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How to use Williams Alligator Indicator in crypto trading?You have probably heard about Alligator, indicator which is used by top crypto traders. This powerful tool can increase performance of every cryptocurrency trading strategy and help you to make money on the market. Alligator gives us the precise answer if now price is in impulsive or reactive wave. This knowledge is very useful in building your own crypto trading strategies or even in automated trading bot strategies. Even if you use grid bot strategy Alligator can increase your return on investment because it’s vital to set up grid bot in reactive wave and sideways movements. What is the beast Alligator, let’s have a deep dive into this topic today! What is Alligator? Alligator is the best indicator for trend detection. It consist of three moving averages which are called jaw, teeth and lips. Moving averages are frequently used in algorithmic trading bots. They can be exponential, smoothed or weighted depending on particular crypto trading algorithm, but we will use smoothed moving averages (SMA). Jaw (blue line) - 13 period SMA shifted 8 bars is the future. This is the balance lie of the current time frame, for example 1D Teeth (red line) - 8 period SMA shifted 5 bars in the future. This is balance line of lower degree time frame, for example 4h Lips (green line) - 5 period SMA shifted 3 bars in the future. This is balance line of two times lower degree time frame, for example 1h Please, be careful when you use Alligator on different cryptocurrency trading platforms. Check the correct settings and moving average type. On TradingView it’s correct, don’t worry! Trend detection with Alligator. 
The main Alligator’s feature is the detection the trending markets and markets which are about to explode in any side. This powerful tool can enhance your crypto trading algorithm if you use it in the correct way. On the ATOM price chart you can see the example of an Alligator. As you can see it has two conditions: sleeping and hungry. Sleeping Alligator is when all lines are crossing each other and the price. This period of time can takes up to 80% of time. This is the market cycle stage where you shall avoid any trading and be prepared for the trending market Hungry Alligator is when after a long period of consolidation price chose the trend direction. It’s an impulsive move. Alligator’s mouth is widely opened and do not crosses the price. It’s very important to distinguish the trending market because only this type of a market gives you opportunity for the fast and huge profit. Otherwise, in the range bounded market you don’t have enough space for price to make profit for you. Most of stop losses occur while Alligator is sleeping. Another one very useful hint for you. If you use Elliott waves analysis. You don’t need to understand in which wave market is now. You just jump into the impulses and avoid corrections. How to trade with Alligator Here is the most interesting part. How to start crypto trading using Alligator? Our basic strategy is to wait when the price will create the first fractal above the Alligator’s mouth and place conditional order to buy one tick above the fractal’s top. We will discuss fractals in details next time. Now you have to understand how to use Alligator. Another one hint from our experience is to use fractals only when Alligator has been sleeping for a long time, like you see on the BTC chart. After long sleep and fractal breakout Bitcoin showed the greatest bull run in the history. Let’s notice where we should close trade. Almost at the top! When price started showing weakness we don’t need to be in the market anymore. Using this strategy on 1W time frame you can hold assets during entire bull run and sell then before bear market. Fantastic! Isn’t it? Conclusion In this article we discussed how you can implement Alligator indicator in your trading routine. This indicator will help you to avoid boring market when you can only lose money and catch every big move. Moreover you can use even sideways market detection if you use cryptocurrency trading bot which earns money in range bounded market. For sure this in not the only one strategy using Alligator. Next time we enhance our approach with other tools and see in details how Alligator improve their profitability. Moreover, soon we will live stream where practice trading with Alligator. See you next time!

 Best regards, Skyrex Team
Education
by Skyrexio
17
Bitcoin vs. Ethereum: Deciphering the DistinctionsCryptocurrencies have revolutionized the financial landscape, with Bitcoin and Ethereum emerging as two prominent players shaping the digital economy. Despite sharing the common ground of blockchain technology, each offers distinct features and functionalities, underscoring the need to understand their differences. Introduction to Bitcoin Bitcoin, introduced in 2009 by the mysterious Satoshi Nakamoto, heralded the dawn of decentralized digital currencies. Its primary objective was to provide an alternative to traditional fiat currencies through a peer-to-peer electronic cash system. Transactions on the Bitcoin network are verified and recorded on an immutable public ledger, known as the blockchain. Introduction to Ethereum In 2015, Vitalik Buterin introduced Ethereum, presenting a paradigm shift beyond mere digital currency. Ethereum serves as an open-source platform for executing smart contracts and decentralized applications (DApps) without intermediaries. At its core is Ether (ETH), the native cryptocurrency powering transactions and fueling the ecosystem. Core Differences Purpose: Bitcoin functions primarily as a digital currency, aiming to revolutionize financial transactions. Ethereum, on the other hand, is a versatile platform enabling the execution of smart contracts and DApps, with broader implications for decentralization beyond monetary exchange. Technology: Bitcoin operates on a Proof-of-Work (PoW) consensus mechanism, requiring significant computational power for transaction validation. Ethereum initially adopted PoW but is transitioning to Proof-of-Stake (PoS) with Ethereum 2.0, offering improved scalability and energy efficiency. Scalability: Bitcoin processes approximately 7 transactions per second, while Ethereum can handle up to 30. Both face scalability challenges, with Ethereum exploring solutions like sharding to enhance throughput and efficiency. Supply: Bitcoin has a fixed maximum supply of 21 million coins, creating scarcity akin to digital gold. In contrast, Ethereum does not have a predefined supply limit, potentially allowing for continuous production, albeit with economic implications. Use Cases: Bitcoin is synonymous with a store of value, often likened to digital gold due to its limited supply and scarcity. Ethereum's versatility enables the creation of innovative applications such as decentralized finance (DeFi), non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), and more, expanding its utility beyond monetary transactions. Price Dynamics Bitcoin's market movements often dictate the broader cryptocurrency landscape, impacting the prices of assets like Ethereum. Influencing factors include market sentiment, regulatory developments, and macroeconomic conditions. Ethereum's price dynamics are further influenced by platform upgrades, developer activity, and the burgeoning demand for decentralized applications. Monthly Bitcoin Chart Monthly Ethereum Chart Conclusion While Bitcoin and Ethereum share the foundation of blockchain technology, their purposes, technologies, and applications diverge significantly. Bitcoin seeks to redefine monetary exchange, while Ethereum aims to revolutionize contractual agreements and decentralized applications. Understanding these distinctions is paramount in navigating the evolving landscape of digital assets and harnessing their transformative potential in the global economy.
BINANCE:BTCUSDEducation
by FOREXN1
6
what currencies to buy in times of geopolitical tensions. In times of geopolitical turmoil or war, investors often seek refuge in currencies perceived as safe havens. several currencies are considered safe harbors due to their stability, liquidity, and low risk of depreciation. Some of the notable safe-haven currencies include: 1-US Dollar (USD): The US dollar is often regarded as the ultimate safe-haven currency due to the size and stability of the US economy, as well as the liquidity of USD-denominated assets. During times of uncertainty, investors tend to flock to the USD, driving up its value. 2-Swiss Franc (CHF): Switzerland's reputation for political neutrality and its strong banking system make the Swiss Franc a popular safe-haven currency. Investors view the CHF as a stable and reliable asset during periods of geopolitical tension. 3-Japanese Yen (JPY): The Japanese Yen is considered a safe-haven currency due to Japan's status as a net creditor nation and its large current account surplus. During times of crisis, investors often repatriate funds into the JPY, driving up its value. 4-Euro (EUR): Despite occasional uncertainties surrounding the Eurozone, the Euro is still considered a safe-haven currency by many investors. The Euro's status as the second most traded currency in the world and the stability of major Eurozone economies contribute to its safe-haven appeal. 5-Gold-Backed Currencies: Some countries, particularly those with significant gold reserves, may issue currencies backed by gold or pegged to the price of gold. These currencies offer stability and are perceived as safe havens during times of crisis.
