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Techniques For Getting Better Prices 🎯Hey everyone! 👋 Last week, we posted an idea about the three main order types that market participants use: Market orders, Limit orders, and Stop orders. This week, we thought we’d take it a step further, and discuss some of the more advanced techniques that professional traders use to get better prices, using those three order types. 🎯 Technique 1: Use Limit-Thru orders instead of Market orders 📈 This is a popular technique among traders in nearly all scenarios. If you’re looking to “take” liquidity (you’re the aggressor in the trade), using a Limit-thru order is almost always a better option than using a Market order. Limit-thru orders are so-named because they are Limit orders - “I would like to purchase shares at this price and no worse” - but the aforementioned price is above the best offer. For example, Let’s look at AAPL again. Let’s say the stock is bid at $175.01 and offered at $175.03. A buy Limit-thru order could be priced at $175.05. A Limit order like this is “thru” the price of the best offer, and is thus “marketable”. The reason that Limit-thru orders are often better than market orders is because of market microstructure. If you place the Limit-thru order as described above, then you might not get a full fill, but you won’t pay drastically more than you expected. With a market order, the market maker might fill you on your first set of 100 shares, and then move up offers on other exchanges where you get the rest of your fills. The BATS exchange is closer to Manhattan than the NY4 datacenter, which houses a lot of the bigger exchange servers. This means that your order may hit BATS before the other exchanges. If a market maker knows that there is buying interest in something, they will fill the first 100 shares of something, then out-run your order to other exchanges that have more liquidity and potentially move up their offers, getting you a worse price. This doesn’t always happen, but the way the markets are set up allows for antics like this. Pros will often use Limit-thru orders (where the order price is offer+0.02c, for example) to sidestep these issues. The same is true when reversed for selling assets. Technique 2: Work your orders. 💪 Fun Fact: The Orderbook you see may not be the real Orderbook. It’s true! When it comes to the market for any given security, there are two types of limit orders: “Lit” orders, and “Dark” orders. When looking at the depth of market, you are only seeing some of the picture! Sometimes, there will be hidden orders in between the price you want and the price that’s shown. By placing your order within the spread, it’s possible to get better prices than you would have otherwise from dark orders / pegs / etc. Additionally, if you place your order in between the spread, you become the new best price on your side. This may encourage someone looking to take the opposite side of the trade to come and meet you where you are. This is especially true in options markets where spreads are often wide and slow moving. Working your orders (posting them, and moving them around) will almost certainly get you better fills than hitting the best posted price on the other side of the trade. Just make sure you don’t miss the move while waiting to get filled! Technique 3: Use the Orderbook to your advantage. 🧾 It’s rare when it happens, but occasionally non-sophisticated market participants will “show their hand” in the market. This typically involves one large lit limit order that sticks out like a sore thumb in an orderbook. If this person begins to signal aggression, you might be able to score an awesome price on the assets you’re looking for. For example: Let’s say that you’re looking to buy some AAPL stock, and you pull up the orderbook (depth of market). From here, you can see that there’s a massive sell limit order that is slowly moving it’s price lower and lower in an attempt to get filled. This kind of obvious sell pressure can lead to a significant price move as the market front runs all of the liquidity the whale is looking for. This may continue for some time until the whale starts getting paid. When this happens, the stock has likely found a local area of demand, which is probably a much better price than what you were expecting when you pulled up the order ticket. Bottom line, it can make sense to take advantage of these situations if you see them before sending out orders. That’s it! Some tips and tricks for getting better prices using orders and the orderbook. -Team TradingView 💘 If you missed it, this was the beginner idea from last week:
NASDAQ:AAPLEducation
by TradingView
53
Why You Should Learn To Trade Interest RatesIf you're trading this market right now you have to keep your eye on Interest Rates. Why? Interest Rates have the largest web in the market. They impact every market we trade (even crypto :) What rates are doing not only impact the markets we trade, they impact us in everyday life. In this video I go over the best way to trade interest rates and even if you're not interested in trading interest rates, I go over the best markets to keep up on your quotes to see what rates are doing. Past performance is no guarantee of future results.  Derivatives trading is not suitable for all investors. 
CBOT_MINI:2YY1!Education
by anthonycrudele
27
Indexes - What are they and how do they work?Index tracks performance of multiple assets that are grouped together. One of the first people to introduce the concept of indexing were Charles Dow and Edward Jones when they created the Dow Jones index in 1896. This concept allows for an easy tracking of performance of any particular sector within the economy. For example, the Nasdaq 100 index tracks performance of hundred biggest tech companies in the U.S.; similarly, the Russell 3000 index tracks three thousand largest companies in the United States. These indexes contain U.S. securities which account for over 90% of U.S. corporate equity; therefore, analyzing an index provides an investor with information about the overall health of the economy or particular sector. Diversification Generally, investing in indexes is associated with lower risk than investing in stocks. This is because indexes are structured in such a way that they diversify risk by tracking performance of multiple assets rather than by tracking performance of one single asset. For example, if an investor's portfolio consists of shares of a single stock company and the value of those shares drops, then it directly affects the portfolio in a negative way. However, if an investor owns an index tracking performance of 10 companies instead of a one stock title, then the investor's risk is diversified among ten companies instead of one single company. Therefore, an index tends to perform well as long as the majority of its components perform well. Similarly, when the majority of companies incorporated within an index perform poorly then the index tends to reflect it. Illustration 1.01 Illustration above depicts the monthly chart of Hang Seng Index (Ticker: HSI). It is observable that the index performed well in the long-term. Though, massive drops in the index are observable too in 1997, 2000, 2007, 2015 and 2018. Source: www.tradingview.com Value of the index and weight distribution The value of an index is dependent on its underlying holdings; further, it can be based on the price, market-cap or any other metric related to these assets. There are various methods on how to weight an index which plays an important role in how it performs. For example, in an unweighted index all its components have equal significance, regardless of their size. However, in a market-cap weighted index these components hold significance that is proportional to the size of their market-cap. Therefore, a volatile move in a big company would have a bigger impact on the overall performance of an index as opposed to the volatile move in a small company. Most indexes are price-weighted and market-cap weighted. Indexes as financial assets Generally, indexes tend to move in trends and produce good results over a long-term period. Index investing is preferable for inexperienced and passive investors because it tends to outperform active management in the long run. Additionally, it takes off psychological pressure that is associated with an actively managed portfolio while providing more free time to an investor. Exposure to an index can be gained by investing in index futures, options, CFDs, ETFs and other derivatives. Major indexes include: Dow Jones Industrial Average - thirty large U.S. companies that trade on the NYSE and NASDAQ. Nasdaq 100 - hundred biggest tech U.S. companies that are publicly traded. Standard & Poor 500 - five hundred biggest companies in the U.S. that are publicly traded. Russell 2000 - two thousand smaller companies that comprise the Russel 3000 index. Russell 3000 - three thousand biggest companies in the U.S. that are publicly traded. DAX 40 - forty biggest German companies that trade on the Frankfurt Exchange. Hang Seng Index - sixty biggest companies that trade on the Hong Kong Exchange. Seasonality and trends Indexes tend to move in cyclical trends and less often in trading ranges. They are less prone to the effects of calendar and industrial seasonality when compared to stocks and commodities. Change in components Since their inception many indexes have changed the composition of their underlying assets. For example, the Dow Jones Industrial Index started as Dow Jones Transportation Average in 1896 and consisted of only twelve companies. These companies operated mainly in railroads, cotton, tobacco, gas and oil sectors. However, eventually new companies were added to the index until it reached the total number of thirty companies in 1928. Since then the composition of the index changed several times; although, the number of companies stayed the same. This concept of rebalancing indexes is common to many other indexes; and it usually occurs on a quarterly basis. Illustration 1.02 Picture above shows the monthly chart of the Nasdaq 100 Index (Ticker: NDX) between 1995 and 2006. Companies included in this index changed over time. Nowadays, the Nasdaq 100 index includes such companies as Alphabet, Apple, Microsoft, Intel, Tesla, etc. Source: www.tradingview.com If you have not read our previous articles on stocks and commodities, please feel welcome to do so. They are attached to this idea. Additionally, feel free to express your own thoughts and ideas in the comment section below. DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor. Your own due diligence is highly advised before entering trade.
