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Psychology of a Market Cycle - Where are we in the cycle?Psychology of a Market Cycle - Where are we in the cycle? This tutorial is related with "Trading Psychology - Fear & Greed Index" study Before proceeding with the question "where", let's first have a quick look at "What is market psychology?" Market psychology is the idea that the movements of a market reflect the emotional state of its participants. It is one of the main topics of behavioral economics - an interdisciplinary field that investigates the various factors that precede economic decisions. Many believe that emotions are the main driving force behind the shifts of financial markets and that the overall fluctuating investor sentiment is what creates the so-called psychological market cycles - which is also dynamic. Stages of Investor Emotions: *Optimism – A positive outlook encourages us about the future, leading us to buy stocks. *Excitement – Having seen some of our initial ideas work, we begin considering what our market success could allow us to accomplish. *Thrill – At this point we investors cannot believe our success and begin to comment on how smart we are. *Euphoria – This marks the point of maximum financial risk. Having seen every decision result in quick, easy profits, we begin to ignore risk and expect every trade to become profitable. *Anxiety – For the first time the market moves against us. Having never stared at unrealized losses, we tell ourselves we are long-term investors and that all our ideas will eventually work. *Denial – When markets have not rebounded, yet we do not know how to respond, we begin denying either that we made poor choices or that things will not improve shortly. *Fear – The market realities become confusing. We believe the stocks we own will never move in our favor. *Desperation – Not knowing how to act, we grasp at any idea that will allow us to get back to breakeven. *Panic – Having exhausted all ideas, we are at a loss for what to do next. *Capitulation – Deciding our portfolio will never increase again, we sell all our stocks to avoid any future losses. *Despondency – After exiting the markets we do not want to buy stocks ever again. This often marks the moment of greatest financial opportunity. *Depression – Not knowing how we could be so foolish, we are left trying to understand our actions. *Hope – Eventually we return to the realization that markets move in cycles, and we begin looking for our next opportunity. *Relief – Having bought a stock that turned profitable, we renew our faith that there is a future in investing. It's hard to predict with certainty where we exactly are in the market cycle, we can only make an educated guess as to the rough stage based on data available. And here comes the study "Trading Psychology - Fear & Greed Index" Factors taken into account in this study include: 1-Price Momentum : Price Divergence/Convergence versus its Slow Moving Average 2-Strenght : Rate of Return ( RoR ) also called Return on Investment ( ROI ) is a performance measure used to evaluate the efficiency of an investment, net gain or loss of an investment over a specified time period, the rate of change in price movement over a period of time to help investors determine the strength 3-Money Flow : Chaikin Money Flow ( CMF ) is a technical analysis indicator used to measure Money Flow Volume over a set period of time. CMF can be used as a way to further quantify changes in buying and selling pressure and can help to anticipate future changes and therefore trading opportunities. CMF calculations is based on Accumulation/Distribution 4-Market Volatility : CBOE Volatility Index ( VIX ), the Volatility Index, or VIX , is a real-time market index that represents the market's expectation of 30-day forward-looking volatility. Derived from the price inputs of the S&P 500 index options, it provides a measure of market risk and investors' sentiments. It is also known by other names like "Fear Gauge" or "Fear Index." Investors, research analysts and portfolio managers look to VIX values as a way to measure market risk, fear and stress before they take investment decisions 5-Safe Haven Demand: in this study GOLD demand is assumed What to look for: *Fear and Greed Index as explained above, *Divergencies Tool tip of the label displayed provides details of references Conclusion: As investors, we always get caught up in the day to day price movements, and lose sight of the bigger picture. The biggest crashes happen not when investors are cautious and fearful, it's when they're euphoric and expecting financial instruments to continue going higher. So as we continue investing, don’t forget to stop and ask yourself, where in the chart do you think we are right now? The Market Psychology Cycle shines light on how emotions evolve, fear and greed index can come in handy, provided that it is not the only tool used to make investment decisions. It is easy to look back at market cycles and recognize how the overall psychology changed. Analyzing previous data makes it obvious what actions and decisions would have been the most profitable. However, it is much harder to understand how the market is changing as it goes - and even harder to predict what comes next. Many investors use technical analysis (TA) to attempt to anticipate where the market is likely to go. Investors are advised to keep tabs on fear for potential buying the dips opportunities and view periods of greed as a potential indicator that financial instruments might be overvalued. Warren Buffett's quote, buy when others are fearful, and sell when others are greedy
Education
by dgtrd
4
CRUDE OIL (WTI) Weakening Market & Consolidation Crude oil is becoming weaker and weaker. though many fundamentalists promised a quick return to "normal" price levels after the lockdown removal, it looks like things are much more complicated than that. if you are a swing trader and you are looking for an opportunity to jump in in the market, I guess it is not the best moment. for the entire month, we could not set a new high. ATR drops as crazy and volatility is missing:) let the market start moving. let it pick the direction and then just act accordingly. swaps are now very expensive on oil, so no need to incur these losses.