OANDA:XAUUSDEducation
by JoeChampion
12
Mind the Gap: How to Trade Price GapsThe Power and Beauty of Price Gaps Price gaps represent a clear imbalance in supply and demand, making them one of the purest representations of momentum in financial markets. These gaps occur when there is a significant disparity between the closing price of one period and the opening price of the next, indicating a sudden surge in buying or selling pressure. How to Trade Price Gaps: 3 Different Strategies 1. Gap & Go: Description: This strategy involves trading in the direction of the gap, anticipating that the momentum will continue. Execution: Enter trades as soon as the market opens, aiming to capture the initial momentum surge. Timeframe: Typically applied on shorter timeframes, such as intraday charts. Risk Management: The gap can be used for stop less shelter, hence stops can be placed above (below) the gap. Example: Tesla (TSLA) 5min Candle Chart In this example, Tesla gaps lower at the open – breaking below a key level of support and signalling the breakdown of a sideways range. The gap follows through to the downside during the remainder of the trading session. Past performance is not a reliable indicator of future results 2. Gap Fill: Description: In contrast to the Gap and Go strategy, this approach involves fading the initial price movement and trading in the opposite direction of the gap. Execution: Wait for price to retrace back to pre-gap levels before entering trades, anticipating that the gap will eventually be filled. Timeframe: Can be applied on various timeframes, depending on the magnitude of the gap and market conditions. Risk Management: Implement stop-loss orders to manage risk, as price may continue to move against the trade. Example: Barclays (BARC) Hourly Candle Chart Barclays gap above key resistance on the hourly candle chart. The gap is filled and broken resistance turns to support prior to the uptrend resuming. Past performance is not a reliable indicator of future results 3. First Pullback: Description: This strategy combines elements of both Gap and Go and Gap Fill, focusing on entering trades after the initial momentum surge but waiting for a pullback or consolidation before entry. Execution: Wait for the first pullback or consolidation after the gap before entering trades in the direction of the prevailing momentum. Timeframe: Suitable for both shorter and longer timeframes, depending on the magnitude of the gap and market dynamics. Risk Management: Utilise stop-loss orders to protect against adverse price movements and adjust position sizing based on volatility. Example: Arm Holdings (ARM) Hourly Candle Chart Arm’s share price puts in a large price gap which breaks decisively above a key level of resistance on the hourly candle chart. Given the size of the gap, optimal entry requires waiting for the market pullback. Past performance is not a reliable indicator of future results Additional Factors to Consider Catalyst Behind the Gap: Look for stock-specific news events that recalibrate market expectations, such as earnings surprises or changes in outlook. Mechanical events like dividends or corporate actions are less likely to sustain momentum. Size of the Gap: Larger gaps indicate stronger momentum but also carry a higher risk of mean reversion. Assess the magnitude of the gap relative to historical price action and volatility. Levels Broken: Consider the significance of key support and resistance levels broken by the gap, as they may influence the strength and direction of the price movement. Prevailing Trend: Analyse the prevailing trend before the gap and assess whether the gap aligns with the overall market direction. By incorporating these factors into your analysis and selecting the most suitable strategy based on market conditions, you can effectively trade price gaps and capitalise on momentum opportunities in the financial markets. Remember to exercise proper risk management and adapt your approach as market conditions evolve. Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84.01% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
NASDAQ:TSLAEducation
by Capitalcom
1
1-Indicator Strategy For Beginners...The Stochastic Hey Rich Friends, Happy Wednesday! I wanted to share one of my top 3 favorite indicators with you.... The Stochastic (STOCH). As a leading (vs lagging) indicator, it is perfect for beginners because you can find entry and exit signals with only a few key details. Adding the STOCH to your chart: 1. Search the indicators for "STOCHASTIC" and click once to add to your chart. The only thing that I modify is the thickness of the lines but feel free to make further changes to your liking. 2. Make sure that the "indicators and financial values" option is ON. Right-click your scales, select labels, and make sure "indicators and financial values" is checkmarked. Entry signals for a buy: - The STOCH is facing up - The fast line (blue) is above the slow line (orange) - The STOCH has crossed above the 20% level, from oversold, back into the blue-shaded area Exit the trade or take profit once the STOCH has crossed back below the 80% level, from overbought, into the blue-shaded area. Entry Signals for a sell: - The STOCH is facing down - The slow line (orange) is above the fast line (blue) - The STOCH has crossed below the 80% level, from overbought, back into the blue shaded area Exit the trade or take profit once the STOCH has crossed back above the 20% level, from oversold, into the blue-shaded area. I hope that this video helps someone become a more independent and profitable trader. Let me know in the comments if you try this strategy! Peace and Profits, Cha
Education
0
by MoneyMantraCha
33
Keltner Bands Pullback StrategyHere we take a look at trading pullbacks using the Keltner Channels. I cover the initial setup, the types of entries, and trades to avoid. This setup contains 3 parts: The channel touch The Pullback The Entry The Channel Touch Here is an example of the beginning signal in our setup, a band touch. The top and bottom bands represent the ATR (Average True Range) of a loopback period. So a touch of the band indicates volatility in the underlying stock or commodity. This also presents us with a chance for a nice pullback with continuation. The Pullback The pullback is simple, it is a reversion to the mean. So, the price pulls back to the mean (the ema) that the Keltners are based on. From this point, you can start to determine the entry. The Entry Depending on your style, a stop order, or limit order trader, you get to create your style to enter the trade. The following are some ideas: zero line MACD cross, second entry (price action) long or short, a trigger zone (for limit order traders), and an ema touch (limit order traders). Zero Line Entry Price pulled back and crossed the zero line on the modified MACD indicator. Second Entry Long (High2) The entry is the second attempt to break the previous bars high in a pullback. The Trigger Zone I created these based on an internal Keltner channel. You can set your limit orders anywhere inside of them. EMA Touch Whenever the price touches an offset ema you can enter. So you can place and move your limit order as the ema moves. I like to offset by one because you are guaranteed a price touch (ema doesn't move). Backtesting is also my accurate with an offset ema. Conclusion The Keltner channels offer an extremely powerful way to determine a potential pullback within a trend. They also help define trends (on the first touch) and help objectively identify climatic behavior. This strategy as a whole allows for high-quality setups and the flexibility of entering and exiting trades based on trading style. I like to shoot for a 1:1 based on stop placement.
AMEX:IYREducation
by JoeRodTrades
3
HERE ARE 10 COMMON TRADING INDICATORS MADE SIMPLE Chart has all 10. Hope this helps. Hope it's simple to understand if you still struggle with indicators. Remember, no one indicator is good on its own. Think of an indicator as a sign that you should pay attention to a possibility. For example, if I go to the ocean, maybe I have an indicator that says you're closer to sharks than in the great lakes, will I be eaten? Probably not, but also, there are more sharks and my indicator confirms that. I can't use this one indicator to say, I'm probably about to be eaten. BUT.. Let's say I have multiple indicators that I use to give me a better idea if I'll be eaten. Maybe an indicator tells me there is an oddly higher than avg number of a sharks number 1 food source within the area. Can I say I'll be eaten? No, but I could say, maybe due to the increased food supply, there may be more sharks. What if I have a few more indicators, one of which says there are 30 great whites within 10 miles, and another that says, usually at this time of the year, there are only ever between 2 to 7 great whites. Can I say, Yes, I'll be eaten? NOPE, not yet. What if I have another indicator that says, across the globe, shark attacks are increasing by a certain percentage, and another that says, there is blood detected within the water you're swimming in, which is lower than the threshold for human's to detect, but higher than the threshold needed for sharks to smell. What if I combine that with an indicator that says, on avg there are 1000 swimmers here, but now, there are under 30. Can I say I'll be eaten? Nope, BUT, I can say, hmm. Something is up and if one of us were to get eaten, I'm more likely to be picked out of 30 people than 1000. When can I say I'll be eaten? Probably if you build an indicator that can detect bite force and compare to known bit forces of sharks that could sense you're actively being eaten, but at that point, the stock moved already... err I mean, the shark ate already, and you're late to the show.. My point being, use them, but don't always assume when it comes to indicators. Take in all the data and then make a decision. Some indicators fit your style, some won't. Do I need 30 stacked indicators for sharks if I'm swimming in Lake Michigan? Probably not, it would make everything a mess. So, here there are. Relative Strength Index (RSI): Ah, the RSI, the “I’ve had too much” indicator of the stock market. When it hits above 70, it’s like your stock had too much to drink at the party and is likely to come crashing down. Below 30? It’s been left out in the cold and might be due for a warm-up (a.k.a. price increase). Remember, it’s not foolproof, but then again, neither is your weather app. On-Balance Volume (OBV): This one’s all about following the crowd. If the volume is increasing, it’s like everyone’s rushing to get the latest iPhone. But remember, even if everyone jumps off a bridge, it doesn’t mean you should too. Always double-check before you follow the herd. Simple Moving Average (SMA): The SMA is like that reliable friend who’s always a bit behind on the latest trends. It gives you the average closing price over a certain period. It’s simple, it’s moving, it’s average. It’s the SMA. Exponential Moving Average (EMA): The EMA is the SMA’s hip younger sibling. It cares more about what happened recently than what happened way back when. It’s great for short-term trading, but remember, even the coolest kids can get things wrong. Moving Average Convergence Divergence (MACD): This one sounds complicated, but it’s not. It’s like watching two rabbits on a race track. If the fast rabbit (the 12-day EMA) overtakes the slow rabbit (the 26-day EMA), it’s a bullish signal. If the slow rabbit overtakes the fast one, it’s a bearish signal. Just remember, rabbits are unpredictable! Fibonacci retracements: Ah, Fibonacci, the Da Vinci of math. These horizontal lines indicate where support and resistance levels might be. It’s like trying to predict where you’ll meet your ex at a party. It could be useful, but don’t rely on it too much. Stochastic oscillator: This one’s a bit like a pendulum. When it swings one way, it’s likely to swing back the other way soon. It’s great for spotting potential reversals, but remember, even a broken clock is right twice a day. Bollinger bands: These are like the elastic waistband of your favorite sweatpants. If the price hits the upper band, it might be time to sell (or stop eating pizza). If it hits the lower band, it might be time to buy (or hit the gym). Average Directional Index (ADX): This one tells you whether the price is trending strongly or just wandering around like a lost puppy. Above 25 is a strong trend, below 20 is weak. But remember, even lost puppies find their way home eventually. Accumulation/Distribution (A/D) line: This one’s all about supply and demand. If the line is going up, the stock is being accumulated. If it’s going down, it’s being distributed. It’s like tracking whether more people are buying or selling fidget spinners. Remember, these indicators are like tools in a toolbox. Don’t try to build a house with just a hammer. Use them in combination, understand their limitations, and always do your own research. Happy trading! 📈