SP:SPXEducation
by Tradersweekly
43
Big Four Macro Overview: Part 5For more detail please refer to the first four pieces in the series (linked below) and the accompanying charts. Markets entered 2022 with well established trends and trading ranges, but I believe that the coming year holds significant potential for change. This is particularly true in the equity and treasury markets. Because much of the outlook hinges on inflation (see below) it will be particularly important to monitor inflation related markets. Importantly, while it's easy to make the case that rates should rise significantly this year, modern financial history suggests that rising rates are likely to break the most vulnerable financial link. If that link has the ability to create systemic disruption, rates will fall again, even if inflation is high, as the market runs to the quality of treasuries. In my opinion, the most important trend of the last four decades has been the decline and subsequent quiescence in the inflation rate. Falling and low inflation allowed Treasury rates to decline. Falling Treasury rates supported equity valuations and home prices. They also enabled the wholesale financialization of the economy and allowed both public and private entities to add leverage without consequence. Importantly low and steady inflation also created the negative correlation between treasury and equity. Without that correlation 60/40 and risk parity strategies may well be in danger. Inflation: My working thesis has been that many of the trends that supported disinflation have reversed and that rising inflation will act as a headwind to investment for the next decade. Going into 2020 I believed that the stage for higher inflation had already been set and that higher inflation would result in higher rates and ultimately equities. Consider that in early 2020: • The output gap had closed for the first time since the Great Financial Crisis. • The economy had just reached full employment with a U-3 Unemployment rate @ 3.5%. • Wages as measured by the Employment Cost Index were rising @ +4.4% YOY rate. • The Cleveland Fed Median CPI had recently set a 10 year high. If not for the pandemic, by early 2021. the Federal Reserve would have been forced to respond to rising inflation by increasing rates. Instead, Covid crushed the demand side of the economy, derailing the growing inflation. Now the extreme fiscal and monetary response combined with disruptions in logistics and labor have combined to create very high inflation. While I think that many of the issues creating this burst of inflation are moderating, the same set of factors that were reversing in 2020 are still in place. In short, I believe that the broader trend has changed and that when everything settles out, will end up significantly in excess of the Feds 2% average target. Bottom Line: Above trend growth in inflation and monetary/fiscal tightening suggest higher volatility and a significant chance that many of the trends that have defined the last few decades will falter. My sense of the economy is that the best growth has already occurred as the result of historically supportive fiscal and monetary policies and now both paths are turning restrictive (see the second part of this series for a more in depth discussion) and markets will likely reflect that reality. Rates: • Bonds remain in a bull market defined by a broad declining channel, but rising inflation could easily change the trend. The most likely catalyst to end keep rates below 3.25% would be a financial accident created by higher rates. Equities: • SPX remains in a technical bull market and there are no overtly bearish behaviors evident in the longest perspectives. However short term weakness can easily morph into a bear market. Commodities: • Goldman Sachs Commodities index is in the center of a broad 14 year range, bounded essentially by the low set during the financial crisis and the resultant 2011 high. range. The most notable/useful current chart feature is the clear uptrend from the 2020 pandemic low. Until that uptrend is broken, the most immediate trend is to higher prices. US Dollar: • The wide macro range, 70.70 - 121.02 has contained price action over most of my trading career but volatility is more cyclical than price. These periods of low vol. set up conditions that often lead to explosive moves. Now, back to the charts! Good Trading: Stewart Taylor, CMT Chartered Market Technician Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
ECONOMICS:USIRYYEducation
by CMT_Association
57
How Different Order Types WorkHey everyone! 👋 Today we wanted to take a look at the 3 main order types that exist when it comes to interacting with the markets, and explain a bit more about what they do, and when they are useful. Sound good? Let’s jump in! 🚀 Before we talk about the different order types that you might see when you place a trade through TradingView’s platform, it’s important to understand how almost all markets work in the first place. When it comes to any market, at any time, there is a “BEST BID”, and a “BEST ASK”. 🔢 The BEST BID is the highest price that someone is willing to pay for a given asset, and the BEST ASK is the lowest price that someone is willing to sell a given asset for. Let’s think about that again. When it comes to stocks, for example, your broker will present you with a consolidated marketplace of orders (orderbook) for a given stock. Let’s say you’re in the market for some Apple shares. You can see that the stock is “trading at” $175.50. What does that mean? It means that the lowest price that someone is willing to sell their Apple shares might be around $175.52, and the highest price that someone is willing to pay for Apple shares might be around $175.49. 💹 How are these market participants making their intentions known? By placing LIMIT ORDERS. ⌛ 1.) A LIMIT ORDER is a type of order that you send to the trading venue when you’d like to buy or sell something at a certain price. In the Apple example above, let’s say that you’d like to buy some Apple, but you don’t want to pay a penny more than $175.25. When you enter this order and click “send”, your order goes to the venue, and JOINS the orderbook, at the price of $175.25. You are now “LIVE” and in the market. Your broker will deduct the cash it would require to fulfill that order from your buying power while your order is live. Next question: If people have their limit orders out in the order book, how would price ever work its way down to you? 🔽 There are a couple ways, but one of them is most common: MARKET ORDERS ⌚ 2.) A MARKET ORDER is an order that is sent to the market and immediately takes action to buy or sell an asset at whatever the prevailing prices are. Lots of people use market orders because they virtually guarantee that you will get the resulting position you want, instantly. The downside is that once you send a market order, you can’t control the price you get. Prices may change in an instant, and you may end up with a position at a price that you no longer want. Back to our example: if you’re waiting to get filled with your order in AAPL, buying shares at $175.25, then whoever pays you will be crossing the spread, probably with a market order. 💵 Let’s assume that you get filled by buying shares in AAPL at $175.25, and you’d like to get out of your position if the stock trades under $175. In this case, you’d use a STOP ORDER. 🛑 3.) STOP ORDERS are orders that you send to the market that live on Nasdaq/NYSE servers. They have a trigger price, and once the trigger price is hit, they execute a Limit Order or a Market Order based on your inputs. These are STOP LIMIT ORDERS, and STOP MARKET ORDERS. This sounds complicated, but it’s more simple than it sounds. Again; back to our example. Let’s say that you get filled on your buy in AAPL at 175.25, but then your stop order gets hit at 174.99 (you wanted to get out if the stock went under 175). If the stop order is a market order, you will get hit out of your position, no matter the price. Simple as that! ✅ Next week, we will be covering some of the order techniques that professional traders use to get better prices. 🦾 Stay safe out there! -Team TradingView 👀
NASDAQ:AAPLEducation
by TradingView
45
How To Use Bitcoin Futures To Hedge Your CryptoYou are either a trader or a HODL'er. Since I am a trader I don't like to sit in massive swings in my spot Bitcoin positions, I like to use Micro Bitcoin Futures to hedge my spot position to minimize the risk and also maximize my long position in spot. In this video I explain how I am currently hedging my long Spot Bitcoin position using Micro Bitcoin Futures, Symbol MBT. Past performance is no guarantee of future results. Derivatives trading is not suitable for all investors.
