Get started

Community ideas

Premium & Discount Price Delivery in Institutional TradingGreetings Traders! In today's educational video, we will delve into the concepts of premium and discount price delivery. The objective is to provide you with a comprehensive understanding of institutional-level market mechanics. Before we proceed, it is crucial to define what we mean by "institutional level" and "smart money," as these terms are often misunderstood. We will also address the common misconceptions about who the liquidity providers are in the market. By grasping these foundational concepts, you will gain a new perspective on the market, realizing that its movements are not random but calculated and precise, orchestrated by well-informed entities often referred to as smart money. If you have any questions, please leave them in the comment section below. Best Regards, The_Architect
Education
by The_Archi-tect
10
43 lessons about forex trading at 43 that I wish I’d known at 23I turned 43 last week. I’ve been working for global brokerages and trading for 16 years. Here’s 43 things I wish I knew back then when I first started trading: 1. Start with your objectives first. I once asked a hedge fund manager what his advice for new traders is, and he said ‘get your objectives clear first.’ Set your goals first, and then create a plan to achieve them.’ 2. Risk/reward is everything. As a trader, your job is to place trades with an asymmetrical risk/reward profile – i.e. trades where you can make more than you can lose. That’s what good trading is all about. 3. You are a risk manager first, and a trader second. Your top priority as a trader is to protect your trading capital. Then, secondly, it is to make money. Not the other way around. 4. Cut your losses short and let your profits run. After working in brokerages for 16 years, if I know one thing about retail traders, it is they let their losses run and take their profits too quickly. Don’t be like them. 5. Be properly capitalised. The main reason I’ve seen traders lose is they have too small accounts and use too much leverage. Keep your risks small compared to the size of your account. 6. Use a rules-based approach to trading. Write a plan that contains rules for every decision you need to make as a trader…and then follow it. 7. Be clear and specific. Be clear about your goals, your objectives for each trade, and when you will enter and exit the market. If you are not clear, then keep planning until you are. 8. Mistakes kill trading systems. Errors – for example, not following your rules (or even worse, trading without rules) can make the difference between hitting your goals, or having a losing month. 9. Trade your best idea. Keep it simple and focus on your best idea at the time. Don’t trade too many strategies or systems all at one time. 10. Trade the correct strategy for the market type. Sell in bear markets, buy in bull markets. Range trade or stay out of sideways markets. If the market forms a tight range, trade the breakout. Pick the right approach for the current market conditions. 11. You will not win all the time… and that’s ok. Even the best traders have losing weeks, months and years. Go easy on yourself when things are not working out. Keep trying to improve. 12. Trade less, not more. I made 3% a month over 3 years, taking one trade a day. You don’t need to trade often to hit your objectives. 13. You only need one good trade. One good trade a week or month is all you need to achieve your objectives. 14. You achieve your goals through position-sizing. Controlling the size of your position is more important than getting the trade direction correct. 15. It’s not how often you win, but how much you make when you do. It does not matter if you take lots of small losses, as long as you make large gains when you win. 16. Play the probabilities, not what you think is going to happen. Don’t try to ‘make a trade work’ by taking profit early or not taking a trade, rather trust in the probabilities and your plan. 17. Time of day matters. The forex markets often change direction when the Tokyo, London and New York markets open. Be prepared. 18. Don’t trade on Monday mornings. Funny things happen on Monday mornings when most traders are asleep and the markets are illiquid. It’s best to avoid trading at this time...oh and stay away from New York Friday afternoon too. 19. Keep your entries simple…Don’t over-complicate your entries. A simple breakout or pull-back during a trend will work. Keep your entries simple so you can act decisively. 20. …and your exits complex. Many things happen after you enter a trade, so you need a toolbox of exit strategies. 21. Take some profit when the market gets overbought or oversold. I used to hold on to every trade, hoping it would be a massive winner, only to see it reverse and my profit disappear. Now, I’m happy to take profit as soon as the market signals it’s about to reverse. 22. Trail your stop-loss, but not too close. A trailing stop will allow you to keep your gains. Don’t put it so tight that it will knock you out of the big winners. 23. Move your stop to breakeven, but not too early. Having a trade that you’ve made risk-free by moving the stop loss point is a great feeling. But don’t do it so early that you get whipsawed. 24. News events will be the greatest source of profits and losses . Pay close attention to news events, as they have the power to wipe out your hard-earned gains or generate windfall profits - in the blink of an eye. 25. Record your trades. Keep track of all the trades you make so you can review your performance and… 26. Do more of what works, and less of what doesn't. Doing this over and over again is the secret to success. 27. Know your macros. I’m not talking about calorie-counting. Learning macro analysis of the forex markets will prove valuable in the long run as you will understand what is behind the movements on the charts. 28. Scale-in to high-conviction trades. If you have a high-conviction winner, backed by the fundamentals, then maximise it by adding to the trade as it goes your way. 29. Practice mental rehearsal. Like an elite athlete before their big event, practice executing your trades perfectly in your mind's eye. And take deep breaths while you’re rehearsing. 30. Trading is a game. View trading as a game, where you make the rules and your profits are your winning score. 31. Develop personal discipline. The key to consistent trading is developing the discipline to trade your tested rules, even when you have a series of losses. 