NASDAQ:TSLAEducation
by nicktussing77
18
What's in a Trading Plan? Here's All You Need to Include.Ready, set… plan? In this guide, we discuss why you need to plan your trading before trading your plan. Let’s roll. Table of Contents: »Importance of a Trading Plan »The Successful Trading Plan Doesn't Exi... »What's in a Typical Trading Day? »Markets, Strategies and Styles »Summary Venturing into trading without a plan is akin to setting sail on the ocean without a compass. Or taking the leap without looking first 😉. We can keep the metaphors rolling but if there’s one thing you must remember from this word salad of an article, it’s this: success in trading is possible with a plan. Without a plan, not so much. In this guide, we'll talk about the importance of creating a trading plan, what you should include in it, and how to follow it. 📍 Importance of a Trading Plan A trading plan is not just a list of dos and don’ts; it's the roadmap to trading success. Here's why it matters: ➡️ Streamlines Your Actions : Much like a roadmap, a trading plan outlines your objectives, time frames, strategies, and risk management techniques, and offers a clear path forward. ➡️ Limits Emotional Swings : By defining rules and parameters in advance, a trading plan helps to keep emotions in check, limiting impulsive actions that could lead to financial pitfalls. ➡️ Fosters Discipline : Sticking to a plan holds you accountable for your actions and allows you to see where you jump out of your rule book and into undisciplined FOMO-driven pump-chasing revenge trading. 📍 The Successful Trading Plan Doesn't Exi... Many traders believe that you can be successful by buying and selling random selections of stocks, forex pairs, or commodities. However, the reality is that the most — if not all — successful traders have one thing in common: a well-defined trading plan. Here's what makes for a successful trading plan: ☝🏽 Adaptability : A successful trading plan is not rigid but flexible, allowing for adjustments in response to changing market conditions. ☝🏽 Consistency : A plan helps you stay on track toward your goals as a trader, allowing you to stick to predefined rules and strategies, especially when things get hot and volatile. ☝🏽 Continuous Improvement : A successful trading plan is a work in progress. The more time you use it, the higher probability you will have to refine it as you drift along diverse assets, all swayed by different factors. 📍 What's in a Typical Trading Day? A typical trading day is a blend of preparation, execution, and reflection. And while you should leave room for new ideas, fresh approaches, and some surprises, there are mainstay components that you need to have in your trading plan. 📰 Reading the News : Staying in the know is always a good idea. For many successful traders, the first thing to do is check what’s the latest on the news front. Known as fundamental analysis, reading the news and doing your research will help you get a sense of investor sentiment. Moreover, you can stay ahead of the curve and anticipate big market moves by following the economic calendar. Lots of those sharp swings you see in forex or stocks are caused by regular data dumps such as the monthly US nonfarm payrolls report. The Federal Reserve’s decisions on interest rates or the monthly Consumer Price Index are also keys to anticipating volatility. And what better place to follow all that’s moving markets than the TradingView News section ? 📈 Following the Charts : if you’re here, this one won’t be too new to you. Chart reading, known as technical analysis, is one of the oldest ways to analyze anything — from stocks to crypto and even frozen orange juice. Think of a chart as your trading canvas. It’s your space to be creative, draft ideas, look for technical patterns and formations, and anticipate potential moves. Observing the chart and watching how prices behave will help you spot where a trend may form, extend, or reverse. Some of the most popular technical formations include double tops and bottoms, head and shoulders, cup and handle, and more. And some of the most popular technical indicators include the Simple Moving Average (SMA), the Relative Strength Index (RSI), and the Fibonacci sequence. All of that, and much more, is readily available for you almost anywhere you click on the TradingView platform. ⚒️ Work on Your Skills : Trading doesn’t have to glue you to the screen in constant monitoring of every blip. If you don’t see anything to trade, don’t trade just for the sake of it. Sometimes the best trading position is no position at all. Instead, use some of your idle time to build out your knowledge base. Grab some books on technical analysis or trading psychology. Or watch interviews of successful traders and investors and gain that educational edge to help you become a more aware, informed, and confident trader. 🏖️ Take a Break : Not everything you do needs to be related to productivity gains and trading improvement. Stare into space or read a great novel. Take your mind off trading and unwind, let the steam off, and recharge your batteries. Go out, enjoy a walk or do some people-watching. Taking time to zone out every now and then will help you get back to trading sharper, smarter, and more balanced. 📍 Markets, Strategies and Styles The world of trading is as diverse as it is dynamic, offering a flurry of markets, strategies, and trading styles to explore. Here's a glimpse into the landscape: 💹 Markets : Traders can choose from a variety of financial markets, including stocks , forex , and cryptocurrencies , each with its unique characteristics and opportunities. When you set out to create your trading plan, think carefully whether you want your portfolio to be concentrated into any one market or asset class. Or maybe you’d like to go for a diverse approach to trading and pull in assets from several markets. Knowing what your asset preference is will help you phase out markets so they don’t distract you. 🎯 Strategies : From technical analysis to fundamental analysis, you can adopt various strategies to identify trading opportunities and manage risk, ranging from trend following to mean reversion. News trading is a popular approach to markets as it allows you to bet on economic reports, geopolitical events, central bank updates, and more. On the other hand, technical traders tend to stick to the chart in efforts to gauge price movements and trends. Every chart tells a story. Deciphering it is the tough part. 🌈 Styles : Trading styles are equally important and they’re all tied to a specific time frame of holding your positions. If you’re more into short-term trading, you may pick scalping and target a few pips of gains before jumping out of your trade. Day trading and swing trading are two popular time-sensitive trading strategies that you may want to explore when building out your trading plan. 📍 Summary Your trading plan should be exactly that — yours. Tailor it to your specific goals, risk orientation, asset preference, and find out how it stacks up against market conditions. That way, you can navigate the markets with confidence and direction, instead of letting markets sway your decision making and lead you into uncharted waters. Embark on your trading journey armed with a well-crafted plan, and let it be your roadmap to trading success. 📣With that said, let us know in the comments: do you have a trading plan? What’s the most important element of it and are you always sticking to it?
COINBASE:BTCUSDEducation
by TradingView
40
Don't Trade These Trend Lines | Forex Trading Basics A lot of traders apply trend lines for trading and making predictions on different financial markets. Trend line can also be an important element of price action patterns. However, only few knows that some trend lines are better to be avoided. In this article, I will share with you the types of trend lines that you should avoid and not rely on for making trading decisions. Invalidated Trend Line Even the strongest trend lines may lose their significance with time. Before you take a trade from a trend line, make sure that it still remains valid. If the trend line is not respected by the buyers and then by the sellers, or by the sellers and then by the buyers, we say that such a trend line lost its significance, and it is better to not trade it. Have a look at that rising trend line on USDCAD. We see strong bullish reactions to that, and we may expect a bullish movement from that, once it is tested. However, it was violated and after a breakout it should turn into a vertical resistance. Retesting that, the price easily went through the broken trend line. The trend line lost its significance, and it is better to not trade that in future. 2 Touches Based Trend Line When you are looking for a strong trend line to trade, remember that the trend line should be confirmed by at least 3 touches and 3 consequent bullish / bearish reactions to that. Above is the example of a valid and reliable trend line. However, quite often, newbie trade 2 touches based trend lines. Most of the time, such trend lines are neglected by the market. Moreover, relying on 2-touches-based trend lines, your chart will look like a complete mess. Simply because there are too many trend line meeting that criteria. Receding trend line There are the trend lines that go against your trade with time while remaining valid. Have a look at a major falling trend line on NZDCHF on a daily time frame. You may open a swing long position from that on a daily or a day trade on intraday time frames like an hourly. You can see that the market may easily go against your predictions for a long time, while perfectly respecting a trend line. The price was sliding on that trend line for 6 consequent days before it finally started to grow. Such trend lines are better to be avoided . Make sure that a trend line and your trade have the same direction. Trend lines can provide very safe points for trading entries. However, the trend lines are not equal and while some of them can be very profitable, some of them can lead to substantial losses. ❤️Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
20