BEducation
by anthonycrudele
40
2 Types of Flags / Trading Range and Channels as FlagsWe have two flags in trading: First: Horizontal flags (Trading Range). These flags are the strongest type of flag. Horizontal flags indicate that the opposite side of the trend is incapable of creating a highs/lows opposite trend. Second: Flag with minor highs/lows. This type of flag is weaker than the first one. The opposite side of the trend was able to create the opposite highs/lows (Minor highs/lows). Flags Tips: 1) Before trading with flags, always check out the trend before them. Trends must be strong so the possibility of flag breakout increases. 2) After checking the trend before flag, check out the candles within flags. Less than 20 bars in Horizontal flags is acceptable but more than 20 bars make the market Neutral with 50-50 chance of breakout. Also in flags with minor highs/lows you have to check the latest major high/low and the opposite side must not reach that major high/low otherwise trend may be reversed. According to the points mentioned about flags, we examine the bitcoin chart: If we zoom out on the chart, we see a large trading range that we have already had a strong uptrend. This range is an ascending flag but has more than 20 candelabra, which indicates that both sides of the market are active. Within this range, a tight downtrend channel has formed over the past few weeks. It is true that we do not have a downtrend before this channel, but we consider it an ascending flag and expect it to break upwards.
Education
by AmirSoraya
83
Traders vs Gamblers: Know the main differences!Hey, fam! Happy Friday and welcome on another educational post. The topic is the following: differences between a trader and a gambler. We are gonna go through 6 crucial points and elaborate how traders are different from gamblers. 1) As a trader, one’s aim is to focus on the next 100 trades instead of the next 10. Long-term success, profitability, and consistency are two of the main things traders should target. However, a gambler’s wish and desire is to make quick money. 2) A successful trader/investor has a backtested trading plan that he sticks to and optimizes along the way, adapting to changing market conditions. On the other hand, gamblers like to trade based off what other people think and tweet, or by simply opening a random Buy/Sell position and hoping it plays out successfully. 3) Profitable traders always diversify their portfolio and risk no more than 1-2% per trade. On the contrary, gamblers go “full margin mode” on a single trade without setting a Stop Loss and end up blowing their accounts and blaming the markets. 4) Chasing markets and rushing the process is not what real traders do. Instead, they follow their plan and wait for the price to play out and match their entry criteria before executing. Nonetheless, gamblers like to overtrade, open positions based on nothing, make biased decisions. 5) When enduring a loss or two (or three), traders neither get emotional nor try to revenge the markets. They know that if they obey risk management principles and open high risk-to-reward positions, they will cover all their previous losses and get back to making profits. Gamblers, on the other hand, get angry and start attempting to revenge the market by making foolish decisions and entering many illogical trades. 6) Last but not least, if you want to be successful and profitable in this field, you have to treat trading as a business and take things seriously. Those that think markets are a playground or a casino machine will never succeed in this space.
BITSTAMP:BTCUSDEducation
by Investroy
255
Lets Talk ARKK Weekly Baby! Capitulation! One of the most important chart patterns is the buying and selling climax. A classic example of the pattern, in the form of a potential selling climax (S/C) is showing up in the daily and weekly charts of ARKK. Climaxes are exhaustion patterns, they develop as the last needful seller (weak hands) capitulates and hits the bid. Sellers are essentially exhausted. 1) Selling climaxes exhaust the available supply and often mark an important change in the market state. a. Even if they don't mark the end of a trend, they often lead to a period of consolidation. It is not unusual to see a trading range develop after the completion of the secondary test. b. Climaxes are fractal, appearing in literally every time frame. c. Climaxes appear after a long period of trend. 2) Climaxes typically appear concurrently with terrible news flow. a. Late last week I overheard an obviously frustrated fund manager on Bloomberg state that "I'm liquidating and going back to the real fundamentals." Down nearly 60% over the course of the last year he, and many other investors were finally throwing in the towel. 3) Climax patterns occur on extremely heavy volume. a. A clear reversal bar (often a key reversal) is typically evident. b. But modern climaxes can take several days to complete. c. Often the liquidated shares are distributed from weak hands, to strong hands. d. The new buyers are not necessarily long term investors and they often take advantage of the reaction rally to take trading profits. 4) There is often a sharp rally just prior to the selling climax. Wyckoff labeled this as preliminary demand (P/D), a point where strong handed longs are beginning to accumulate shares. The P/D is an alert to begin monitoring for a selling climax. In the case of ARKK, this P/D warning did not occur. 5) Immediately following the S/C is the automatic rally (A/R). Since sellers have been exhausted, the A/R can often cover significant ground. Buyers of the selling climax often use this rally to sell a portion of the position built during the climax. 6) In the case of ARKK, there is a micro test of the S/C. The successful test set the stage for the A/R. 7) A much larger secondary test separated in time must be completed before the S/C can be trusted. Its important to note WHERE the behavior is occurring. In past entries, I have talked about building confluences of support and resistance to create zones. These zones can then be monitored for patterns that are consistent with a change in trend. 1) Price is resting at the bottom of both short term and intermediate trend channels. I generally view channel tops and bottoms as more reliable indicators of overbought and oversold than most of the momentum suite of indicators. The two channel bottoms formed a support confluence in the 61.81 to 63.63 area. 2) There is a clear three wave move (A-B-C) that can be used to generate Fibo extension targets. I use the A-B-C pattern to generate three targets, 1, 1.382, 1.618%. The distance is then projected from the top of C. In this case the tool generated equality with the first wave at 63.38. You can use the Trend Based Fib Extension tool in MV to generate the calculation. 3) The three levels (two channels and 1 Fibo) produce a support confluence in the area between 61.81 and 63.38. This is the zone where the S/C occurred. Most momentum oscillators are deeply oversold. I have included the weekly RSI to illustrate. Note the curl higher. Odds are good that the selling in ARKK is essentially exhausted now. My guess, given the broader backdrop, is that it will form a trading range lasting several weeks, maybe months that will allow strong hands to redistribute shares before beginning a fresh markdown. But, opinion not withstanding, I will follow the evidence and clues as they build. Good Trading: Stewart Taylor, CMT Chartered Market Technician Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
AMEX:ARKKEducation
by CMT_Association
92
How To Find New Stocks To TradeHey Everyone! 👋 Ever get tired of looking at the same tickers? Looking to learn about different sectors of the economy? Want to broaden the number of assets you trade? Check out our Sparks . We created Sparks to quickly inspire you to dig deeper, to find new and interesting opportunities in markets. Sparks are curated watchlists built around interesting themes. Here are a few examples: AI Stocks : For when you want to bet on the rise of the machines 🤖 Legacy stocks : Companies that have been owned by the same family for generations ⌛ The Death Industry : Someone has to make money on coffins, right? 💀 Space Stocks : For when you want your portfolio to blast off into zero G. 🚀 Check them out and then let us know what your favorite Spark is by sharing a link in the comments below! Three lucky people will win some special prizes including 1 year of Premium, 1 year of Pro+, and 1 year of Pro. Bonus points (a chance to win a TradingView mug) if you add a quick summary of why that spark is your favorite. Drawing ends at Noon EST, this Wednesday. Good luck to all! 😎 -Team TradingView
NYSE:AIEducation
by TradingView
118