32. Keep your thinking flexible. Don’t hold onto a view too tightly, and be prepared to do a u-turn and go the other way. 33. Trade for yourself, not what others will think of you. Do you for you. Not for what others will think of you, or because of what you’ve seen another trader do on social media. 34. Know yourself, before you trust others. Don’t give your money to someone else to trade, until you at least understand how to manage risk yourself. Then you can tell if they are any good at it. 35. Your broker is (probably) not your enemy… in my 16 years of experience, major regulated brokers are not trading against you. They want you to have a good trading experience. 36. …but they are not your mate. They are not always going to call you if you lose money to assist you. That’s not their priority. 37. Costs add up. Costs compound negatively, just like returns compound positively. Keep your transaction costs and fees as low as you can. 38. There is always a marketmaker. If your broker is not the marketmaker, then their liquidity provider is. In the forex market, there is always a marketmaker somewhere down the line. 39. Grind it out. Show up each day, follow your processes, and the results will come. Get used to the grind, and don’t chase the fast win. 40. Don’t tie your self-worth to the markets. The markets are a fickle, challenging beast and your success as a trader is not something to base your personal self-esteem on. 41. Spend your time being happy. Good traders are relaxed and happy. Remain calm and have a positive expectation. 42. Fight the good fight. Author Paulho Coelho said: “The Good Fight is the one that we fight in the name of our dreams.” If you are passionate about trading, keep up the fight. Keep trading, learning and growing and you’ll get there. 43. Enjoy the journey. Trading is a journey through the Himalayas. The highs are high and the lows are lows. The key is to enjoy every step. Thanks for listening. Sam
Education
by Sam_Eder
43
RSI Indicator LIES! Untold Truth About RSI! The Relative Strength Index (RSI) is a classic technical indicator that is applied to identify the overbought and oversold states of the market. While the RSI looks simple to use, there is one important element in it that many traders forget about: 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 the markets are volatile or trade in a strong bullish/bearish trend. In this article, we will discuss the situations when RSI indicator will lie to you. We will go through the instances when the indicator should not be relied and not used on, and I will explain to you the best strategy to apply RSI. Relative Strength Index analyzes the price movements over a specific time period 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. By itself, the overbought and overbought conditions give poor signals, simply because the market may remain in these conditions for a substantial period of time. Take a look at a price action on GBPCHF. After the indicator showed the oversold condition, the pair dropped 150 pips lower before the reversal initiated. So as an extra confirmation , traders prefer to look for RSI divergence - the situation when the price action and indicator move in the opposite direction. Above is the example of RSI divergence: Crude Oil formed a sequence of higher highs, while the indicator formed a higher high with a consequent lower high. That confirmed the overbought state of the market, and a bearish reversal followed. However, only few knows that even a divergence will provide accurate signals only in some particular instances. When you identified RSI divergence, make sure that it happened after a test of an important key level. Historical structures increase the probability that the RSI divergence will accurately indicate the reversal. Above is the example how RSI divergence gave a false signal on USDCAD. However, the divergence that followed after a test of a key level, gave a strong bearish signal. There are much better situations when RSI can be applied, but we will discuss later on, for now, the main conclusion is that RSI Divergence beyond key levels most of the time will provide low accuracy signals. But there is one particular case, when RSI divergence will give the worst, the most terrible signal. In very rare situations, the market may trade in a strong bullish trend, in the uncharted territory, where there are no historical price levels. In such cases, RSI bullish divergence will constantly lie , making retail traders short constantly and lose their money. Here is what happens with Gold on a daily. The market is trading in the uncharted territory, updated the All-Time Highs daily. Even though there is a clear overbought state and a divergence, the market keeps growing. Only few knows, however, that even though RSI is considered to be a reversal, counter trend indicator, it can be applied for trend following trading. On a daily time frame, after the price sets a new high, wait for a pullback to a key horizontal support. Your bullish signal, will be a bearish divergence on an hourly time frame. Here is how the price retested a support based on a previous ATH on Gold. After it approached a broken structure, we see a confirmed bearish divergence. That gives a perfect trend-following signal to buy the market. A strong bullish rally followed then. RSI indicator is a very powerful tool, that many traders apply incorrectly. When the market is trading in a strong trend, this indicator can be perfectly applied for following the trend, not going against that. I hope that the cases that I described will help you not lose money, trading with Relative Strength Index. ❤️Please, support my work with like, thank you!❤️
Education
by VasilyTrader
34