Bitcoin Halving 2024 – This Time It’s DifferentREPORT HIGHLIGHTS: The fourth bitcoin halving event, scheduled on or around April 19, 2024, heralds a significant transformation in the cryptocurrency landscape. This halving, marked by the reduction of bitcoin supply subsidy, the emergence of a liquid investment ecosystem via CME Group futures and options, the advent of spot Bitcoin ETFs and the introduction of Ordinals, brings forth novel dynamics that could reshape prevailing narratives around bitcoin economics. The Halving Mechanics At its core, the quadrennial halving event entails a reduction in the reward granted to miners for each block mined on the bitcoin blockchain (the block subsidy) as determined by the bitcoin protocol. It is scheduled to occur roughly every four years, or every 210,000 blocks until the entire 21 million bitcoin supply is mined, approximately by 2140. As part of bitcoin's deflationary approach to its capped supply, the upcoming halving will reduce the bitcoin supply subsidy from 6.25 bitcoin per block to 3.125 bitcoin, fostering a more stringent supply landscape. By gradually decreasing the number of bitcoin entering into circulation, and, so long as the adoption of bitcoin grows over time, the halving mechanism ensures that the laws of supply and demand will consistently impact the value of the asset. Satoshi Nakamoto, in the bitcoin whitepaper's Incentives section, noted: “In a few decades when the reward gets too small, the transaction fee will become the main compensation for nodes. I’m sure that in 20 years, there will either be very large transaction volume or no volume.” Impact on Price Dynamics Source: CME CF Bitcoin Reference Rate Historically, each halving event has been accompanied by a significant surge in bitcoin price in the months preceding and following the event. Notably, in the 365 calendar days after the November 28, 2012, halving, bitcoin prices rose 8,447%, when the reward was cut from 50 bitcoin to 25 bitcoin. In the year following the July 9, 2016 halving, bitcoin prices rose a more modest, but still impressive, 283%, and the block reward was reduced to 12.5 bitcoin. In the 12 months after the May 11, 2020 halving, where the reward was cut to 6.25 bitcoin per block, bitcoin prices jumped 527%. The pre-halving rally has shown a diminishing trend over time, likely due to miners selling off their bitcoin holdings to secure profits ahead of the impeding reward reduction. Nevertheless, the historical pattern suggests the potential for bitcoin to reach new all-time highs in the aftermath of the 2024 halving. Impact of Bitcoin Spot ETFs The landscape surrounding bitcoin has evolved significantly, particularly with the approval of spot Bitcoin ETFs and the influx of institutional capital into the market. These ETFs have generated substantial daily demand, surpassing the pace of new bitcoin supply even before the halving and have the potential to absorb a considerable portion of the limited new issuance, To put the spot Bitcoin ETF inflows into perspective, at the current rate of block rewards, the bitcoin network produces about 900 new coins per day, or around $54 million worth of bitcoin (assuming an average price per coin of $60k). In April 2024, issuance will fall to 450 coins, or about $27 million worth of bitcoin. During the month of February, net inflows into the U.S.-listed spot Bitcoin ETFs averaged $208 million per day, far outstripping the pace of new supply, even before the halving. This imbalance between new demand and limited new issuance has likely contributed to the strong upward pressure on the price. Evolution of a Large Liquid Derivatives Market The emergence of a robust, regulated derivatives market facilitated by CME Group Bitcoin futures and options marks a fundamental shift in the narrative surrounding the halving for three key reasons: it enables price risks to be hedged, facilitates the management of bitcoin demand risk and provides market participants with actionable price discovery. Miners typically sold their bitcoin for fiat currency as they mined them, to pay for operational costs. This constant selling meant that price appreciation was measured. After a halving event, miners would have fewer bitcoin to sell, meaning the price could go up. Mining is now dominated by larger, often publicly traded, companies and with a liquid regulated derivatives market, it is possible for these firms to hedge and lock in future bitcoin prices to cover expenses without selling their coins. If this is the case, then selling pressure from miners is less likely to act as a drag on bitcoin prices going forward. Through the emergence of a healthy options market, investors can take price signals and consensus estimates about market expectations. Options could allow for additional income to be earned by miners or enhance long bitcoin positions, which would further cushion the impact of the upcoming halving. A higher number of investors and traders means better liquidity and enhanced price stability for bitcoin. It’s worth noting that bitcoin has become less volatile in recent years, with fewer extreme moves both to the upside and to the downside (link to Erik.N’s article). Growing institutional participation drove Bitcoin futures average daily open interest to over $11 billion so far in March (+29,000 contracts). Year- to- date average daily volume in Bitcoin futures at CME Group is roughly $4 billion (+15,400 contracts). Large Open Interest Holders (a LOIH is any entity that holds at least 25 Bitcoin futures or Micro Bitcoin futures contracts) reached a record of 272 holders, indicating growing institutional interest for bitcoin exposure. Impact on Miners The impeding halving poses challenges and opportunities for miners, as evidenced by shifts in miner behavior and industry dynamics. Decreased bitcoin reserves held by miners, coupled with heightened competition and record high hashrates, underscore the need for operational efficiency and strategic adaptation. The number of bitcoin held in wallets associated with miners has dropped to the lowest level since July 2021, suggesting that miners are perhaps capitalizing on bitcoin's recent price surge, running down their inventory ahead of the halving or leveraging them to raise capital for upgrading machinery and mining facilities. The bitcoin hashrate, a measure of network security, is near an all-time high and a sign of high competition, meaning miners need to marshal ever more computing power to earn new rewards. The difficulty in mining a single block is also at a record, and with high energy prices, the mining landscape remains tough. In previous cycles, there weren't many large-scale miners and even fewer publicly traded ones. The halving may catalyze merger and acquisition activities among mining firms, driving industry consolidation and fostering innovation in sustainable mining practices. Several publicly listed mining firms have already indicated they will use the halving to capitalize on strategic opportunities as mining rewards decrease and competition among miners intensifies. Depending on the operational cost of each miner, less efficient, unprofitable miners may be forced to leave the network or merge with larger companies to survive. In a more competitive landscape, miners will be driven to enhance their overall operational efficiency, including machine optimization, enhanced security and best-in-class risk management practices. This could likely spur increased innovation throughout incumbent mining technologies and methodologies, ultimately benefiting the industry as a whole. As the world becomes increasingly conscious of environmental impact, bitcoin miners that are at the forefront of adopting eco-friendly, sustainable practices and renewable solutions, such as carbon capture and heat waste recycling, will likely ensure that the future of crypto aligns with global sustainability and ESG goals. The rise of Ordinals The recent surge in retail demand can be attributed in part to the rise of bitcoin Ordinals BRC 20 tokens, which are reshaping the crypto landscape. These tokens, often likened to “NFTs for Bitcoin,” have the potential to drive on-chain activity and increase transaction fees, thereby bolstering miners’ revenue streams amidst declining block rewards post-halving. Long Term Outlook Bitcoin’s designation as digital gold underscores its role as a store of value, particularly amidst the scarcity reinforced by halving events. Institutional investors who view bitcoin as a hedge against inflation may find the halving supportive of its perceived value. Shifts in central bank policies, such as prolonged higher interest rates and potential quantitative easing measures, could further bolster bitcoin’s appeal as a hedge against currency devaluation. Looking ahead, the implication of bitcoin’s programmed scarcity intersecting with evolving demand dynamics remains intriguing. With 28 more halving events expected over the next 112 years, the future trajectory of bitcoin adoption and network growth warrants close monitoring – especially when broader retail and institutional access to bitcoin was only made possible in the U.S. less than 90 days ago with the approval of spot bitcoin ETFs. In conclusion, while past having cycles, with the associated price rallies offer valuable insights, the 2024 halving presents a unique confluence of factors that could usher in a new era for bitcoin. As institutional and retail interest converges with regulatory developments and macroeconomic shifts, maintaining a balanced perspective is imperative to navigating the evolving landscape of cryptocurrency. If you have futures in your trading portfolio, you can check out on CME Group data plans available on TradingView that suit your trading needs www.tradingview.com By Payal Shah, Director of Equity Research and Product Development at CME Group. *CME Group futures are not suitable for all investors and involve the risk of loss. Copyright © 2023 CME Group Inc. **All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
CME:MBT1!Education
by CME_Group
9
TradingView Masterclass: The power of Bar Replay🚀 Unlocking Your Trading Potential with Bar Replay on TradingView In the whirlwind of trading, having ace tools up your sleeve can dramatically shape your strategy and success. The spotlight shines bright on TradingView’s Bar Replay feature, a gem that offers a rewind on market movements, setting the stage for strategic mastery. Let's dive into what makes Bar Replay a must-use for traders eager to refine their game. 🕒 Understanding Bar Replay on TradingView Bar Replay is one of TradingView's standout features, allowing traders to select any point in history on their chart and watch the market's movements replay from that moment. It's a game-changer for visualizing price actions and volume changes without the stakes of live trading. Whether you're aiming for an in-depth analysis or a quick market recap, the adjustable speed of Bar Replay caters to all your needs with unmatched flexibility. 🤿 Why Dive into Bar Replay ? The magic of Bar Replay lies in its exceptional ability to simulate market scenarios, offering a practice ground for strategy testing and gaining insights from historical market behavior. Newcomers find a safe space to learn and experiment, while the pros get a robust tool for refining strategies. Our tutorial video steps it up by walking you through practical uses on a top company's chart—marking crucial levels, applying indicators, and making trade decisions, all within the Bar Replay environment. ✨ Conclusion: ReplayYour Path to Trading Excellence Bar Replay isn't just another tool; it's your companion in the quest for trading excellence, turning theory into actionable insight. Whether you're just starting or fine-tuning your strategy, it bridges the gap to more informed and decisive trading. Ready to explore Bar Replay 's power and make each session a step closer to your trading goals? Let's embark on this journey together. ❓ Ever tried Bar Replay in your trading adventures? We're all ears! 📢 Whether it's been a strategy game-changer or you're navigating its integration, drop your stories below. Let’s navigate the market's waves together. 💖 TradingView Team PS: Check out our other Masterclasses in the Related Ideas below 👇🏽👇🏽👇🏽 and give us a 🚀 and a follow if you don't want to miss any of our future releases!