FX:USOILEducation
by VasilyTrader
13
If BTC is Steady, We Are Steady in Small Caps BoiCheck out the latest blog post for more boi: www.derzzycharts.com Same deal, short weakness, buy strength. When BTC is giving the market room to breath, we own altcoins. It works every time. We don’t need to know why, we just know that it does. So what did we do today? We looked at the top 500 coins, and picked some charts to buy. Let’s have a look. Here we have WTCUSDT and FTMUSDT. You don’t even need to know what they are, just that they have strong charts. That is the beauty of technical analysis, it could be anything! It could be corn, it could be soybeans, it could be any altcoin out there. If the chart looks good, we put in an order. We bought WTCUSDT earlier, but we are waiting for the pullback in FTMUSDT. So how did we pick these out of all of the charts? Good question… well we didn’t want bearish divergences on the RSI, we wanted a good cloud, and a MACD that had room to run. A lot of coins have pumped, but you don’t want to hold bags in crypto. So you have to pick positive charts. Don’t chase bro! For a look at the indicators and the decisions, see the linked post. Happy Trading! Brandon Anderson brandon@derzzycharts.com @derzzycharts www.derzzycharts.com
BITSTAMP:BTCUSDEducation
by derzzycharts
GOLD buying opportunity trade setupTaking a look at the price action on Gold, we saw a high probability trade setup for a potential buying opportunity. We saw many factors all lining up together which always helps increase the probability for you as a trader to get a good idea what direction price could go next. As you can see from the 30 Minute chart, we saw Gold in a descending channel until it completed a larger bullish 3 drive pattern right at a previous level of support. What increased the strength of this level was that a smaller bullish 3 drive pattern also completed right at the same point. What we needed to do now was wait to see if price would bounce to the upside from this point which occurred nicely and so with this information we can go down to our lower time frames and find a local inner trend line just above the lows and wait for this to break to the upside which will help pin point a precise entry level for the potential long trade. For trade management, we can place our stop loss just below the 3rd and final drive while also looking to target the top side of the channel.
OANDA:XAUUSDEducation
by DavidVillagra
Trendlines, Volume and FibonacciTrendlines are the simplest chart pattern you can find, but they are some of the most widely used, and for good reason. They highlight a price trend going up, down, or sideways. Which therefore will be used for further analysis and other chart patterns, but what many people don't know are the specifics of trendlines. Firstly, widely-touched trendlines (about a month apart) perform much better than closely-touched trendlines. Trendlines with more touches also perform better than those with fewer. Furthermore, the longer the trendline the better the performance. However, steeper trendlines don't cut - performance usually lacks when trendlines get steeper. The Gold monthly chart shows a downward channel highlighted by blue trendlines. This channel isn't the best since the breakout doesn't kick in for a couple of years, however, it would have been great for a few swing trades. Highlighted by the blue notes are regions of high volume at valleys and peaks. Heavy volume at peaks and volumes are good indicators of support and resistance. Represented by the white horizontal lines. However, one important thing to note is that horizontal consolidation regions provide better support and resistance then peaks and valleys. The HCR is presented by the yellow note and the highest blue note in the chart. Also shown is the Fibonacci retracement. The Fibonacci retracements of 38%,50%, and 62% are good regions for support and resistance. A stop placement at 67% protects trades 66% of the time.
OANDA:XAUUSDEducation
by BlackbearTrader
EW Analysis: Silver Is Pointing Towards 2019 HighsHello traders! Today we will talk about Silver and its price action from Elliott Wave perspective. Metals are in an impulsive rally, especially Gold, but since March, Silver is doing much better if we take a look at the GOLD/SILVER ratio, which is now turning bearish and there's actually room for more weakness after recent corrective slow down. So, it means that Silver may continue to work better than Gold. Silver is in the strong uptrend from the beginning of March and it's ideally unfolding a five-wave cycle back to the 2019 highs, so current slow down can be just a temporary correction in wave 4 before we may see another leg to the upside, probably final 5th wave that can send the price up to 19 area. In the 4-hour chart we are currently tracking a bullish triangle within wave 4 that can be approaching the end soon, so a rise into a 5th wave can be around the corner. Be humble and trade smart! If you like what we do, then please like and share! Disclosure: Please be informed that information we provide is NOT a trading recommendation or investment advice. All of our work is for educational purposes only.
OANDA:XAUXAGEducation
by ew-forecast
GOLD (XAUUSD) Structure Analysis & Thoughts gold is just unstoppable. the price is growing like crazy this week. if you missed this movement and plan to jump in, it is too late and very risky atm. the price is relatively close to our next potential reversal area 1823 - 1833. this area is based on a resistance line of a rising channel and fib.extension confluence of the last two major daily impulses. attention! I don't say that we should just blindly short from that area. always look for a confirmation on a lower time frame to trade against the trend. moreover, if you want to catch a bull rally, a pullback from the above-mentioned area may let you buy on a discount from the support of the channel. apply these structure levels based on your strategy and good luck!
FX:XAUUSDEducation
by VasilyTrader
16
Nasdaq vs Gold vs Dot Com Bubble FactsI only look at facts, not people's opinions. In fact my opinion doesn't matter. The current situation is nothing compared to Dot Com Bubble. If you only look at one data or one chart and make your investment/trading decision based on that. Good luck. If you try to be fancy and wants to short the market top. Good luck. The fact is, we have BOTH Nasdaq and Gold rallying at the same time, UNLIKE during Dot Com Bubble when Gold was in its bear market. The capital flow is BROADENING, which means the capital is NOT ONLY flowing into Nasdaq. Of course the concentration is HIGHER there. But we are not in the same situation like Dot Com. Nasdaq didn't go from 1000 to 5000 or did 5x in 5 years. We are just barely 2x from Dot Com Bubble top, not considering inflation. That's the problems with people who think they can predict a market top. That's why none of the richest people in the world are short sellers. Short selling is just a fancy occupation, nothing more. We already had that major corrections, major corrections will happen from time to time, but you don't want to fight against the secular trend of asset prices going up versus fiat or dollar and that may continue much longer than you can be rationale. Just enjoy the ride and take some profit here and then, buy only essential things in your life, no need for big house or lambo or yacht, you will not bring those items with you in grave anyways. Don't fight against the fed. And lastly, stop wasting your time, don't reach out to me. I will never read any messages or comments. Regards.
TVC:IXICEducation
by UnknownUnicorn735418
3