Economic Calendar: Top Market Events You Should Watch Out forMarkets tend to get especially volatile whenever there’s an economic report or some data dump that takes investors by surprise. That’s why we’re spinning up this Idea where we highlight all the major market-moving events you should watch out for when you do your trading. Today, we look at the Economic Calendar . 🏦 Central Bank Meetings and Announcements • Federal Reserve (Fed) Meetings The US Federal Reserve holds Federal Open Market Committee (FOMC) meetings roughly every six weeks,or ( eight times a year ), to talk about monetary policy, including interest rates. Setting interest rates is arguably the most significant event with long-lasting consequences for markets. Each of these meeting takes two days and wraps up with a speech by the gentleman who moves markets with a simple “Good afternoon” — Fed boss Jay Powell. • European Central Bank (ECB) Meetings Similar to the Fed, the ECB holds regular meetings to decide on monetary policy and borrowing costs for the Eurozone. ECB officials’ decisions sway financial markets, especially those based in the old continent. Indexes such as the Stoxx 600 Europe (ticker: SXXP ) and the European currency tend to fluctuate wildly during ECB events. • Bank of England (BoE) Meetings The BoE's Monetary Policy Committee (MPC) frequently meets to discuss and set interest rates and other monetary matters. Decisions made by BoE policymakers mainly affect the UK corner of the financial markets. That means elevated volatility in the British pound sterling and the broad-based UK index, the FTSE 100, among other UK-based trading instruments . • Bank of Japan (BoJ) Meetings The BoJ holds policy meetings to decide on interest rates and monetary stimulus, among other central-bank topics. Until recently, the Japanese central bank was the only one to sport a negative interest rate regime . 📝 Economic Data Releases • Nonfarm Payrolls In the US, the Bureau of Labor Statistics releases the Employment Situation Summary on the first Friday of every month. The data package includes the non-farm payroll print , which tracks how many new hires joined the workforce, the unemployment rate, and average hourly earnings. • Consumer Price Index (CPI) Monthly CPI measures the rate of inflation at the consumer level. The reading is closely monitored by the Fed in order to gauge the temperature of the economy. A reading too hot indicates an expanding economy, and vice versa. • Producer Price Index (PPI) Similar to CPI, PPI measures inflation at the wholesale level and can provide signals about inflation trends. • Gross Domestic Product (GDP) Quarterly GDP churns out a comprehensive measure of a country's economic activity and growth. • Retail Sales Monthly retail sales indicate consumer spending patterns, which are a critical component of economic activity. The data shows whether consumers pulled back from spending or splurged like there’s no tomorrow. • Purchasing Managers' Index (PMI) PMI reports for manufacturing and services sectors lay out insights into business activity and economic health. 🏢 Corporate Earnings Reports Publicly traded companies around the world release earnings reports every quarter. The hottest ones are America’s corporate giants, such as tech stocks , banking stocks , and more. The quarterly earnings figures include financial performance for the most recent three months and forward-looking guidance, which comprises earnings and revenue expectations. 🌐 Geopolitical Events Political developments, such as Presidential elections, and geopolitical tensions can have immediate and significant impacts on financial markets. These events are less predictable but are closely monitored by market participants and can quickly fuel volatility across asset classes, prompting investors to shuffle their portfolio holdings. Final Considerations Pay attention to these reports, events, and economic data and you’ll get to understand what moves markets. Anytime you witness a sharp reaction in gold ( XAU/USD ) or a quick reversal in the US dollar ( DXY ), it’s likely that the underlying factor is an economic report you didn’t know about. If you do track them — which one is your favorite market report or economic news release? Let us know in the comments below!
Education
by TradingView
3
Four Factors Driving Gold Prices Relative to Silver2600 years ago, the Anatolian Kingdom of Lydia minted the world’s first gold and silver coins. In doing so, the Lydian King Alyattes and his successor Croesus introduced the world’s first exchange rate: the gold-silver cross. Like any cross rate, the amount of silver that can be purchased with an ounce of gold is driven by both demand and supply-side factors, and the cross rate is anything other than stable. Sadly, we don’t have the time series of the gold-silver ratio dating back to ancient times, but we do have data going back to the launch of gold futures on December 31, 1974. Since the mid-1970s, one ounce of gold bought anywhere from 17 ounces to as many as 123 ounces of silver (Figure 1). Figure 1: The amount of silver an ounce of gold can buy has been highly variable In addition to the impact of monetary policy, which we have covered here, the gold-silver ratio appears to be governed by four other factors: Relative volatility and the silver beta Fabrication demand and technological change Gold’s use as a monetary asset Supply-side dynamics Relative volatility and beta To borrow an expression from the equity markets, silver is the high-beta version of gold. First, silver and gold prices usually have a strong positive correlation. Since 2004 the one-year rolling correlation of their daily price moves has hovered around +0.8 (Figure 2). Second, silver is more volatile than gold. As such, when gold prices move up, silver tends to move up more, thereby lowering the gold-silver price ratio. By contrast, during bear markets, the gold-silver ratio tends to rise. Figure 2: The correlation of gold and silver price changes has hugged +0.8 since 2004. For example, when gold and silver prices peaked in September 2011, one ounce of gold bought fewer than 32 ounces of silver (Figure 3). In the ensuing bear market, the ratio rose to as high as 124 ounces of silver per ounce of gold. The ratio snapped back to 64 in 2020 as gold and silver rallied early in the pandemic. In 2024, as both metals have rallied, silver has outperformed, rising 23% in the first five months of the year compared to 12% for the yellow metal. Figure 3: Positive correlation plus much higher volatility give silver a high beta to gold Fabrication Demand and the Impact of Technological Change What is curious is that while gold and silver have rallied thus far in 2024, gold broke to new record highs of nearly $2,500 per ounce whereas silver prices remain 40% below their twin 1980 and 2011 peaks despite having outperformed gold since 2020 (Figure 4). The reason may lie in technological advances. Figure 4: Gold has hit records in 2024 while silver is still 40% below its 1980 and 2011 record highs Even before the Lydians minted the first gold and silver coins around 600 BCE, both metals had been used to make jewellery: silver since around 2500 BCE and gold since 4500 BCE. Some things don’t change. Even today, the primary use of both metals is to make jewellery. Yet, thus far this century, silver has been buffeted by two sets of technological developments: the digital revolution and the energy transition. Both have impacted the relative gold-silver ratio. In 1999, photography used 267.7 million troy