COINBASE:BTCUSDEducation
by TradingView
7
Double EMA Strategy...For Beginners Hey Rich Friends, Happy Monday! It's a new week which means many new opportunities to get into the market...but it doesn't mean that you have to take all of them. Make sure you focus on finding the best setups by sticking to your plan and following your confirmation checklist. The best out of 25 will give you a good idea of your win/loss ratio. If you are still struggling to find a SIMPLE strategy that works for you, try using this Double EMA strategy that I apply to my trades. Let me know what you think and if it works for you! Today we will cover: 1. How to use EMAs on Tradingview 2. Double EMA Strategy 3. Feel confident taking a buy or sell in Forex trades 4. Trade with the trend Peace and Profits, Cha
Education
0
by MoneyMantraCha
19
How to Use Fibonacci Retracements for CryptoHow to Use Fibonacci Retracements for Crypto Fibonacci retracements have long been used in traditional financial markets. However, with the advent of crypto trading, they’ve also found popularity amongst digital asset traders. In this article, we answer the question “What is Fibonacci in crypto?”, discuss how to trade retracements and offer some strategies you can get started with today. Understanding Fibonacci Retracements Fibonacci retracements are based on the Fibonacci sequence mathematical concept. This sequence was discovered by Leonardo Fibonacci, a 13th-century Italian mathematician, and consists of a series of digits where each number is the sum of the two preceding ones, starting from 0 and 1. The sequence is 0, 1, 1, 2, 3, 5, 8, and so on. The most interesting aspect of this sequence is the so-called Golden Ratio of 1.618. This ratio can be found throughout artificial and natural structures, including the Taj Mahal, tornadoes, and spiral galaxies. This ratio, and complementary ratios, also seem to significantly influence the financial markets. Fibonacci retracement levels are percentages derived from the Golden Ratio. The most widely used retracement levels are 38.2%, 50%, and 61.8%. These levels represent potential support and resistance areas where the price of an asset, like a cryptocurrency, might bounce back or reverse during a trend. Additional retracement levels, like 23.6% and 78.6%, are also sometimes used, although they are considered less significant. As traders, we can use the Fibonacci sequence in crypto trading to identify potential areas where a price may reverse or stall, allowing us to make informed decisions about when to enter and exit a position. The retracement levels can be applied to any timeframe, making them versatile tools for different trading styles, including day trading, swing trading, and position trading. What Does Fib Mean in Crypto? “Fib” is an abbreviated term describing Fibonacci retracements. While there are other types of Fibonacci tools, such as extensions, fans, and spirals, Fibs will almost always refer to retracements. How to Use Fibonacci Retracements for Crypto Trading Using Fibonacci levels in crypto has become increasingly popular in recent years, especially for the world’s largest and most popular digital asset, Bitcoin. The highly volatile nature of cryptocurrencies makes it crucial for traders to identify potential areas of support and resistance where prices may reverse. To find and use your own Bitcoin Fibonacci levels, follow these steps: Plot the Bitcoin Fibonacci retracement levels by selecting an extreme low and high in an uptrend and vice versa. This can be done using the Fibonacci retracement tool available in most charting software, including the TickTrader platform by FXOpen. Observe price action at the 38.2%, 50%, and 61.8% levels. Each level acts as an area that may prompt a reversal. If the price breaks through one level, it can be assumed the trend is continuing and that the asset will move to the next level. When drawing the Fibonacci retracement, it’s essential to follow these two rules: When looking to plot support levels, set the first point at a swing low and the second at a swing high. When looking to plot resistance levels, set the first point at a swing high and the second at a swing low. Optimising Entries and Exits While Fibonacci retracements can help traders pinpoint support and resistance levels, there are a few factors to consider to make the most out of Fibs for crypto trading. Trade with the Trend Like many technical tools, Fibonacci retracements are best applied in line with a broader trend. While you might be looking for a short-term reversal, the setup will have the highest probability of working as expected when it conforms to a higher timeframe trend. In other words, you would want to look for retracements in a larger uptrend and vice versa. Think of the Levels as Areas Like traditional support and resistance levels, Fibonacci retracement levels shouldn’t be treated as the exact point where the price will reverse. It happens occasionally, but the price will often move slightly beyond the level before reversing as expected. It may even stop just short of it. Instead, you can treat them as areas of interest and then wait for confirmation using other tools. Combine Fibs with Other Technical Tools When looking at a crypto Fibonacci chart, it can be tempting to simply set a limit order at one of the significant levels and call it a day. While this sometimes works, there’s no guarantee these areas will remain consistent. It’s better to evaluate the likelihood that the area will hold, or is holding, using other tools. For example, you could look for it to line up with a horizontal support/resistance level or a trendline. Momentum indicators, like the relative strength index (RSI), can also offer insights into whether the trend is weakening and is due for a reversal. Additionally, candlestick and chart patterns can provide extra confirmation. Strategies for Trading Bitcoin with Fibonacci Retracements Let’s take a look at some specific Fibonacci retracement strategies you can use to trade Bitcoin and other cryptocurrencies. Trend Trading with Support and Resistance This approach simply requires identifying a broader trend and waiting for a pullback to one of the key levels that lines up with the horizontal support and resistance level. Entry: Limit orders can be set at the level within the support/resistance area. Alternatively, you could wait for the area to show signs of reversal before entering with a market order. Stop Loss: Stop losses can be set just above (in an uptrend) or below (downtrend) the horizontal area. It should be somewhere that invalidates your idea without being unnecessarily wide. Take Profit: Traders often begin to take profits at the chosen high or low. In the example shown, we could start to take profit at the retracement’s swing low. Relative Strength Index (RSI) Divergences and Fibonacci This strategy combines the popular momentum indicator, the relative strength index (RSI), with the Fibonacci retracement tool. Specifically, we’re looking for divergences that indicate a potential reversal as the price moves to a Fib level. Entry: Wait for a regular divergence to appear at a significant Fibonacci level (right-hand trendline). When the price shows signs of reversal, validating both the retracement and the divergence, traders can enter with a market order. Stop Loss: A stop can be placed above or below the entry candle, depending on the direction of the trade. Take Profit: As with the previous strategy, a good place to consider taking profit is at the high or low of your plotted retracement. As a bonus here, we also have a hidden divergence (the left-hand trendline) that indicates that bullish momentum is likely to happen. Fibonacci and Chart Patterns In this strategy, we use chart patterns to confirm the level is holding. In the Bitcoin Fibonacci chart shown, we’ve used a bullish wedge (a common reversal pattern), but you can use any pattern you prefer. Entry: After observing a chart pattern at a retracement level, you could wait for the pattern to be confirmed with a breakout. Then, you may enter on the retest of the pattern’s trendline. In this example, we could wait for the upper trendline to be broken before waiting for a pullback and entering. Stop Loss: Stops can be placed above or below the pattern’s opposing trendline. Here, we’d place it below the wedge’s bottom trendline. Take Profit: You could take profit at the retracement tool's extreme points. This setup also had extra confirmation with the double bottom before the wedge broke out, providing a high-probability trade. Confirming Fibonacci with Other Technical Indicators Of course, RSI isn’t the only indicator you can combine with Fibonacci retracements. Here are some other popular indicators to use: Moving Averages: Moving averages can offer dynamic support and resistance levels that add extra confluence to a Fib setup. Longer-term averages, like a 50 or 200-period moving average, are often respected. Meanwhile, pairing two faster moving averages can help confirm reversals when they cross over. Bollinger Bands: Bollinger Bands are often used to spot potential reversals. Touches to the band that move away sharply can be a sign of a reversal and, when combined with a retracement level, can make for a decent entry. MACD: MACD is another momentum indicator that can help traders find reversals. When the MACD and signal lines cross at a Fibonacci level, this can indicate a reversal is inbound. Risk Management