic departments. Traders were the kings, earning millions in profits. The traffic department arranged the logistics of moving raw materials around the globe from production points to consuming locations. The telex messages contained information about proposed transactions and completed ones. I read each one with great interest. Those messages turned out to be an invaluable education in the business. The high school job turned into a lifelong career. The excitement of markets and the global nature of the commodities business was a powerful force that caused me to forgo law school for a career as a commodity trader. Market structure- We looked at processing spreads and term structure Location-location-location is the real estate mantra- It applies to commodities too Different qualities command premiums or discounts Another part of market structure that can provide valuable clues and makes the pieces of the puzzle form a picture I view the commodity markets as a jigsaw puzzle with many moving pieces. Each market has idiosyncratic characteristics. Quality and location are parts of each market’s structure and can provide insight into the path of least resistance of prices. Market structure- We looked at processing spreads and term structure Over the past two weeks, I highlighted processing spreads and term structure, two critical puzzle pieces. In the future, I will cover substitution spreads and the essential technical factors that held uncover a picture of the path of least resistance for prices. Processing spreads tell us about the demand for one commodity that is a product of another. Crude oil crack spreads and soybean crush spreads were examples. Term structure tells us about the supply-demand balance as backwardation where deferred prices are lower than nearby prices for the same commodity indicates supply shortages or concerns. Contango, where deferred prices are higher, suggests plenty of nearby supplies to satisfy demand or a market is in equilibrium with supply and demand balanced. This week, we will look at location and quality spreads covering the same commodity’s regional dynamics and different compositions. These spreads shed light on areas of the world where a commodity may trade at a significant differential or where other forms or variations of the same commodity are at premiums or discounts, which could signal price changes. Location-location-location is the real estate mantra- It applies to commodities too A location spread reflects the price of the same commodity for delivery in one location or area versus another. The most recent example of substantial location differentials has been in the natural gas market. The natural gas futures contract on the CME’s NYMEX division reflects the price of the energy commodity for delivery at the Henry Hub in Erath, Louisiana. The chart shows that in October 2021, the futures reached the highest price since February 2014 when they traded to a high of $6.466 per MMBtu, only 2.7 cents below the 2014 $6.493 high. Meanwhile, shortages of natural gas in Asia and Europe pushed the energy commodity price over five times higher than the NYMEX futures price. Since natural gas in liquid form travels the world via ocean vessels, the high prices in Asia and Europe have a bullish impact on US prices. Meanwhile, prices in the US can vary dramatically from the NYMEX Henry Hub price, which is a benchmark. Following the price action in natural gas swaps between one US region and others can provide clues about the energy commodity’s price path. Commodity production tends to be localized in areas of the world where the earth’s crust contains reserves or the soil and climate support crop growth. Consumption is widespread as people worldwide require essential staples. When local shortages occur, prices can rise to substantial premiums to benchmarks. In glut conditions, they can fall to significant discounts. Monitoring these location differentials in all commodities provides valuable information about supply and demand characteristics. Different qualities command premiums or discounts A quality spread is the price differential between one form or composition of a commodity and another in the same raw material. An example is the price differential for one hundred-ounce bars of gold and four hundred-ounce bars of gold. Each COMEX contract calls for 100 ounces of the precious metal, the US standard of trade. The London gold market is a far more active wholesale market, where the standard of trade calls for the four hundred-ounce bars. Price differentials reflect the price and time to process one form of gold into the other. Significant premiums or discounts of either size bars, or different sizes such as kilos bars, one-ounce bars, or others, can tell us about retail or wholesale gold demand. When we drink a cup of coffee, we rarely think of the origin of the beans that are ground into the caffeinated beverage. Arabica coffee beans trade in the futures market on the Intercontinental Exchange. The Arabica beans tend to be most popular in the US. Starbucks, Dunkin Donuts, and most US establishments offer Arabica