ounces of silver which accounted for 36.6% of that year’s total silver supply. By 2023 photography used only 23.2 million ounces of silver or about 2.3% of 2023’s total supply due to the rise of digital photography. Meanwhile, silver’s use in electronics and batteries grew from 90 million ounces to 227.4 million ounces or from 12.3% to 22.7% of silver’s total annual supply, partially offsetting the decline in traditional photography, which may partially explain why silver has struggled to hit new highs in recent years even as gold has set records. The good news for silver, however, is that it is finding new use in the energy transition. Over the past few years silver has seen strong growth coming from solar panels, which accounted for 20% of 2023 silver demand, up from essentially nothing in 1999 (Figure 5). Solar panels may explain in part why silver has recovered relative to gold since 2020. Figure 5: Battery and solar panel demand have grown as photography demand has shrunk If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com By contrast, gold fabrication demand has shown itself to be immune from recent technological developments and is still overwhelmingly dominated by jewellery demand, with electronics, dental and other uses absorbing just 17% of annual gold mining supply (Figure 6). The differences in silver and gold fabrication demand underscores that gold is considered the purer of the two precious metals. Figure 6: Gold fabrication demand has remained little changed Gold and global monetary policy Indeed, central banks around the world treat gold as money while they largely ignore silver (Figure 7). They hold a combined 36,700 metric tons of gold, the equivalent of 1.2 billion troy ounces or 13 years of global mining output. Moreover, central banks have been net buyers of gold every year since the global financial crisis. Figure 7: Central banks have been net buyers of gold since the global financial crisis Central bank buying of gold since 2009 contrasts sharply with their tendency to be net sellers from 1982 to 2007. Central banks’ accumulation of gold suggests that they want a hard asset to complement their foreign exchange reserves of dollars, euros, yen and other fiat currencies, a view that appears to have been reinforced by on-and-off quantitative easing since 2009 and increased use of financial sanctions. Central bank buying impacts gold prices directly, but only boosts silver prices indirectly via the gold market. The supply side of the equation Central bank gold buying reduces the amount of gold available to the public. Over the past decade, central bank buying has removed the equivalent of 8%-20% of new mining supply from the gold market each year (Figure 8) which may also explain why the gold-silver ratio rose significantly from 2011 to 2020 and why, even today, it remains at 2x its 2011 level. Figure 8: Net of central bank buying, gold supply has stagnated since 2003 Total gold supply net of official purchases has stagnated since 2003. Meanwhile, silver mining supply peaked in 2016 and gold mining supply peaked the next year (Figure 9). The fact that new supply is arriving on the market more slowly than in the past may be bullish for both gold and silver. Figure 9: Gold and silver respond negative to changes in each other’s mining supply. Our econometric analysis shows that gold and silver prices are negatively correlated with changes to one another’s mining supply. A 1% decrease in gold mining supply, on balance, boosted gold prices by 1.9% and silver by 3.0% from 1974 to 2023. A 1% decease in silver mining supply boosted the prices of the metals by 1.3%-1.6% (Figure 10). Secondary supply appears to respond to price rather than drive it. Higher prices incentivize more recycling, but recycled metal doesn’t appear to depress prices as it doesn’t bring any new metal onto the market. Figure 10: Secondary supply responds to price rather than drives it What connects the two markets is jewellery. Because gold is 70x as costlier than silver, when prices rise, demand for gold jewellery falls while silver’s jewellery demand is relatively unresponsive to price because it costs much less. Gold and silver can be seen as a sort of binary star system where the two stars orbit a common center of gravity or barycenter. Gold is the larger, more stable and more influential of the two, but it is by no means immune from silver’s pull. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com By Erik Norland, Executive Director and Senior Economist, 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_MINI:ES1!Education
by CME_Group
4
Options Blueprint Series: Swap Strategies for High VolatilityIntroduction CME Group Gold Futures have always been a cornerstone in the commodities market, offering investors and traders a way to hedge against economic uncertainties and inflation. With the current market environment exhibiting heightened volatility, traders are looking for strategies to capitalize on these fluctuations. One such strategy is the Straddle Swap, which is particularly effective in high volatility scenarios. By utilizing the Straddle Swap strategy on Gold Futures, traders can potentially benefit from price swings driven by news events, economic data releases, and other market-moving occurrences. Strategy Explanation The Straddle Swap strategy is designed to capitalize on high volatility by leveraging options with different expirations. Here’s a detailed breakdown of how this strategy works: Components of the Straddle Swap: 1. Buy one call option (longer expiration) This long call option benefits from upward price movements in Gold Futures. 2. Sell one call option (shorter expiration) This short call option generates premium income, which offsets the cost of the long call option. As it has a shorter expiration, it benefits from faster time decay. 3. Buy one put option (longer expiration) This long put option benefits from downward price movements in Gold Futures. 