Techniques As with all trading strategies, risk management is critical to a sustainable system. However, there are a few techniques that are specific to Fib retracements. Look For High-Quality Setups The first step in managing your risk is to only trade the best setups. This means looking for Fibonacci trades that have multiple confirmation factors and waiting patiently to see what you want to see. You might miss some moves this way, but it’ll also keep you out of many losing trades. Set Logical Stop Losses When using Fibonacci retracements in crypto, it can be tricky knowing where to place your stop loss. It’s good practice to consider the wider context of your trade idea and how your stop-loss placement fits into it. If you’re confident that the retracement level will hold or are trading short-term price movements, setting a stop loss beyond the entry level is suitable. Likewise, if you’re less confident that the area will prompt a reversal or are taking a longer-term view of the market, then you may prefer to set your stop loss at the high or low of the Fibonacci retracement. Establish Take Profit Targets in Advance By knowing where you want to exit a profitable trade, you prevent yourself from giving up too much profit by holding on too long. Using the take-profit levels discussed is a good place to start, as are Fibonacci extensions. Develop a Rule-Based System Having clearly defined rules for Fibonacci entries will remove a lot of the guesswork that comes with discretionary trading. It helps you find the best quality setups, avoid impulsive decision-making, and means you can easily adjust your strategy as you progress. Common Mistakes to Avoid When using Fibonacci in crypto trading, traders can sometimes fall into pitfalls. Let’s examine some of the most common errors. Confusing Highs and Lows: As mentioned, selecting a high or low as your first point when plotting the retracement depends on whether you’re looking for support or resistance. Be sure to follow the rules described earlier to avoid any confusion. Confusing Fibonacci Retracements for Extensions: Retracements identify potential support and resistance levels during a price pullback, while extensions project potential target levels beyond the original high or low. Double-check the name of the tool you’re using to avoid getting the two mixed up. Ignoring the Bigger Picture: Always consider the overall market context and trend before making a trade. If the market is strongly trending in one direction, a reversal at a Fibonacci level might be less likely. Misidentifying Significant Price Points: Selecting the correct high and low points is essential for accurate retracement levels. This usually means selecting the most extreme swing highs and lows that are easily visible. Take your time to identify the most significant price points, and be prepared to adjust your points as the market progresses. Closing Thoughts In summary, Fibonacci retracements can make for an excellent addition to your crypto trading arsenal. While they shouldn’t be used in isolation, combining Fibs with other technical tools and indicators can make for an effective strategy. However, the tips, techniques, and strategies described here aren’t exclusive to crypto: they can be applied to whichever market you prefer to trade, like forex, stocks, and commodities. Want to see for yourself? You can open an FXOpen account to gain access to these markets and the advanced TickTrader platform, where you’ll find the Fibonacci retracement tool and the indicators discussed waiting for you. Good luck! *At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules, respectively. They are not available for trading by Retail clients. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
BITSTAMP:BTCUSDEducation
by FXOpen
6
Embracing Failure: The Key to Unlocking Trading SuccessIn the pursuit of trading mastery, the path is often littered with setbacks and failures. However, it's essential to recognize that these hurdles are not just obstacles but invaluable learning opportunities. Learning how to fail – and more importantly, learning from failure – is a critical step towards enhancing your trading success. This article explores the significance of embracing failure as a vital component of your trading education. ➡️ The Role of Failure in Trading Trading, by nature, involves uncertainty and risk. Even the most seasoned traders face losses; it's an inherent part of the game. However, the difference between successful traders and those who struggle lies in their response to failure. Successful traders view failures as feedback, using them as a springboard to refine strategies, hone skills, and fortify mental resilience. ➡️ Failing Forward The concept of "failing forward" means using setbacks as a catalyst for growth. Instead of letting failure deter your progress, it involves analyzing what went wrong, understanding the factors at play, and adjusting your approach accordingly. This mindset shift is crucial in trading, where the same mistake can be costly if repeated. ➡️ Lessons from Losses Every loss carries a lesson. It could be a flaw in your strategy, a gap in your market knowledge, or even an insight into your psychological biases. By meticulously reviewing your failed trades, you can uncover these lessons and apply them to avoid similar pitfalls in the future. Remember, in trading, experience is measured not just by your wins but also by how you navigate and learn from losses. ➡️ Some famous quotes Thomas A. Edison : " I have not failed. I've just found 10,000 ways that won't work. " Winston Churchill : " Success is stumbling from failure to failure with no loss of enthusiasm. " Michael Jordan : " I've failed over and over and over again in my life and that is why I succeed. " Henry Ford : " Failure is simply the opportunity to begin again, this time more intelligently. " J.K. Rowling : " It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all—in which case, you fail by default. " Oprah Winfrey : " Failure is another stepping stone to greatness. " Theodore Roosevelt : " The only man who never makes mistakes is the man who never does anything. " Albert Einstein : " A person who never made a mistake never tried anything new. " Coco Chanel : " Success is most often achieved by those who don't know that failure is inevitable. " Johnny Cash : " You build on failure. You use it as a stepping stone. " James Joyce : " Mistakes are the portals of discovery. " Samuel Beckett : " Ever tried. Ever failed. No matter. Try again. Fail again. Fail better. " Robert F. Kennedy : " Only those who dare to fail greatly can ever achieve greatly. " John C. Maxwell : " Fail early, fail often, but always fail forward. " Arianna Huffington : " Failure is not the opposite of success; it's part of success. " Abraham Lincoln : " My great concern is not whether you have failed, but whether you are content with your failure. " Dale Carnegie : " Develop success from failures. Discouragement and failure are two of the surest stepping stones to success. " Mary Kay Ash : " When you fail, you have to be able to say, 'I believe in myself enough to try again. '" Steve Jobs : " Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure — these things just fall away in the face of death, leaving only what is truly important. " Richard Branson : " Do not be embarrassed by your failures, learn from them and start again. " As you can see, you're not the only one who fails, the famous people quoted all had their fair share of fails. The fact that they did not give up is testimony to their eventual success. ➡️ Building Resilience Repeated exposure to failure, coupled with a constructive response, builds resilience. This mental toughness is invaluable in trading, helping you maintain composure and clarity in the face of market volatility. Resilient traders are better equipped to stick to their strategies, manage risks effectively, and seize opportunities without being swayed by emotional extremes. ➡️ Practical Steps to Learn from Failure ☝🏽 Keep a Trading Journal : Document every trade, including the rationale, outcome, and any emotions felt. Review this journal regularly to identify patterns in your failures. ☝🏽 Seek Feedback : Engage with a trading community or mentor. External perspectives can offer insights you might overlook. ☝🏽 Educate Continuously : Use failures as a cue to fill knowledge gaps. Whether it's technical analysis, market fundamentals, or trading psychology, there's always more to learn. ☝🏽 Develop a Growth Mindset : Cultivate the belief that your abilities and intelligence can grow with effort. This mindset encourages resilience and a positive attitude towards learning from failure. ➡️ Conclusion In trading, failure is not the opposite of success; it's part of the journey to success . By embracing your failures, analyzing them, and extracting lessons, you can continually improve your trading performance . Remember, every great trader has faced setbacks; what sets them apart is their ability to learn, adapt, and evolve from those experiences. So, next time you encounter a setback, see it as an opportunity to grow and inch closer to your trading goals. ❓How do you deal with failure? Do you let it get the best of you or do you dust yourself off and continue with renewed drive and energy? Share your experience in the comments below 👇🏽👇🏽👇🏽 Liked this article? Give it a boost 🚀 Follow for more! Thanks for reading, meet you in the comments.