NYSE Comp: Broadening Top Potential Macro WarningThe NYSE composite has spent the last year building a classic broadening top pattern. The pattern develops as strong hands distribute to weak hands, and when it occurs, often marks a transition from bull to bear. 1. Broadening formations are relatively rare and because the pattern itself is difficult to trade systematically (as the boundaries are continually moving farther apart) aren't given a lot of attention in literature. a. Edwards and Magee in their seminal "Technical Analysis of Stock Trends" suggest that the broadening top, as a rule, only appears near the end or in the final phases of long bull markets. b. Shabacker in his classic "Technical Analysis and Stock Market Profits" also remarks that the pattern is rare, but extremely important, often marking an important transition from bull to bear. 2. In my experience both Shabacker and Edwards and Magee are correct. They are rare and generally very hard to trade (so I don't bother) but they do offer an important warning of a potential phase transition. 3. Note that the pattern isn't always well defined, with overthrows and underthrows of the pattern boundaries occuring regularly. This is what makes it hard to trade or design a trading strategy around. a. The pattern is extremely compelling when it appears in individual equity charts. As I see it, these are the important chart elements. 1. The composite broke the trendline from the March 2020 low. This changed the weekly trend from up to neutral. 2. After breaking the trendline, the Comp spent most of the next year moving laterally and tracing out a clear broadening formation, warning of a potential phase transition. 3. Over the last few weeks the Comp violated the rising trend line (marked on the chart) along the last three internal trend line lows, and accelerated to the lower boundary of the pattern. 4. I have included the 10 and 40 week moving averages. The two averages are roughly equivalent to the 50 and 200 day averages. Note that the 10 has rolled over and is moving to meet the flattened out 50. Often a narrowing between two moving averages marks an important market decision point. Its interesting that it is occuring at the very moment when the broadening formation appears to be nearing a conclusion. 5. If the market does begin to breakdown there are several initial move targets that can be constructed. I like to look for confluences of move targets and chart supports. The more the merrier. a. I like to overlay the .382, .500 and .618% retracement targets first. b. Next I locate chart supports. In this case, the area around the 14183 high from early 2020 can be expected to generate at least some buying interest. c. There is also a measured move target that can be generated using the width of the broadening top, it projects to roughly 14400. d. 14089 is the .382% Fibonacci retracement. 6. The support confluence provided by the pivot, the Fibo and the measured move suggest an initial support zone between 14089 and 14400. I would clearly watch this roughly 2% wide zone for reversal behaviors to either reduce shorts or perhaps, if the right behaviors develop, consider new longs. But again, the MAIN point is not so much generating trading targets as recognizing the pattern as potentially a harbinger of an important trend change. This is particularly important against the context presented in the macro overview posts of the last few weeks. Good Trading: Stewart Taylor, CMT Chartered Market Technician Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
TVC:NYAEducation
by CMT_Association
45
How To Succeed In Your TradingFocus on one single trading strategy One thing that many people try and do is switch between strategies constantly. This is setting you up for failure, and if the concept of probabilities is truly understood, you will comprehend the reasons why a single strategy will work. Any strategy is not going to have a 100% win rate, so first you should attempt at getting 50% of your trades right. After that mastering a 2:1 Reward to risk ratio is what will make you profitable. Trying to juggle many strategies will have you working tirelessly, but not moving forward in any particular one. Less trading, more education Many people have the conception that spending countless hours in front of the screen looking for potential set ups is how it should be, however that is completely wrong in my eyes. I spend minimal time now looking at charts and set ups, I highlight key levels I want to look at, along with alerts, and simply wait for the market to head there. Time spent looking at charts should be simply for education and mastering your strategy through back testing or simply understanding previous data. Approach the market from a neutral position Anyone that knows me knows how big I am on trading psychology and how I believe it is the most important aspect of trading. Emotions in trading can be one of your greatest enemies as it can lead you to failure even after your success. There are scenarios where you can take trades and be in positive which will lead you to feel over confident, happy, and those will ultimately will lead to irrational decisions if you let them. Those emotions will make you believe you are better than the markets, or that you can outsmart them, ultimately leading your successful trade to turn into a failure. The same can happen when you feel the opposite and lack confidence to enter another trade due to a loss, or think have feelings of doubt. This is why the market needs to be approached by a completely neutral position. Once you understand that for every person on one side of a trade, there is someone on the opposite side, you will begin to understand that the market itself is just a whole bunch of neutral information moving in nobody’s favour. Write your goals Affirmations are great and something that has helped me in every aspect of my life and not just trading. It is very important to write down your goals in order to manifest them into reality. All ideas first begin in the mind, and then come into the physical. Your goals need to be solidified, definite, and written down in order for your mind and yourself to know exactly what you are going after. Every single day, you need to read your goals aloud, envision them in your mind with every bit of detail possible in order to bring them into the physical. In order to achieve a goal you need to arrive at the destination first in your mind. Relax There is no need to rush a single thing in your trading journey, and believe me take it from my experience, every time I tried to, I failed. People attend university for years before going out into a career which then takes many years before mastering it, yet people want to master trading in a year. Patience is required in all aspects of trading, whether it’s on the charts themselves, or with your strategy, or with your learning curve. It all requires patience. If you are going after trading as a serious life career which you aim to remain in, then relaxing and taking your time is the first step. Nothing great comes from rushing it, especially the markets. Know how to handle your trades Based on your strategy and the concept of probability there are a number of things needed in order to appropriately handle your trades. Firstly, don’t touch your stop loss. I cant say this enough, but stop losses are determined as the final barrier before the trade is invalid, and they are determine before entering the trade. If you find yourself moving your stop, ask yourself why. You will find out mostly its out of fear of losing your money, which is one of the 4 fears of trading. Accept your loss and let the trade stop out, you had it there for a reason. Also, don’t leave trades behind out of fear. If you have a strategy that you have confidently developed, you should understand that the overall should be a greater number of winners than losers, and you should not leave trades behind out of fear, because they can be the ones that perform the best and make up for the losers. Another thing to have in place is an appropriate strategy for exiting your trades. Many people have trades that are in profit, however due to the lack of knowledge on how to exit their trades, they still end up not profitable. You need to have a system on how to exit your trades appropriately and at what levels. Always remember, the profit running on a trade is not yours until its closed. Risk management Yes, I know you have heard it and read it a thousand times already, but you have no idea how important risk management is until the day you master it and recognise it was the single greatest thing holding you back from success. People can have amazing strategies, the best reward to risk ratios, but with the inappropriate risk management trust me it means absolutely nothing. I have seen people overleverage on a trade simply because it “looked too good” compared to other trades, only for it to be the worst of the bunch. I have seen people lose tremendous amounts of money and one thing I can promise you is not a single one of these people lost 100 trades in a row at 1% a trade. Every single one of them lost their entire accounts due to ONE trade that they married. Risk management should be one of your main areas of focus, because believe me if you have mastered it, even with an average strategy you are doing much better than someone with an exceptional strategy with no adequate risk management. Keep track of your performance The only way to improve in any aspect of life is to first recognise what needs change and then work on it. It is very important to actually understand your positives and negatives and have them all tracked. A journal is one of the first steps in order to look in the mirror. Being completely honest is the only way a journal will work, and lying is only lying to yourself. If you are after serious improvement you need to appropriately identify all your flaws in order to better them. You should never feel down or behind, remember trading the markets is one of the biggest psychological challenges one can face, and that is exactly why not everyone is suited for them. Instead see it as a challenge to better yourself and achieve the perfection and discipline you have always desired on and off the charts. Trading the markets will teach you lessons that you will carry with you throughout your entire life and not just on the trading floor.