4. Sell one put option (shorter expiration) This short put option generates premium income, which offsets the cost of the long put option. It also benefits from faster time decay due to its shorter expiration. Rationale for Different Expirations: Longer Expirations: The options with more days to expiration provide a longer timeframe to capture significant price movements, whether upward or downward. Shorter Expirations: The options with less days to expiration decay more quickly, providing premium income that reduces the overall cost of the strategy. This helps mitigate the effects of time decay on the longer-dated options. Market Analysis Using TradingView Charts: To effectively implement the Straddle Swap strategy, it’s crucial to analyze the current market conditions of Gold Futures using TradingView charts. This analysis will help identify optimal entry and exit points based on volatility and price trends. The current price action of Gold Futures along with key volatility indicators. Recent data shows that the 1-month, 2-month, and 3-month Historical Volatilities have all been on the rise, confirming a high volatility scenario. Application to Gold Futures Let’s apply the Straddle Swap strategy to Gold Futures given the current market conditions. Identifying Optimal Entry Points: Call Options: Buy one call option with a 100-day expiration (Sep-25 2024) at a strike price of 2370 @ 64.5. Sell one call option with a 71-day expiration (Aug-27 2024) at the same strike price of 2370 @ 53.4. Put Options: Buy one put option with a 100-day expiration (Sep-25 2024) at a strike price of 2350 @ 63.4. Sell one put option with a 71-day expiration (Aug-27 2024) at the same strike price of $2350 @ 52.5. Target Prices: Based on the relevant UFO support and resistance levels, set target prices for potential profit scenarios: Upper side, target price: 2455. For put options, target price: 2260. Potential Profit and Loss Scenarios: Scenario 1: Significant Upward Movement If Gold Futures rise sharply above 2370 within 100 days, the long call option will generate a potentially substantial profit. The short call option will expire in 71 days, limiting potential losses. Scenario 2: Significant Downward Movement If Gold Futures fall sharply below 2350 within 100 days, the long put option will generate a potentially substantial profit. The short put option will expire in 71 days, limiting potential losses. Scenario 3: Minimal Movement If Gold Futures remain relatively stable, the premiums collected from the short options (71-day expiration) will offset some of the cost of the long options (100-day expiration), minimizing overall losses. Further options could be sold against the long 2350 call and long 2350 put once the shorter expiration options have expired. Specific Action Plan: 1. Initiate the Straddle Swap Strategy: Enter the positions as outlined above following your trading plan, ensuring to buy and sell the options at the desired strike prices and expirations. 2. Monitor Market Conditions: Continuously monitor Gold Futures prices and volatility indicators. Adjust or close the strategy if necessary based on significant market changes. 3. Manage Positions: Use stop-loss orders to limit potential losses. If the market moves favorably, consider exiting the positions at the target prices to lock in profits. 4. Reevaluate Periodically: Periodically reevaluate the positions as the options approach their expiration dates. Make any necessary adjustments to the strategy based on updated market conditions and volatility. By following this type of trade plan, traders can effectively implement the Straddle Swap strategy, taking advantage of high volatility in Gold Futures while managing risk through careful monitoring and the use of stop-loss orders. Risk Management Effective risk management is crucial for success in options trading, particularly when employing strategies like the Straddle Swap. Here, we will discuss the importance of risk management, key techniques, and best practices to ensure that traders can mitigate potential losses and protect their capital. Importance of Risk Management: Minimizing Losses: Trading inherently involves risk. Effective risk management helps minimize potential losses, ensuring that a single adverse move does not significantly impact the trader’s overall portfolio. Preserving Capital: By managing risk, traders can preserve their capital, allowing them to stay in the market longer and capitalize on future opportunities. Enhancing Profitability: Proper risk management allows traders to optimize their strategies, potentially increasing profitability by avoiding unnecessary losses. Key Risk Management Techniques: 1. Stop-Loss Orders: Implementing stop-loss orders helps limit potential losses by automatically closing a position if the market moves against it. For the Straddle Swap strategy, set stop-loss orders for the long call and put options to exit positions if prices reach predetermined levels where losses would exceed the desired trade risk set by the trader. 2. Hedging: Use hedging techniques to protect positions from adverse market movements. This can involve purchasing protective options or futures contracts. Hedging provides an additional layer of security, ensuring that losses in one position are offset by gains in another. 3. Avoiding Undefined Risk Exposure: Ensure that all positions have defined risk parameters. Avoid strategies that can result in unlimited losses. The Straddle Swap strategy inherently has limited risk due to the offsetting nature of the long and short options. 4. Precision in Entries and Exits: Timing is crucial in options trading. Ensure precise entry and exit points to maximize potential gains and minimize losses. Use technical analysis key price levels such as UFO support and resistance prices, and volatility indicators to identify optimal entry and exit points. 5. Regular Monitoring and Adjustment: Continuously monitor market conditions and the performance of open positions. Be prepared to adjust the strategy based on changing market dynamics, such as shifts in volatility or unexpected news events. Additional Risk Management Practices: Diversification: Spread risk across multiple positions and asset classes to reduce the impact of any single trade. Other liquid options markets could be WTI Crude Oil Futures; Agricultural products such as Wheat Futures, Corn Futures, or Soybean Futures; Index Futures such as the E-mini S&P 500 Futures; and even Bond and Treasury Futures such as the 10-Year Note or the 30-Year Bond Futures. Position Sizing: Carefully determine the size of each position based on the trader’s overall portfolio and risk tolerance. Education and Research: Stay informed about market conditions, economic indicators, and trading strategies to make well-informed decisions. By incorporating these risk management techniques, traders can effectively navigate the complexities of options trading and protect their investments. Ensuring more precision with entries and exits, using stop-loss orders, and implementing hedging strategies are essential practices that contribute to long-term trading success. When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. General Disclaimer: The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