COINBASE:BTCUSDEducation
by Nico.Muselle
9
Is TikTok FOMO the Canary in the Crypto Coal Mine? How Memes and Hype Signal a Risky Market The meteoric rise of Bitcoin and other cryptocurrencies has captured the imagination of investors and the public alike. But amidst the excitement, a crucial question lingers: how do we identify when the market might be overheating? Traditionally, analysts have relied on technical indicators and economic data. However, the rise of social media, particularly TikTok, presents a new wrinkle in gauging market sentiment, especially with the influx of worthless meme coins and potentially misleading influencer endorsements. The Allure of Crypto on TikTok TikTok's short-form video format is a breeding ground for viral trends, and cryptocurrencies are no exception. Endlessly scrolling users are bombarded with enthusiastic pronouncements about the "next big coin" and testimonials of life-changing gains, often featuring meme coins with dog or cat logos. These videos exploit the "fear of missing out" (FOMO) mentality, pressuring viewers to jump on the bandwagon before prices skyrocket. However, many of these meme coins have little to no underlying technology or real-world application, making them inherently risky investments. The Mania Indicator: While social media can be a valuable tool for connecting with communities and sharing information, the sheer volume of uncritical crypto hype on platforms like TikTok, especially surrounding meme coins, can be a strong warning sign. When complex financial instruments are reduced to catchy slogans and presented as a get-rich-quick scheme with cute animal mascots, it suggests a market driven by speculation rather than fundamentals. Paid Promotions and Influencer FOMO: Further complicating the issue are influencers who promote specific cryptocurrencies, often without disclosing that they're being paid to do so. These endorsements can mislead viewers into believing these meme coins or hyped projects are legitimate investments. This lack of transparency can create artificial demand and inflate prices in the short term, but can also lead to dramatic crashes when the hype bubble bursts. A Canary in the Coal Mine? Historically, periods of intense social media buzz surrounding specific stocks or asset classes have often coincided with market peaks. Social media trends are fleeting, and the frenzy surrounding meme coins on TikTok could be a sign that the crypto market is nearing a period of correction. Beyond the Hype: It's important to remember that social media trends are fleeting. While these platforms can provide a glimpse into popular sentiment, they shouldn't be the sole basis for investment decisions. Conducting thorough research, understanding the underlying technology of a project, and employing sound risk management strategies remain paramount for navigating the ever-evolving crypto landscape. The Takeaway: The proliferation of meme coin cheerleading and potentially misleading influencer endorsements on TikTok serves as a stark reminder of the importance of measured analysis in the face of market exuberance. While social media can be a tool, responsible investors should prioritize fundamental analysis, avoid meme coins with no real-world application, and be wary of paid influencer promotions. A long-term perspective is essential when navigating the exciting, yet volatile, world of cryptocurrencies.
CRYPTOCAP:TOTALEducation
by ParabolicP
5
Keltner Channels vs Bollinger BandsKeltner Channels vs Bollinger Bands: Which Indicator Should You Use? If you’re a trader, you likely know that indicators are a valuable tool for identifying trends and finding entry and exit points. Two popular indicators are Keltner Channels and Bollinger Bands. Both help you measure volatility, but which one is better? In this article, we’ll dive into the differences between the two, explain their components, and discuss which one is best. Keltner Channels The Keltner Channel is an indicator that helps traders determine trends, momentum, and potential reversal areas in a given market. It’s named after Chester Keltner, who first introduced it in the 1960s. Keltner Channels are composed of three lines, forming an envelope. The middle of these three lines is an exponential moving average (EMA), usually set to 20 periods. The upper and lower lines are multiples of the Average True Range (ATR) added or subtracted from the EMA, often double. The ATR measures the volatility of an asset by taking the average of the true ranges of its price movements over a certain period. We can interpret Keltner Channels in several ways. The upper and lower bounds act as dynamic support and resistance levels, and traders use them to determine entry and exit points. Additionally, when price breaks through one of the bounds, it may signal a potential reversal or a continuation of the current trend, depending on price action and other technical factors. For instance, a market in a strong bullish trend will appear to stick close to the upper line, often retracing to the EMA before continuing higher. Meanwhile, closes far outside of the lines may sometimes signal a reversal, given how far price has moved beyond its expected true range. Following a ranging market, determined when the lines are effectively horizontal, these kinds of extreme moves may signal a breakout. Bollinger Bands The Bollinger Bands is a widely used technical indicator that helps us identify an asset's volatility and potential price movements. It was created by John Bollinger in the 1980s and has since become a popular tool among traders of all levels. Like Keltner Channels, the Bollinger Bands tool comprises three components: the middle line and two outer lines. The middle line is a simple moving average (SMA), typically 20 periods long. The upper and lower bands are calculated by adding and subtracting a multiple of the price’s standard deviation from the SMA, respectively. This multiple is set to two by default, but some will adjust it according to their preferences. Instead of using the true range, Bollinger Bands use standard deviation (STD) – the square root of the variance of a set of price movements over time. Because they utilise standard deviation, Bollinger Bands are slightly more responsive to volatility than Keltner Channels. When the range constricts, volatility is low; and when the range expands, volatility is increasing. Many traders prefer Bollinger Bands to gauge volatility in the market. As with Keltner Channels, the bands show dynamic support and resistance levels. They’re also quite effective when used to detect reversals – explained shortly. Additionally, we can apply Bollinger Bands to detect trends/breakouts when price hugs the bounds, though arguably not as well as Keltner Channels. Keltner Channels vs Bollinger Bands So, we know that using Keltner Channels and Bollinger Bands helps us to measure volatility while trading. But what exactly are their key differences? ATR vs STD The first and most fundamental difference is how each indicator measures volatility. ATR, used in Keltner Channels, takes the average of absolute changes in price, or an average of the true range. The standard deviation used by Bollinger Bands indicates how much price may deviate from its average. While the difference may seem subtle, it can be significant in certain market conditions. Standard deviation gives more weight to larger values over smaller ones, effectively making Bollinger Bands more responsive to volatility. EMA vs SMA The second is the moving average both indicators use. Keltner Channels employ an exponential moving average, which is more responsive to recent price action than other moving averages. Bollinger Bands implement the simple moving average, which reacts slower than the EMA. The impact isn’t as significant as ATR vs standard deviation, but the more responsive nature of the EMA may help traders get into positions more often if they’re trading pullbacks. Trading Trends To determine a trend with Bollinger Bands, we typically look for the bands to start widening, which indicates volatility (usually following a breakout). When the bands become tight, it’s expected that a new trend could be about to form. To identify a trend using Keltner Channels, we can examine whether it slopes up or down. Given that Keltner Channels are often slower moving, multiple closes outside the channel can show us that an asset has momentum and is looking to continue the trend. Trading Reversals Statistically, 95% of price action should be inside Bollinger Bands with two standard deviations. This is significant for identifying potential overbought and oversold areas; moves beyond the bounds indicate that the price action is extreme and has a strong likelihood of reversing. Keltner Channels can be used to find reversals, but it’s often much harder than with Bollinger Bands. A price will regularly breach or close outside of the channel in a strong trend while not crossing Bollinger Bands. It’s best to apply Keltner Channels to trend trading and identifying breakouts. Using Keltner Channels and Bollinger Bands in a Strategy Overall, Bollinger Bands are a more responsive indicator that may help us identify when volatility could be about to pick up (tightening) and when a new trend has likely started (widening). They’re well suited to trading reversals, thanks to the statistics of standard deviations. Keltner Channels tend to be less responsive to volatility, but they may be much better at identifying strong trends, especially when price hugs or continuously closes beyond the lines. When price ranges, Keltner Channels often show a new trend forming much faster than Bollinger Bands, thanks to the telltale sloping of the channel. So which one is best? Ultimately, it comes down to the individual trader and their style. Some may prefer to trade reversals with Bollinger Bands or jump on board breakouts with Keltner Channels. You could play around with both in the free TickTrader platform from us at FXOpen to get an idea of how to apply both indicators while trading. Closing Thoughts You should now have a solid overview of the differences between Keltner Channels and Bollinger Bands. While they may seem similar, taking the time to experiment with them will show you the qualities of each and how they could be applied to various scenarios. Once you settle on your favourite, why not combine it with other indicators, like RSI or Stochastic oscillator, to develop your own strategy? Then, when you’re ready, open an FXOpen account and start using your system for real trading! This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
8
Don't Get Duped by the RSIWhy This Popular Indicator Can Lead You Astray The Relative Strength Index (RSI) is a common technical analysis tool used by traders to gauge whether an asset is overbought (priced too high) or oversold (priced too low). It analyzes price movements over a specific period (often 14 days) and displays a score between 0 and 100. Generally, an RSI above 70 suggests an overbought condition, while an RSI below 30 suggests an oversold condition. While the RSI seems straightforward, there's a crucial catch: it's a lagging indicator. This means it reacts to past price movements rather than predicting future ones. This inherent lag can sometimes mislead traders, particularly when markets are volatile or trending strongly. Here's how the RSI's lagging nature can be deceptive: Overbought Traps: The RSI might reach overbought territory (above 70) during a strong uptrend. However, instead of signaling an imminent reversal, the price could keep climbing, potentially reaching new highs. This can lure traders into believing a correction is coming (based on the high RSI) only to miss out on further gains. Oversold Deceptions: Conversely, the RSI might dip into oversold territory (below 30) during a downtrend. This could be interpreted as a buying opportunity, anticipating a bounce back. But, in a strong downtrend, the price may continue to fall, and the RSI might stay oversold for extended periods. How to Use the RSI More Effectively: Despite its limitations, the RSI can still be a valuable tool when used strategically: Confirmation Tool: Combine the RSI with other technical indicators or chart patterns for confirmation. For example, an RSI divergence (where the RSI moves in the opposite direction of the price) might strengthen a potential reversal signal. Identify Trending Markets: The RSI can help identify the strength of a trend. During strong uptrends, the RSI may frequently reach overbought levels without signaling an immediate reversal. Conversely, in downtrends, the RSI may stay oversold for extended periods. Identify Overbought/Oversold Conditions: While not a precise timing tool, the RSI can indicate when an asset might be nearing extreme price levels, potentially due for a correction. However, be cautious about chasing these signals blindly. Beyond the RSI: Remember, the RSI is just one piece of the puzzle. Always consider other factors like market sentiment, news events, and overall price trends when making trading decisions. Here are some additional tips: Don't rely solely on technical indicators. Develop a comprehensive trading strategy that considers both technical and fundamental analysis. Backtest your strategies. Test your trading ideas using historical data to see how they would have performed in different market conditions. Start small and manage your risk. Don't invest more than you can afford to lose, especially when using potentially deceptive indicators. By understanding the limitations of the RSI and using it strategically, you can improve your technical analysis skills and make more informed trading decisions.
BITSTAMP:BTCUSDEducation
by ParabolicP
51
Trade like the pros in dark pools█ Trade like the pros in dark pools If you're accustomed to trading on the stock exchange, you know that an exchange operates like a digitalized marketplace. Buyers and sellers gather around a stock and indicate what they're willing to trade for, hoping that two orders will match. Before you decide at what price you're willing to trade, you likely look at the order book depth. There, we see how many shares are seeking buyers or sellers at a specific price. For a trade to be completed, the so-called spread needs to be crossed. The spread is the difference between the buying and selling price, in the example above 20 cents (226.40 – 226.20). In stocks that are traded very frequently, the spread is smaller and it's seldom a problem to execute very large volumes on the open market. █ Dark pools simplify trading in small companies Many stocks have too small a turnover to place a larger order without significantly affecting the price. Therefore, professionals have used dark pools for many years. Leading brokers are now making this flow available to all their customers. The advantage of a dark pool is that you don't need to show your order to other market participants until a trade has been completed. This facilitates, especially, trading in larger volumes. Another advantage of dark pools is that trades are made at so-called midprice. Returning to the example above, a trade would occur when someone is willing to pay the full spread of 20 cents. Had the order book been a dark pool, the midprice would have been 226.30 SEK. In this way, it results in a better price for both buyers and sellers. For those trading in larger volumes, this can mean a lot of money. █ All orders pass through dark pools The fact that dark pools are now available to everyone does not mean that all orders should be placed there. In fact, there are several barriers to how much trading can be routed this way before the dark pool is temporarily limited. When you place a regular order, thanks to so-called smart order routing, it will check if a better completion can be achieved via this dark pool than on the open market. So, whether you choose to actively place an order in the dark pool or not, you can benefit from the characteristics of the dark pool. █ Shouldn't the exchange be completely open? A criticism of dark pools is that they are exactly as they sound, hidden. But all trades made in Nasdaq Stockholm's dark pool are visible under completions. Stocks with low turnover can be difficult to trade without significantly affecting the price. ⚪ Let's take another example. Here we have a stock where the entire buy side corresponds to just over 130,000 SEK. That's a lot of money, but not an unreasonable holding for a private individual. This is also an order book from a company with a market value of about 1.6 billion. Thus, a small company, but not so small that trading for a couple of hundred thousand SEK should be unreasonable. Here, the spread is also 30 cents. Which is over one (1) percent on this stock price. Being able to halve this cost can save a lot of money both directly and over time. It is also possible to hide parts of an order today. In the advanced order placement on the open market, there is actually a tool for that problem as well. There, you can set the visible number of shares to be shown in the order book. █ When you should use the dark pool If you have never had problems with your order placement, you probably don't even need to consider placing an order in the dark pool. But if you trade stocks where you need to split your orders to not swallow too large a part of the order book, it might be valuable to try. ----------------- Disclaimer This is an educational study for entertainment purposes only. The information in my Scripts/Indicators/Ideas/Algos/Systems does not constitute financial advice or a solicitation to buy or sell securities. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on evaluating their financial circumstances, investment objectives, risk tolerance, and liquidity needs. My Scripts/Indicators/Ideas/Algos/Systems are only for educational purposes!