COINBASE:BTCUSDEducation
by opes_trading_group
331
Success is a one big IcebergJust like real life, trading life is full of ups and downs. You know those days when you wake up with an absolutely awful mood and you can't figure out possible reasons? Well, there could be several factors influencing it: negative energy of the outside world, bad weather, personal problems and so forth. It is very similar to checking the markets and noticing that everything is so choppy that there is nothing to trade. Several determinants here as well, such as heavy economic news, holidays, or just a bay day with no opportunities (after all, not every day is a trading day). One thing that gets us through these challenges faced is patience, because, after all, time heals all pain wounds and fixes most of our problems. I quote Shakespeare: “The evil that men do lives after them; The good is oft interred with their bones". To reverse-engineer and interpret it into the trading language: "People only see the end goal, the glory, the monumental win. They don’t see the dedication, hard work, persistence, discipline, disappointment, sacrifices, and many failures it takes to reach success". In more simple terms, people only see the tip of the Iceberg (success, amazing profits, consistency), and not the bottom of it (sleepless nights, hard work, dedication, failure, pain). Not a single skill is learnt over the course of a night. Just like it takes several years of practice, hard work and expertise to become a successful lawyer, a famous actor, and an exceptional doctor, it takes years of hard work, passion, and dedication to become a consistently profitable trader/investor.
BITSTAMP:BTCUSDEducation
by Investroy
107
IWM: The most interesting chart in the world: As of Friday (Jan 21) IWM has fallen out of a long range of distribution, produced both daily and weekly closes outside the trading range, and importantly has the potential to produce a large move. In this piece we discuss the trading range, mostly from a Wyckoff perspective, show multiple ways to start thinking about how far the move might progress, and finally take a look at IWM in terms of its strength relative to the higher quality SPX. Again, there is not a trading recommendation attached to these observations. The CMT course offers an excellent way to learn more about the concepts discussed below. 1) The most important chart feature is the trading range. Long trading ranges represent zones where supply and demand move into balance. a. Ranges are zones where strong hands / smart money accumulate new shares if they are bullish, or distribute existing shares if they are bearish. b. In early November price attempted to break out of the top of the range, but failed. In Wyckoff terms this is known as a terminal upthrust. The failure is bearish and confirmed the view that the range represented distribution. c. The upthrust was followed by a high volume decline back to the lower bound. The volume expansion and solid thrust strongly suggested that price was likely to break out of the trading range. d. There was some buying as the market tested the bottom of the range for the last time (note the very low volume bounce). My interpretation is that traders who had repeatedly bought the trading range lows, tried to buy again. They failed to recognize the significance of the upthrust and of the development of high volume in the days just prior. Now they are trapped. 2) On Friday, price fell through the range lows, trapping longs and accelerating lower on high volume. 3) Was the volume high enough to exhaust the immediately available supply? I would think not. Modern selling climaxes often take multiple days to unfold, and are not likely to occur this soon after falling out of a long zone of distribution. Remember, the long range attracted many weak handed buyers who are now being forced to liquidate. Targets: 1) There are several ways to think about move objectives. The simplest is to run a Fibonacci retracement of the March 2020 low to the November 2021 high. I keep it simple. I look at .382, .500 and .618. 2) Note that the 50% retracement of the entire move is very close to the January 2020 high pivot. The two form a support confluence in the 169 zone. Given the amount of distribution that occurred in the trading range, I think its more likely that the .618% retracement @ 152 is the most likely one. 3) When a correction develops you will be able to use the TradingView trend based Fib extension tool to project additional targets. Its likely that those targets, combined with the retracement tool and more traditional chart analysis will provide support confluences to work with. Point and Figure charts also provide insight. They don't get nearly the respect of Fib points, but they deserve it. I tend to use the Fibo points as my references, but sometimes, a solid PF range count can add insight. Wyckoff and others taught that the length of time spent in the consolidation is related directly to the distance of the subsequent move. Trading ranges are areas of the chart where large amounts of shares change hands, often from strong hands to weak hands. This is why there is a relationship between the length of the range and the size of the move. 1. Granted, there is no end to the debate as to what points should be used to define the counts. Since I'm a simple guy, I keep it simple. 2. In this case the width of the range is notable. A conservative target falls in the 145 area while a more aggressive accounting measures as deep as 121. So I have targets, what do I do now? 1. I think its enough to know that the targets are all much lower. As the trade progresses the chart will produce more support and resistance zones, target and objectives that will help to narrow the range of outcomes. 2. The final point is that, particularly in the case of point and figure charts, objectives are more guides than they are precise points. When available P&F counts are extremely useful in determining risk/reward in a trade. In the shorter run, the market broke out of its trading range on Friday with a solid daily/weekly thrust lower. But now, in the shortest perspectives it is deeply oversold. If the market does rally, the character of the rally is likely be corrective. I like to look for bear flags or pennants or a rally back to the underside of the broken trading range before the market rolls over again. Final Point: I was always taught to buy the strongest names/groups in uptrends and to sell the weakest names/groups in downtrends. IWM has clearly been weaker than SPX for a number of months. The top panel is IWM, the middle panel is the SPX and the bottom panel is the ratio between the two. If the market is setting up a major correction IWM probably will be far weaker than SPX. Good Trading: Stewart Taylor, CMT Chartered Market Technician Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
AMEX:IWMEducation
by CMT_Association
52
WTI Crude Daily Chart: Thoughts on trading and a setup...WTI Crude Daily Chart: Thoughts on trading and a trade set up illustration: This post was written on January 18-19th but in order to avoid anyone viewing it as a trade recommendation I have withheld publication until today (1-21). It is only meant to illustrate how I think about trades and setups. The placing of entry and stop orders is complex. You need to develop your own plan, consistent with your risk management. Most price change is noise. As an analyst your job is to identify those junctures where signal content is greater than noise content. Once those points are identified, you need a plan. TA is easy. Trading is way harder, particularly if you haven't systemized your plan. Importantly, to be successful you need to do your own work. You need to understand how supply and demand shapes a market pattern and then find and isolate trading setups based on that knowledge. You do this by looking at, and more importantly thinking about, thousands of charts. Simple right? The point I'm trying to make is that you shouldn't expect to be successful by mimicking trades offered by some internet jackass like me. You have to do work. Hard work. Put in your time. Become a chart dog. Otherwise it’s a hobby, not a career. Hopefully these commentaries help you find a starting place. WTI may be setting up one of my favorite technical trading setups, the failed breakout. I thought it might offer a good opportunity to walk through how I think about my trades. After all, what is the point of doing chart analysis if you don't have a plan to trade the analysis. 1. Today (1-19-2022) crude oil (CL) set a modest new high above $85.41 bb pivot that first appeared as resistance in October 2021. 2. Analysts making the fundamental case for $100.00bbl oil seem to be everywhere in the media today. 3. They may be right, sometimes the fundamental guys can be very good. But even in the cases where they get it right, their timing can be off dramatically. 