COMEX:GCV2024Education
by traddictiv
10
Forex Market Liquidity: Analysis and Implications for TradersForex Market Liquidity: Analysis and Implications for Traders The foreign exchange market is renowned for its dynamic and fast-paced nature. As traders navigate this landscape, understanding the concept of liquidity becomes crucial. In this article, we analyse its components, explore factors that influence it, measure and analyse its impact, discuss potential risks for traders, and present real-life examples to illustrate its implications. What Is Liquidity in the Forex Market? Liquidity in the forex market refers to the ease with which a currency pair can be bought or sold without causing a significant change in its price. Highly liquid assets are usually easily tradable, while less liquid assets may experience more considerable price fluctuations during transactions and bear higher spreads. Liquidity Components The liquidity of a currency pair is influenced by several factors, which traders need to consider when constructing a liquidity-proof trading strategy. These include the market depth, the bid-ask spread, and the trading volume. - Market depth represents the number of buy and sell orders at different price levels in the order book. A deep market with many orders at different price levels typically suggests higher liquidity. - The bid-ask spread is the difference between the highest price a buyer agrees to pay and the lowest price a seller agrees to accept. A narrower spread typically indicates higher liquidity, while a wider spread reflects lower liquidity. Traders often monitor the spread to gauge current conditions. - Trading volume refers to the total number of currency units traded within a specified period. Higher trading volume generally indicates greater liquidity, signalling a robust trend. Low trading volume could indicate liquidity issues. Risks for Traders Arising From Liquidity Levels in Forex Liquidity is a crucial consideration for traders as it directly affects transaction costs and the ease of entering or exiting positions. High levels generally result in lower transaction costs and less slippage, providing traders with potentially more exciting conditions. Additionally, liquidity may contribute to price stability, reducing the impact of large trades on prices. Low levels, on the other hand, can pose certain risks that traders must be aware of. In illiquid markets, larger trades can have a more pronounced impact on prices, potentially resulting in random price movements and unfavourable execution prices. Forex market liquidity implications suggest that low liquidity can lead to increased volatility, making it challenging to analyse price movements accurately. In low liquidity conditions, traders may also experience slippage and delays in order execution, impacting the efficiency of trades. Factors Influencing Liquidity in Forex Trading Various factors influence current market liquidity in the forex market, and understanding these dynamics is essential for traders: - Market Participants: The presence of a diverse range of participants, including retail traders, institutional investors, and central banks, contributes to liquidity. A balanced mix of participants often leads to a more liquid market. - Economic Indicators: Economic releases, such as employment data, GDP figures, and interest rate decisions, can significantly impact a currency’s trading activity. Traders often witness increased volatility before and after such data is released, affecting market liquidity. - Time of Day: Forex operates 24 hours a day, five days a week. Volume varies depending on the time of day, with peak liquidity during the overlap of major trading sessions. Forex Market Liquidity Indicators and Measures Assessing quantitative metrics is a fundamental initial step in a profound forex market liquidity analysis. Let’s discuss some popular indicators which can help evaluate the liquidity level using the trading volume: - On-Balance Volume (OBV): OBV assesses the strength of a price trend by evaluating the relationship between volume flow and price movements. Higher liquidity often accompanies stronger and more sustained price trends. - Volume Oscillator: When the volume oscillator is positive or above a specific threshold, it indicates that the recent trading volume has been relatively high. This may suggest that there is more liquidity in the asset. - Money Flow Index (MFI): The MFI considers trading volume as a component of its calculation. A high trading volume, when combined with significant price movements, can result in a higher MFI reading, indicating strong market participation and potentially higher liquidity. A low trading volume during price movements may result in a lower MFI reading, suggesting reduced liquidity and potentially less market interest. Price Gaps: In illiquid markets, there are fewer participants and lower trading volumes. In such conditions, price gaps are more likely to happen and can be more substantial. With fewer participants, it becomes challenging to match buyers and sellers efficiently. As a result, a significant order or news event can lead to a notable price gap when the market reopens. You can visit FXOpen and explore new trading opportunities for some of the most liquid currency pairs through the free TickTrader trading platform. Real-Life Examples of FX Liquidity To illustrate the importance of considering liquidity in a forex strategy and how it can impact trader behaviour, let’s consider some real-life examples: The 2015 Swiss Franc Depegging In 2015, the sudden decision by the Swiss National Bank (SNB) to remove the Swiss Franc (CHF) peg against the euro had a profound impact on the forex. The depegging in January 2015 led to a sudden drop in value, causing not only an unprecedented shift in trading dynamics but also triggering a significant price gap. The market experienced a reduction in trading volume, highlighting the challenges of liquidity in the face of unexpected events. High Volumes During Trading Session Overlaps The EUR/USD currency pair experiences varying trading volumes throughout different global sessions, primarily influenced by the overlap of major trading hours. The chart below depicts the significant volume spikes occurring during the overlap between the European (UTC 08:00 - 17:00) and North American (UTC 13:00 - 22:00) sessions, commonly known as the "London-New York overlap." This period witnesses peak trading volumes, providing traders with optimal conditions for executing trades. Takeaway Understanding liquidity is paramount for traders navigating the complexities of the financial markets. By comprehending the components of trading activity and analysing influencing factors and their impact on real-life trading, traders may make more informed decisions to potentially reduce risks and optimise their trading strategies. You trade forex and commodity, stock, and index CFDs today by opening an FXOpen account! 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