OMXSTO:ERIC_AEducation
by Zeiierman
3
How to Use Stop Loss Orders in Trading?Stop loss order is the order that automatically closes your trade once it reaches a specified price target. Learn all about it here. Table of Contents: 🔹What Is a Stop Loss Order? 🔹Why Stop Loss Orders Matter? 🔹Setting Stop Loss Levels 🔹Types of Stop Loss Orders 🔹Adjusting Your Stop Loss Orders 🔹Summary In trading, reducing risks is oftentimes all that matters to achieving success. One of the essential tools to protect your investments from steep or unexpected losses is the stop loss order. Understanding how to use stop loss orders can unlock your path to profitability by allowing you to balance your risk and reward ratio. In other words, with the right stop loss setup, you can shoot for asymmetrical risk returns by keeping your drawdown small and letting your profits run. Let’s dive into the exciting world of trading and see how stop loss orders can be your greatest ally in trading. 📍 What Is a Stop Loss Order? A stop loss order is an essential risk management tool used by traders to limit potential losses on a trade. By using a stop loss order, you instruct your broker to automatically sell the asset you’re holding when it reaches a predetermined price level that is below your purchase price, or entry. A stop loss order allows you to control your losses and protect your investments so you don’t have to sit glued to the screen all the time. 📍 Why Stop Loss Orders Matter Stop loss orders play a big role in risk management. These easy-to-set trading tools help traders stick to predefined risk tolerance levels by limiting the amount of money they are willing to lose on any given trade. Without a stop loss order in place, traders may give in to emotional decision-making during periods of market volatility, leading to potential losses. If you have a hard time cutting your losses If you have a hard time cutting your losses when —ok, we get it, you're a bigshot— IF positions go against you, setting a stop loss when you enter the market will do the hard work for you. ➡️ Risk Management: One of the primary reasons stop loss orders are essential is because they help traders manage risk effectively. This is crucial in volatile markets where prices can fluctuate rapidly, as it prevents significant losses that could otherwise occur if trades were left unattended. ➡️ Emotional Control: Trading can evoke strong emotions such as fear and greed, which can lead to irrational decision-making. Without a stop loss order in place, traders may be tempted to hold onto losing positions in the hope that the market will reverse in their favor. ➡️ Peace of Mind: Knowing that there is a safety net in place can provide traders with peace of mind. Stop loss orders allow you to do your thing in the market without obsessively watching charts and tickers. Set your stop loss orders and focus on other aspects of your market study like catching up on the latest market-moving news and analysis . ➡️ Preventing Catastrophic Losses: In extreme market conditions, prices can experience sudden and significant declines. Without stop loss orders, traders risk experiencing catastrophic losses that could wipe out a significant portion of their capital. ➡️ Enforcing Discipline: Successful trading requires discipline and adherence to a well-defined trading plan. Stop loss orders help enforce discipline by striving to ensure that traders stick to their predetermined risk management rules. If trading is about discipline and consistency, then stop loss orders are the stepping stone to success. 📍 Setting Stop Loss Levels Choosing the appropriate stop loss level is a critical aspect of using stop loss orders effectively. Traders should consider various factors, including their risk tolerance, investment objectives, market conditions, and the volatility of the asset being traded. A common approach is to set the stop loss below a significant support level or a recent low in an uptrend (if you have a long position) and above a significant resistance level or a recent high in a downtrend (if you have a short position). Example: Suppose you purchase shares of a company called X (not Elon Musk’s privately held X Corp., which he created by rebranding Twitter) at $50 per share. You estimate that a 5% decline in the stock price would indicate a potential trend reversal. Therefore, you set your stop loss order at $47.50 per share to limit your potential loss to 5% of your investment. 📍 Types of Stop Loss Orders There are several types of stop loss orders that traders can utilize, each with its own special characteristics. The most common types include: ➡️ Market Stop Loss: a type of stop loss order that triggers a market order to sell the instrument at the prevailing market price once the stop loss level is reached. ➡️ Stop Limit: with a stop limit order, you have to deal with two types of prices. The first one is the price that will trigger a sell and the limit price. But instead of converting your order into a sell based on current market prices, you set a limit price. ➡️ Trailing Stop Loss: A trailing stop loss order is dynamically adjusted based on the movement of the instrument’s price. It allows traders to lock in profits while giving the trade room to move in their favor. Example: You purchase shares of a big tech company at $100 per share, and the stock price then rises to $120 per share. You set a trailing stop loss order with a 10% trail. If the stock price declines by 10% from its peak, the trailing stop loss order will trigger, selling the shares at prevailing market prices. 📍 Adjusting Stop Loss Orders While setting stop loss orders is essential, monitoring and adjusting them as market conditions evolve is equally important. Traders should regularly reassess their stop loss levels to account for changes in volatility, price action, and overall market sentiment. Additionally, as profits accumulate, trailing stop loss orders should be adjusted to protect gains and minimize potential losses. 📍 Summary In conclusion, stop loss orders are one of the most essential and effective tools for traders seeking to manage risk and preserve and grow capital in the challenging world of trading. By understanding how to use stop loss orders effectively, you can rein in emotional decision-making, protect your investments, and increase your chances of long-term success. Whether you're a novice or an experienced trader, integrating stop loss orders into your trading strategy is a smart approach to navigate the twists and turns of the financial markets. Remember, trading involves inherent risks, but with proper risk management techniques like stop loss orders, you can tilt the odds of success in your favor. ❓Do you use stop loss orders when trading? Which type ? Let us know in the comments ⬇️
COINBASE:BTCUSDEducation
by TradingView
12
How To Trade A Symmetrical Triangle Break-Out A symmetrical triangle is a geometric formation found in technical analysis, often appearing during periods of market consolidation. It's characterized by converging trendlines, typically drawn by connecting a series of lower highs and higher lows. This pattern reflects a balance between buyers and sellers, signaling indecision in the market regarding the future price direction. Here's how a symmetrical triangle pattern typically looks: Upper Trendline: Connects a series of lower highs. Lower Trendline: Connects a series of higher lows. As the price oscillates between these trendlines, the trading range becomes narrower, forming the triangle pattern. Trading a breakout in forex involves capitalizing on a significant price movement that occurs when the price breaks out of the symmetrical triangle pattern. Traders employ a systematic approach to identify, confirm, and capitalize on these breakouts: Pattern Identification: Recognizing the symmetrical triangle pattern entails observing the converging trendlines and confirming their formation with multiple swing highs and swing lows. Determining Breakout Direction: Traders closely monitor price action within the triangle, looking for signs of an impending breakout. Breakouts can manifest in either direction, and traders seek confirmation through a decisive breach of a trendline, often accompanied by increased trading volume. Confirmation and Entry: Patience is key as traders await confirmation of the breakout. Some may wait for a close above or below the trendline, while others may enter trades immediately upon breakout, anticipating further momentum. Risk Management: Implementing effective risk management strategies is crucial. This involves setting stop-loss orders to mitigate potential losses if the breakout fails or reverses. Monitoring and Adjusting: Traders diligently monitor price action post-breakout, anticipating volatility and potential retests of breakout levels. They adjust stop-loss and take-profit levels based on evolving market conditions and price movements. Trade Management: Once in a trade, traders adhere to their predefined trading plans. They consider scaling out of positions as price reaches predetermined targets or if market conditions shift. Successful breakout trading in forex requires discipline, patience, and effective risk management. It's imperative to integrate technical analysis with other market factors like fundamentals and sentiment for well-informed decision-making.
EIGHTCAP:XAUUSDEducation
by CASHTICKER
33
A Comprehensive Guide to Fibonacci Retracements (Updated)Hello traders, in this post, we will be going over one of the most commonly used tools in all asset classes - the "Fibonacci Retracement" (or Fib for short). For a better viewing experience, please view this on your desktop/PC, as the mobile and tablet versions of the charts are harder to read. Although I have briefly touched on how to use the Fibonacci Retracement tool in my previous Elliott Waves series, we are now going to go over it in depth, and talk about how this tool can help you find entries and exits within an existing trend with or without the use of the Elliott Wave Theory, which also helps identify whether you are in a bullish or bearish trend. The Fibonacci Retracement tool, although widely used by many traders, is almost always not correctly used by new traders. Most traders will often connect the wrong points, indicating the wrong Fibonacci retracement levels. Here, I will be explaining the proper way to use the Fibonacci Retracement tool in a very simple translated friendly guide in one post. ------- What Is the Fibonacci Retracement? Fibonacci Retracements (Fib(s) for short), are a set of 'ratios', defined by mathematically important Fibonacci sequence. This allows traders to identify key levels of support and resistances for price action. Unlike other indicators, Fibonacci retracements are FIXED, making them very easy to interpret. When combined with additional indicators, Fibs can be used to identify potential entry and exit points with high probability to trade on trending movements. Fibonacci retracements are used to indicate levels of support and resistance for a stock’s price. Although they are similar to moving averages in this respect, Fibonacci retracements are set by the extent of the previous bullish or bearish run and do not change each day in the current trend as moving averages do. Therefore, it can be significantly easier to identify and anticipate support and resistance levels from Fibonacci sequences. How Is the Fibonacci Retracement Calculated? (You don't need to calculate it yourself - It's already done for you!) Fibonacci retracements are based on what is known as the 'Fibonacci sequence', where each number in the sequence can be added to the previous number to produce the following number within the sequence. Now, you might be confused here, but don't! - I am just explaining the concept on how it's calculated. You do not need to personally calculate the actual sequence of the Fibonacci Retracement, as everything is already pre-determined and calculated within the tool itself on TradingView. To put it simply, dividing any number in the sequence by the following number yields 1.6180 – known as the "Golden Ratio" – while dividing any number by its predecessor yields 0.6180. Dividing any number in the sequence by two positions in advance yields 0.382, while dividing any number by a number three positions in advance yields 0.236. These ratios originated from the Fibonacci sequence are found throughout nature, mathematics, and architecture - such as flowers, buildings, and so forth. Yes, if you search for Fibonacci sequence examples, you can find these within daily uses, not only in trading. ------ Retracement levels for an asset are drawn based on the prior bearish or bullish movement. Don't forget this - you need to know whether you are in a bullish or bearish trend. Is the stock or coin going up? or down? To plot the retracements, draw a trendline from the low to the high (also known as the swing low to the swing high), or vice versa, high to low, within a continuous price movement trend – Fibonacci retracement levels should be placed at 61.80%, 38.20%, and 23.60% of the height of the line for you by the tool itself. Again, these numbers are already calculated for you within the tool itself. In a bullish trend, the retracement lines start from the top of the movement (i.e. the 23.60% line is closest to the top of the movement), whereas in a bearish movement the retracements are calculated from the bottom of the movement (i.e. the 23.60% line is closest to the bottom of the movement). ------ How to Trade Using the Fibonacci Retracement Once you have drawn a set of Fibonacci retracements on a chart of your liking, it is possible to anticipate potential reversal points where support or resistance will be encountered. If the retracements are based on a bullish trend, the retracements should indicate potential support levels where a downtrend will reverse bullishly. So to put it simply, the pre-determined Fibonacci levels, should in theory and practicality, act as support if in a bullish trend, and resistance in a bearish trend. There will always be some form of price reaction at each Fibonacci level just based on Market Psychology. If the retracements are based on a bearish movement, the retracements should indicate potential resistance levels where a rebound will be reversed bearishly, which is vice-versa for the bullish movement trend. The most common reversals based on Fibonacci retracement levels occur at the 38.20%, 50%, and 61.80% levels (50% comes not from the Fibonacci sequence, but from the theory that on average, stocks retrace half of their prior movements - so this is considered a 'psychological level'). Although retracements do occur at the 23.60% line, these are less frequent and require close attention since they occur relatively quickly after the start of a reversal. In general, retracement lines can be considered stronger support and resistance levels when they coincide with the overall trend, meaning, that if you know that you are in an established bullish or bearish trend, you will most certainly get some form of reaction at the most common reversal levels within the Fibonacci level, which is shown in the image below. Whenever applying Fibonacci retracements, keep in mind that retracement lines represent only potential support and resistance levels, they are NOT 100% set in stone – they represent price levels at which to be alert, rather than hard buy and sell signals; however, they have HIGH PROBABILITY. It is important to use additional indicators, in particular MACD, to identify when support or resistance is actually being encountered and a reversal is likely. The more that additional indicators are pointing towards a reversal, the more likely one is to occur. Also note that failed reversals, especially at the 38.20% and 50% retracement levels, are common.
COINBASE:BTCUSDEducation
by XForceGlobal
36