4. In many cases the analyst or portfolio manager also makes the case for an energy overweight or a position in XLE. I would note that since breaking out above its October pivot, XLE has diverged significantly from the price of oil. XLE is up over 10% from its October high and nearly 30% from its December low. I have to ask myself why is XLE so much stronger than oil and how is this divergence most likely to be solved. 5. As a market moves into the zone around a prior high or low, there are really only two possible outcomes. The market either breaks out or it doesn't. a. While there are only two possible outcomes, there are many variations in how the outcomes evolve. b. To my mind, professional trading isn't about guessing the future so much as having a trading plan to take advantage of the setups. The setup: Support and resistance confluences represent junctures where the signaling content is high. 1. CL is testing an important overhead pivot/resistance, in this case the $85.41 bbl high from late October. 2. Price is pressed against the top of the channel/rising triangle that defined the rally from late December. 3. Price is also pressing against the top of the moving average channel. 4. The triple resistance confluence should be difficult for the market to overcome. 5. The Relative Strength Index (momentum) is overbought. Note that this is the same degree of overbought that produced the June and October 2021 highs and has reliably produced important highs in the past. 6. Volume has been somewhat lighter on this move compared to the initial rally to $85.14 (suggesting less demand). How do I think about set ups and trading? 1. The setup points above suggest that the market is more likely to fail/correct than to break out. In a case like this I am far more interested in finding a way to be short once a confirmed sign of failure materializes. 2. My favorite pattern in this situation is the upthrust or failed breakout. a. Price moves above the resistance, triggering stop loss orders and attracting breakout traders. b. After taking stops and attracting new weak handed longs, the market falls back below the prior pivot, forcing weak handed longs to exit. c. This pattern is always better if it occurs within a few hours of the breakout (which CL has failed to do so far 01-20-2022). 3. If the market fails I like to have a sell order waiting back inside the range. If that sell order is triggered, I immediately place a stop loss order back above the first physical barrier. Trades should only be taken if the upside risk to the protective stop is reasonable. a. I usually keep it simple. For instance I will often use a trade back below the low of the hour, day or week (depending upon the perspective I'm trading) leading to the failed breakout. Triggers can be set up using bars, volatility, TL breaks and dozens of other tactics. b. This is the part where doing your homework and finding a tactic that is consistent with your temperament and risk management context becomes important. 4. Conversely if the market does the unexpected and breaks out, I begin looking for a consolidation pattern, for instance a bull flag or pennant pattern above which I can add a buy stop. I believe that successful trading entails waiting for the high percentage and then having a trading plan to take advantage of it. A platform like TradingView makes it possible to look through hundreds or even thousands of charts to find precisely the trading setups you like the most. Good Trading: Stewart Taylor, CMT Chartered Market Technician Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
NYMEX:CL1!Education
by CMT_Association
35
Macro Overview: Part 4: Dollar Index:I begin each year reviewing the long term technical positions of the "Big Four." 10 Year rates, SPX, Commodities, and the US Dollar. This is the fourth of the series. The fifth and final will attempt to tie the first four together into a organized macro view. Granted, macro doesn’t typically impact shorter term (swing, daily and weekly) trading, but developing a broad framework for understanding market context and to help recognize change in the investment environment is important. It seems that for most of my 40 year career there have been two core calls among many strategists. 1) Interest rates must go up and 2) The Dollar must go down. Neither trade/opinion has worked out. 1) Despite 40 years of policy and global payments angst, the Dollar Index remains range bound. a. The wide macro range, 70.70 - 121.02 has contained price action over most of my trading career. i. The market is roughly in the center of this range. b. The more immediate range, 85.25 - 103.82 has defined trading since late 2014. 2) The 88.25 - 103.82 range is by far the most important chart feature. a. Prices are squarely in the center of this range. b. Moves inside the bounds of the range are noise, and while they may represent trading opportunities they mean little in macro terms. c. Be very careful when commentators suggest that the Dollar is trending. I hear this all the time and at least in terms of macro, these adjustments mean little. 3) A monthly close outside the range would strongly suggest a major change in the fundamental backdrop. 4) I believe that volatility is more cyclical than price. Periods of low vol. set up conditions that often lead to explosive moves. a. Note that volatility has continually made lower highs as vol. has been gradually crushed out of the market over the last 30 years. b. A breakout of this pattern combined with a range break would suggest a disruption in the long term equilibrium and move DX from trendless to trending. 5) Dollar correlations to other assets (rates, equities and so forth) are mixed. Its been several years since I did the correlation work, but I really don't recall teasing out consistent long term tradable factors other than a weak correlation to commodities/gold. But, as a caveat, it has been years since I spent significant time and I was looking over longer periods. Impetus for a range break could be provided by the Federal Reserve increasing rates significantly faster/slower than current expectations or faster/slower than other central banks. Externally, a flight to safety resulting from disruption in emerging markets, armed conflict in Europe, or significant new domestic fiscal stimulus are all possibilities. When thinking about the Dollar its worth remembering that currency is a relative game. It's not only the domestic economy and monetary/fiscal policy, but those factors relative to the same factors inside our largest trading partners. Dollar Bottom Line: It’s a range trade until it ain't no more. Good Trading: Stewart Taylor, CMT Chartered Market Technician Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
TVC:DXYEducation
by CMT_Association
24
Big Four Macro Overview Part 3: Commodities: I begin each year reviewing the long term technical positions of the "Big Four." 10 Year rates, SPX, Commodities, and the US Dollar. This is the third of the series. Granted, macro doesn’t typically impact shorter term (swing, daily and weekly) trading, but developing a broad framework to build understanding of market context and to help recognize change in the environment is important. I think of commodities, particularly industrial commodities, as an economic lens. Granted, economic demand isn't the only driver of the commodity cycle, but its an important one. Since the collapse of the commodities super cycle in 2008, the Goldman Sachs Commodities index has traded in a broad range, bounded essentially by the low set during the financial crisis and the resultant 2011 high. It is also worth considering that the pandemic may be somewhat distorting normal interpretation in that at least a portion of the strength may be due to logistic constraints. 1. Price is currently in the (approximate) center of a 14 year range. 2. Lows at points 1, 2 and 3 were created by the great financial crisis in 2008, The oil glut in 2016, and the pandemic in 2020. Clearly this zone, while wide, provides a substantive support floor. 3. The most notable/useful current chart feature is the clear uptrend from the 2020 pandemic low. Until that uptrend is broken, the most immediate trend is to higher prices. In general higher commodities suggest continued economic growth. 4. A break of the uptrend would strongly suggest that economic demand was weakening or that supply constraints were loosening. I think economic demand is the stronger story. 5. It is notable that the MACD momentum oscillator is close to rolling over. a. I divide MACD into four trend states/quadrants (which I promise to will cover in future posts). MACD for this index is currently in the upper right quadrant. This is the quadrant where bullish momentum is weakening. 6. The combination of the uptrend and the lateral support from the October 2018 high and the December 2021 low (504) should act as support. A violation of the support confluence would strongly suggest that, at least for now, the uptrend was complete. Particularly if MACD moved onto a pure sell signal. 