Crypto Coins Heatmap: The Ultimate Guide for Beginners (2024)Discover the easiest way to track, group and sort your favorite tokens in one place — the TradingView Crypto Coins Heatmap. Everyone — from the aspiring crypto enthusiast to the professional digital asset fund manager — needs it. Meet the ultimate cryptocurrency tracking and monitoring tool, the TradingView Crypto Coins Heatmap. What Is Crypto Coins Heatmap? Slick-looking, feature-rich, and aesthetically pleasing, the Crypto Coins Heatmap is a visual tool developed by TradingView. It displays the performance of crypto coins plastered over a single interface that allows users to keep tabs on price movements through color coding and percentage performance. Key Features Let’s start off with the basic features of the Crypto Coins Heatmap. 1. Color-Coded Performance Indicators Green indicates positive performance (coin go up — good.) Red indicates negative performance (bad coin — goes down.) Grey indicates slim to no price movement, typical for stablecoins. 2. Real-Time Price Data The heatmap is updated in real-time and shows the most current information so crypto geeks could know the price of everything all the time. 3. Market-Cap-to-Size Ratio The size of each crypto coin corresponds to its market capitalization, i.e. the more room it takes on the screen, the bigger the market value. Bitcoin ( BTCUSD ), the original cryptocurrency , takes up over half the entire screen because its dominance is over 50% of the total market’s worth. Key Functionalities What can you actually do with that data and can you customize it? Yes — let’s find out how. 1. Select Source At the top left, select “Crypto coins” and choose your preferred grouping. Crypto coins Crypto coins (Excluding Bitcoin) Crypto coins (Excluding Stablecoins) Coins DeFi 2. Size By Next up, hit the “Market cap” menu to arrange the digital assets by various sizes and parameters. Also, for a more detailed look, make sure to check the dedicated crypto market cap corner on the TradingView website. Market cap FD market cap Volume in USD 24h Total value locked Volume 24h / Market cap Market cap / TVL (total value locked) 3. Color By The third option from the top bar menu — “Performance” — shows you the tokens’ percentage return on various time frames. Performance from 1-hour to 1-year time frame. 24-hour volume change, measured in %. Daily volatility, measured in %. Gap, measured in % (previous day’s closing price to today’s opening price). 4. Toggle Mono Size The grid icon allows you to display all tokens in the same size. 5. Filter The filter icon is where it gets really precise — fine-tune your results by various size and performance metrics. 6. Settings The gear icon displays the layout settings and allows you to add or remove certain visual elements. Add or remove Title (by Description or Symbol). Add or remove Logo. Add or remove First value, measured in %. Add or remove Second value, measured in price or market cap. Color scheme: Classic, Color blind, Monochrome. 7. Share Icon Tell your crypto friends or cool uncle about this nifty interface by clicking on the Share icon to: Save image Copy link Share on Facebook Share on Twitter (X) 8. Heat Multiplier The x1 (by default) icon is the Heat Multiplier, which narrows down your search based on the percentage return on a given time frame. Play around with it to find out the biggest losers and winners in the crypto world. Why You Need the TradingView Crypto Coins Heatmap Interactive Charting Click on any token on the screen to bring up a detailed chart with all the key data you could want. Here’s an example of Ethereum’s ( ETHUSD ) interactive chart: Quickly grasp market conditions, sentiment, and trends with the intuitive interface. Comprehensive Market Overview Make precise comparisons between different cryptocurrencies to see how price performances stack up against each other. Final Considerations The TradingView Crypto Coins Heatmap is your gateway to current price data spanning all over cryptoland. Be sure to check it whenever you need a glimpse into the digital asset market and its volatile prices. And finally, maximize the heatmap’s potential by transferring the insights into your trading plan . Let us know if you use the Crypto Coins Heatmap — leave your comments below!
BITSTAMP:BTCUSDEducation
by TradingView
4
Past Indications of uptrend health in the SPXEven when all empires fall, It's important to remember that as long as humanity in general continues to discover, explore, solve and invent, the better off we all are. That's why the price of indices always tend to go up. Even when they become stagnant, they eventually keep on increasing. The only thing that can revert this is a total collapse of society, which is unlikely in the present moment. Nevertheless, it's also important to observe the health of a trend. When price increases violently, then a correction is likely to occur. These corrections can be severe or simple technical resets. Technical resets are good for everyone as it allows new buyers to enter the market as well as provide good buying opportunities. However, circumstances can lead the price to not have reset but instead have a correction or a crash. The difference between the two is that a correction is slow to reach the bottom, while a crash is a sudden move downward. As one can see here leading up to the 2000 dot com crisis the uptrend was quite healthy, and it did a slight reset before going into euphoria, where price goes into the 3rd standard deviation range while pushing price higher and higher, before price lost momentum and eventually had a correction as the uptrend was way too aggressive. Meanwhile, leading up to 2008 crash there is a very aggressive uptrend, completely breaking into higher level deviations without going through the stages of a healthy uptrend. Causing the price to crash once the market realized that the system was still heavily corrupted by greed. However, since things throughout time do improve, this allowed for another aggressive uptrend to form which instead of running into a crash it went into a technical reset which latter became the longest bull market in USA history.