coffee to consumers. Brazil is the world’s leading producer of Arabica beans. Meanwhile, Vietnam is the leading product of Robusta coffee, which is the beans required for espresso coffees. Robusta coffee futures trade on the Intercontinental Exchange in Europe. A weather event in Vietnam or Brazil can cause supply issues for Arabica or Robusta beans, leading to a price change in one or both variations of the soft commodity. There are many other examples of quality spreads where one form or size of a commodity can experience supply or demand changes that impact the overall price action in the raw materials. Another part of market structure that can provide valuable clues and makes the pieces of the puzzle form a picture Location and quality factors can reveal underlying fundamental trends in a commodity. Comparing current levels to historical ones and explaining the changes often leads to an improved understanding of previous price trends and can help predict the future path of least resistance of prices. Location and quality differentials are parts of a market’s overall structure. Combined with the other structural factors, they can uncover opportunities that improve the odds of success. --- Use the links below to sign up for the Monday Night Strategy Call this week. You can also access the full article for free using the other link below. Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
NYMEX:NG1!Education
by Andy_Hecht
2
DXY - How To Use DXY To Enter Trades 🎯For almost a year DXY has been in an uptrend but we may soon be at the end. Last Friday, DXY closed with a bearish candle at the double top region, indicating that there are al lot of sellers at that level. If we continue to show bearish pressure, we can soon end that uptrend and take advantage of USD weakness across the board. Here's a brief breakdown on how to use DXY: DXY up = USD Strength. DXY down = USD weakness 1. Analyse DXY for reversal zones and identify what the next move is 2. On this chart we can see that DXY is indicating bearish price action 3. Now that DXY is at an important level, go on to your USD pairs and analyse them 4. Find out if there's any XXXUSD LONG ideas or if there's any USDXXX pairs that are at the best place to SELL 5. Correlate the DXY movement with the USD charts e.g. DXY showing bearish price action which makes EURUSD buy a great idea as EURUSD is at a key level. Hope that helps! Goodluck and as always, Trade Safe!
TVC:DXYEducation
by WicktatorFX
9
Three Steps to Become A PROFESSIONAL TRADER 👨‍💻👩‍💻 Hey traders, The road to consistently profitable trading is hard and dangerous. This path can be split into three main milestones. Each of those requires discipline, time & patience. 📚The first step is your trading education. Starting with a basic understanding of what are the financial markets & how they work and finishing with the sophisticated techniques of risk management, so many things must be learned. In the beginning you will be most likely paralyzed by the complexity of the whole system. Even the choice of a trading education provider is not that simple taking into consideration the sheer amount number sources that could be found on the internet. It is highly advisable for you to accompany your trading education with demo account trading so that you could apply what you’ve learned in practice. 💸It is imperative to invest in your education, while simultaneously saving up for your first(but not last) real trading account. Spending your money on education & then saving in order to build your first trading account, a sufficient amount of money is required. Be prepared for failures. Be prepared to blow your first and second trading account & fund it again. Be prepared that the majority of premium educational sources won't meet your expectations. I don't know any trader who succeeded in trading without investing a huge amount of money in that. 👨‍💻With the money being invested & with the knowledge gained, you must practice on a real account. You must choose the trading strategy that is appealing to you and start trading with that. Quite soon you will realize that theoretical knowledge has nothing in common with real market conditions. You will change trading strategies one after another until you finally find the one that truly makes sense to you. Then you will spend a couple of years playing with that, learning the rules & constantly polishing your trading plan. 🏁At some moment you will stop losing. At some moment your trading account will start growing steadily and you will become a consistently profitable trader. As the market conditions change constantly. You must be vigilant & learn to survive in a changing environment. Education, active investing & practice are required from you to keep being afloat. I hope that this article will help you to build realistic expectations concerning trading. If you are ready to learn a lot, invest money & practice many years not making a dime, then one day you will definitely make it. Do you agree with my thoughts? ❤️Please, support this idea with like and comment!❤️
COINBASE:BTCUSDEducation
by VasilyTrader
38