7. There is also a break of the trend-line labeled as A-B. We will cover the proper drawing and use in future posts but often, trend lines and what they mean are as much art as science. In this case, while interesting, I don't view it as particularly important. 8. Commodities deserve to be broken down into industrial and energy verses agriculture and softs. The GSCI is 54% energy, 13% Industrial metals, and 28% agricultural. I tend to watch energy and industrial commodities for economic insight. 9. I have also included a chart of JJM. This is a Total Return ETN of industrial metals. I have highlighted the buying climax that occurred in October. The climax behavior offers a strong clue that the uptrend is likely over, at least for now. In future posts I will cover ending action/climax action in depth. Commodities Bottom Line: The uptrend from the pandemic lows represents the economic recovery. But, while the trend higher is intact, it appears to be weakening. My sense of the economy is that the best growth has already occurred as the result of historically supportive fiscal and monetary. Now, both paths are turning restrictive (see the second part of this series for a more in depth discussion) and markets will likely reflect that reality. One of the expressions of that restriction will likely manifest in the form of weaker, particularly industrial, commodities. Good Trading: Stewart Taylor, CMT Chartered Market Technician Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
SP:SPGSCIEducation
by CMT_Association
33
Inflation made simple: More money More problmesOn March/April 2020 we hit irrational market conditions due to the abrupt halt in the economy. We can blame the pandemic as the trigger, however there were indicators that were already flashing a slow down in the economy. Then "Magically" the so called "V Recovery". Sharp, strong, "back to normal", unemployment spiked to unprecedented levels and went back to a fast recovery. A while ago I published an article about the disconnection between the economy and the stock market. Several articles pointed out the inflation issue, at the time it looked like something that was neglected and even ignored. The Fed called it a "transitory" inflation. The Fed is responsible for watching over inflation and employment. This Fed has disregarded the inflation issue. Magic doesn't simply occur. After the economy stalled due to the virus lock down, the oil tumbled, the stock market wiped off the gains and took it back to 2016 levels, the unemployment spiked, and there were two emergency calls, one to put interest rates to Zero, and the second to increase the debt ceiling to unprecedented levels. We have two main factors to eye, the near Zero interest rates, plus the M1 metric (Money supply) spiking like never before. This means TONS and TONS of bill notes were freshly printed and put out in the market. It is not new to know that the ships at the California ports and the supply chain disruption contributed to inflationary pressures, but they were not the root reason for the 7% inflation we're seeing now, those were more the excuses to divert the attention from the root problem, we have an excessive amount of free money in the market, a Piñata was broken and everybody have cheap mortgages, cheap credit, cheap margin, cheap everything. Supply/Demand in action, a lot of easy money plus a lot of buyers => increase of prices. A lot of bills in the market dilute their value, so now we need more bills to buy the same stuff this equals to inflation, and after these levels shown in the M1 + Interest rates charts, it means a lot of it. Now the FED has changed the tone and it doesn't call it "transitory". They say they will increase the interest rates in 2022, but so far the things are just exactly the same, nothing has changed. The market doesn't understand intentions, it understands numbers. SPX : The index has made fresh all time highs and it's in an uptrend, weakening momentum, but I wouldn't be too worried about it. The market needs a correction to buy cheaper, so this is normal to be expected at some point. As long as things are kept the same I would expect to see the 21st century version of the "Roaring 20's" US30Y : It made a rally from July 2020 to April 2021, then it started to make LL-LH. Something that has to be paid attention to. VIX : The fear indicator is around 17, which signals a bull market. A couple of spikes which showed up during the weeks when the market was testing the trend and the market continued to "buy the dip". DXY : The Dollar index went down after the flood of dollars put out in the market, it tested its lowest at 90 and it went back up to 95. GOLD: Gold is a hedge for inflation. In 2016 it found a support level a little above 1000. Since then it started a rally that took it to 2000. The market was already forecasting some troubles in the economy and when the pandemic hit harder it was when gold took its last rally to 2000. Once the dust was settled it just started to consolidate between 1700 ad 1800. This market is in a wait and see pattern. Cryptos are being eyed as the virtual Gold but still they are in a roller coaster with high volatility, not for the faint at heart. OIL. This is a fundamental economy indicator. The pandemic made the future market participant pay up to 40 to get rid of the contracts, unprecedented. After that historic milestone oil started a recovery rally that followed the "V Shaped" recovery, and it went from a closing 17 level to the 80's level we see today. The pace at which it's been growing has decelerated lately, so basically it is in an uptrend with lower momentum. The economy is reaching an equilibrium where the demand for energy is not the same as the amount needed to jump start the economy. Oil is still making HH-HL, until that changes it's still in an uptrend. Conclusion: Nobody wants the party to be over, so we keep on adding more to it. However this has taken us to the irrational exuberance where the economic indicators already show signs of high levels of stress. A problem has been created, and apparently it will be left alone until it explodes, just like it has happened in the past. There are two ways to deleverage the economy the easy way and the hard way, the longer it takes the Fed to start increasing interest rates, the bigger the problem will become. The housing market is very hot, the used car market, the credits, the spending in general accelerated too much. We risk to see another 2008 when the interest rates will start to go higher and will catch the general public with a lot of debt ... and higher prices. A very good economy educational video that's one of my favorites is from Ray Dalio, and it explains in a very simple and understandable language the economic cycles. I strongly recommend you to watch it. How The Economic Machine Works by Ray Dalio
FRED:WM1NSEducation
by Madrid
74
10 Year Rates: Daily and Weekly Perspective: Important JunctureA reminder that falling bond yields are synonymous with higher bond prices while rising bond yields are synonymous with lower bond prices. In other words, a yield downtrend is the same thing as a bull market in bonds. Last week we published macro overviews of rates and equities that should be referred to for context. 1) A weekly close above the 1.77% would represent the first time since the February 2020 - 0.33% low print that rates will have managed to set higher highs. This would represent a significant change in the markets behavior. 2) The market is currently testing the confluence of resistance generated by the pivot high (1.77%), the top of the channel from the August 2021 low, and the roughly 50% retracement of the 3.25% to 0.33% decline. The confluence should provide signficant resistance. 3) Combined with the oversold condition of the RSI oscillator (remember that rising yields = lower prices, so a high oscillator reading is oversold) it is reasonable to monitor the daily and hourly charts for tradable reversal behaviors. We will cover some of these behaviors and patterns in future posts. 4) At the very least the resistance confluence should create a period of consolidation. 5) The caveat is that longs would not be in harmony with either the weekly and monthly charts, which appear to be setting up for an extended period of rising rates. 6) With both weekly and monthly charts appearing to be in the midst of a signficant change of trend, a break out wouldn't be particularly surprising. 7) At important junctures like this, I typically adapt an, "If this happens, then I do this" trading approach. After all, the market can only do one of a very few behaviors. a. It can breakout and run. In which case finding a trade with solid risk reward becomes impossible. Move to a different market and find a trade. b. It can breakout, move higher and then make a clear consolidation pattern (for instance a flag or a pennant). You can buy breakout with risk stops below the pattern. c. It can upthrust the range (make a false breakout) and fail. This is by far my favorite trading pattern. We will cover it extensively in future posts. What fundamental could produce a produce a reversal? Equity weakness that produces a flight to safety is the most likely candidate. But note that SPX saw a strong reversal yesterday and this mornings dip attracted buyers. But, again, refer to part two of the macro overview for context. Good Trading: Stewart Taylor, CMT Chartered Market Technician Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
TVC:US10YEducation
by CMT_Association
26
Left Brain Versus Right Brain 🧠 (Find out which one is you) 📚Left Brain Versus Right Brain-Thinking vs Feeling Hello all. I put this educational content to help you realize how these two very important psychological concepts play part in almost every traders life. I wanted to bring to you this unusual educational content which I personally learned from a book called, “Trading from Your Gut” by Curtis Faith. This knowledge came to serve me a long way and I hope it helps you too. First let me briefly highlight the differences between Right and Left hemispheres. Right Brain hemisphere : (It is definitely time to buy now): It is a cliché and you probably know it, “listen to your gut”. Right brain traders use gut instinct as the basis for powerful and rapid decision making. Unfortunately, too much reliance on an untrained gut can be disastrous for the inexperienced trader. This is because the right brain is quick and intuits instead of reasoning. Thus, it can be a powerful tool in the hands of an experienced trader who not only relies on intuition, but also reasoning and logic. Left Brain hemisphere : (I will only buy if): Left brain traders know exactly why they enter certain trades, following specific set of criteria that must be met before initiating a trade. Instead of relying merely on intuition and feelings, left brain traders analyze, use linear thinking, categorize, theorize, and only then put on certain trades. It is only after when left brain trader will trust his/her gut to execute the trade. So which is better ? (Integration of both hemispheres): Using intuition to decide when to make trades is not a bad thing when used in combination with logical reasoning using analysis, data and tools. In other words, to become a better trader, one should incorporate both left and right hemispheres and have a balance between brain’s two primary types. It is not about “thinking versus feeling” per se, but rather combining thinking and feeling to be able to intuitively make better trading decisions. No intuition is good without knowledge and without receiving training. Thus, you should never solely rely on trading from your gut. Bonus for you : •If you are a short-term trader or a scalper, you are likely using your right brain due to not enough time to perform analysis. •if you are a long-term trader or a swing trader, then you are using your right brain given plenty of time for analysis. •Remember, left brain analyzes, and the right brain notices. Use your whole brain to trade this year. Thanks for reading, and I hope you can use this for your advantage in this new era of volatility. Enjoy, and happy 2022 everyone.
COINBASE:BTCUSDEducation
by EdgarTigranyan
91
How To: Use the RSI to find Oversold Stocks now RecoveringWith the rotation away from some of the hotter growth stocks especially in the technology space I thought I would show you one way to perhaps find stocks where they have been in a reasonably steady uptrend, but then for whatever reason sold off significantly and are now recovering. This video shows you: 1. How to add and configure a 20 period moving average. 2. How to add and configure the Relative Strength Indicator (RSI) 3. How to setup your own columns and filters in the TradingView Screener 4. How to set up and add files to a TradingView watch list. 5. How to add and modify trade alerts. Hope the video was useful and you might have learnt something about the TradingView functionality you can add to your own set ups and trading. Like if you liked something :)
NASDAQ:LCIDEducation
by zAngus
39
Double Tops & Bottoms - Advanced AnalysisDouble tops/bottoms are relatively frequent and easy formations to identify and use. In this post, we provide a description of each pattern, implications, respective measure rule, as well as the variations described by Bulkowski. We also review the literature on these patterns in order to find various observations as well as a theoretical explanation of their occurrence. 1. Double Tops Double tops are a bearish pattern commonly found in uptrends and characterized by two consecutive peaks located at a similar level, separated by a trough. Bulkowski suggests that the absolute relative distance between the two peaks should be within 6%. The first peak is followed by a 10/20% decline. The location of the trough in the formation forms the "confirmation" level. The price breaking this level signifies the completion of the pattern, and a short position should be opened. In order to avoid fake breakouts, Bulkowski suggests a 5% decline below the confirmation level. Volume is generally declining during the formation of a double top. The time separating two peaks is an important factor when it comes to determining the validity of a potential double top. This separation should be in accordance with the duration of the uptrend before the peaks. Peaks that are too close to each other are not indicative of a double top, while an excessive time separation might indicate that the prior uptrend is outdated. Double top on OIA daily. 2. Double Bottoms Double bottoms are a bullish pattern commonly found in downtrends and characterized by two consecutive troughs located at a similar level, separated by a peak. Bulkowski suggests that the absolute relative distance between the two troughs should be within 6%. The first trough is followed by a 10/20% rise. The location of the peak in the formation forms the "confirmation" level, the price breaking this level signifies the completion of the pattern, and a long position should be opened. In order to avoid fake breakouts, Bulkowski suggests a 5% decline above the confirmation level. Volume is generally declining during the formation of a double bottom. Like with double tops, the time separation between two troughs should be in accordance with the duration of the downtrend prior to the troughs. The observations on the matter previously described for double tops also apply to double bottoms. Double bottom on CFFN daily. 3. Measure Rule The measure rule allows for the determination of the amplitude for the expected price move after a breakout of the confirmation line. This also allows for the trader to decide the location of take-profits/stop-losses when trading double top/double bottom patterns. For double tops, the take profit is determined from the height given by subtracting the formation highest peak with the trough. The height is then subtracted from the formation trough. For double bottoms, the take profit is determined from the height given by subtracting the formation peak with the lowest trough. The height is then added to the formation peak. Another rule suggests an expected price movement after breakout equal to 73% of the distance between the formation highest peak and the formation lowest low. 4. Eve/Adam Variations Bulkowski classifies double tops and double bottoms into four distinct types: - Adam & Adam - Adam & Eve - Eve & Adam - Eve & Eve The term Adam and Eve is given to peaks/troughs depending on their width, with the term Adam given to narrow (V-shaped) peaks/troughs and the term Eve given to wider (U-shaped) peaks/troughs. There aren't large scale studies quantifying the accuracy of each of these variations, Bulkowski ranks each one of them as follows (lower is better) (1): For double tops: - Adam & Adam: 19 out of 36 - Adam & Eve: 10 out of 36 - Eve & Adam: 16 out of 36 - Eve & Eve: 12 out of 36 For double bottoms: - Adam & Adam: 26 out of 39 - Adam & Eve: 17 out of 39 - Eve & Adam: 20 out of 39 - Eve & Eve: 5 out of 39 Note that such classification is not always used by traders. Example of Adam & Eve double top on LEO daily. 5. Observations The big M and big W patterned described by Bulkowski are variations of the double top/bottoms. The analysis conducted by Caginalp and Balevonich shows that double formations can be the consequence of identical equilibrium prices with slightly differing undervaluation (2). 6. References (1) Bulkowski, T. N. (2021). Encyclopedia of chart patterns. John Wiley & Sons. (2) Caginalp, G., & Balevonich, D. (2003). A Theoretical Foundation for Technical Analysis. Capital Markets: Market Microstructure eJournal.
BITSTAMP:BTCUSDEducation
by LuxAlgo
30