SP:SPXEducation
by DarkMessiah777
31
Top 3 Tips on How to Avoid FOMO Trading (Fear of Missing Out)Here you are, casually sipping your coffee and watching the clock go by while you wait for the market to open so you can buy a few shares of your new stock pick. Remember, you chose that one after deep research and careful planning. And then “ WHAM! ” Twitter notifications start flying. GameStop (ticker: GME ) is once again rocketing to the moon after some livestream on YouTube unleashes a huge buying spree. “MUST. GET. IN.” — you, probably, after you get your emotions shaken and stirred by something called FOMO. 🔔 What’s FOMO? FOMO is an abbreviation for Fear Of Missing Out. This little four-word phrase can throw your investment rationale, thesis and analysis out the window so it could settle in your prefrontal cortex where your brain goes to make life decisions. In this blog, we’ll talk about that little gremlin FOMO and what steps you can take to prevent it from overriding your emotions and decisions. And for the sake of your time, we’ll keep it short. Let’s go. 💡 Tip 1: Plan Your Trade Plan your trade in advance and don’t sink into the moment. Knowing your entry, take profit and stop loss before you move into your position will eliminate the urge to rush in when things get hot. 🔴 Problem: News Releases, Earnings Reports We all know how intense markets can get when there are news reports coming out. Company data such as earnings reports or some of America's top economic events , such as the widely anticipated nonfarm payrolls , or the Federal Reserve’s market-moving interest rate decisions can spur volatility and cause trading instruments to seesaw and fluctuate in both directions. And because these events are well-known in advance — the Fed only meets eight times a year — these moments can be an attractive invitation to make a profit. 🟢 Solution: Plan your trade and understand that news reports and earnings releases are a double-edge sword and even if the data supports a certain narrative, i.e. lower inflation = higher gold prices, this isn’t always the case. Take a step back, regulate your breathing and keep your emotions in check. Wait it out until the noise tones down. 💡 Tip 2: Avoid Revenge Trading Revenge trading is the trading you do when you want to get back at the market after getting smacked in the face with a loss. Next time you stare at a losing position, notice if you feel the urge to jump right back in and make up what you lost. That's revenge trading. 🔴 Problem: Losses and Missed Opportunities Taking a beating from Mr. Market can be a painful experience. Yet, not taking the loss the right way can lead to even more pain and wiped out funds. Whenever you’re staring at a losing position, you might be tempted to sell out and jump right back in an effort to make back what you lost. 🟢 Solution: Avoid revenge trading. Recognize that pesky feeling, which — whenever you lose money on a trade — makes you want to pare back your losses with one quick trade. That quick trade could be a) more aggressive (for more potential profit), and b) cost you even more money because you’ve been impatient. 💡 Tip 3: Don’t Chase the Pump Any pump usually has a strong pull, because it makes gains look easy. All you need to do is catch the speed train (or get onboard the rocket ship) and, boom, you're in profit. Although, it's not as easy as it looks. 🔴 Problem: Pump and Dump Schemes Quite often we see some little-known stock or a cryptocurrency with a small market capitalization perform some outstanding moves. It may shoot higher by 100% or more and that may trigger some FOMO in you, causing you to panic-buy and then watch your investment evaporate like snow in water. 🟢 Solution: Don’t chase the pump. It’s simple. A pump can play with your decision-making capabilities and cause you to make irrational choices out of the desire to join the volatility train. But many of those pumps end up as dumps. Pump and dump schemes are real — the gains go as quickly as they came and you don’t want any of that. Final Considerations Forming a deep emotional connection with the market isn’t a bad thing. This place is your passion and you’ve chosen to participate in it, together with its ups and down. What you should pay attention to is how you react to its changing moods and whether you behave logically or illogically to get what you want. Acting illogically can lead you to trip up so you want to distinguish that. Use your emotions to get rational inspiration and excitement about what you want to accomplish. 📣 Your Turn! Have you ever tripped up over a FOMO trade that hurt your account? What was your trigger and subsequent result? Let us know in the comment section below!
NYSE:GMEEducation
by TradingView
10
Using the Second Charts on TradingviewThis tutorial goes over the uses of the very low timeframe features that Tradingview offers, namely the 1 second through to the 30 second charts. The main advantage to these timeframes is that they permit you to clearly see whether your support and/or resistance levels are being held or are being rejected. This allows you to make a determination much quicker than if you are using higher timeframes. This can make or break your profit and setup and is quite an advantageous tool to utilize if you have access to these timeframe periods. In addition to visualizing support and resistance breaks/holds, the use of these smaller timeframe charts also allows you to apply methods such as the Heikin Ashi strategy much more effectively and quickly. If you are a scalper, it does add an insurmountable amount of value to your analysis. Thanks for watching and leave your questions and comments below! Safe trades everyone!
NASDAQ:METAEducation
by Steversteves
8
Differences between paper trading & real money tradingMost people (including me sometimes) lack the right mindset, patience, and planning when it comes to trading. There is no magic technical indicators in trading, it all comes down to simple tools, just like my paper trading journey outlined in this BTCUSD chart. In the chart, I observed that: BTC was no longer trending as its price was ranging for nearly 50 days after the ATH; BTC momentum was weakening as it broke previous two horizontal support areas; Price came to the potential 120 EMA / trendline / downward channel support clusters. Since most of the time, asset price is ranging rather than trending, all we need to do is plot out the Fib levels in our chart and buy at support sell at resistance. You can see my major trades outlined in the chart. I did the same for other crypto symbols ETH & SOL at the same time. However, when it comes to real money trading, I would trade slightly differently. The mentality in paper trading is more aggressive. Usually in real money trading, when major support areas are broken, I would not fade a trend and try to catch the falling knife even you know there is potential support. What I'll most likely do is to wait for price breaks above the descending trendline (shows the strength) and look for opportunities in a potential 1-2-3 or 2B reversal pattern. In real money trading, I try to follow the trend most of the time (price stands above all the moving average) But in paper trading, you have to be the minority in the market to stand out from the competition, which usually means go against the market. Even though we know this looks like a fib range trading scenario, it's better to enter your fading trade after a lower high or higher low is created. In reality, make full use of the capital all the time is not recommended, especially when you about to trade against the current trend. Always try a small position first when doing so and build up your position along the way. However, in this competition, the forex pair EURUSD and SPX500 have low volatility, we have to trade maximum allowed quantity of each symbol in the hope of increasing account profits. Lastly, do not overtrade, which makes sense for both paper and real money trading. It's easier to do so in paper trading as people would worry much less about the profits/losses they have made. All in all, I'm just lucky enough to get the 2nd place in this competition, always respect the market and the market is always right.
COINBASE:BTCUSDEducation
by Hakukuro
15
SPY Fibonacci Price Theory And BreakOut BarsThis instructional video teaches you the basics of Fibonacci Price Theory in conjunction with Breakout Bars and how price is the ultimate indicator. Throughout this video, I try to provide instruction on key elements related to the Fibonacci Price Theory (Unique & Standout Highs/Lows). Additionally, I've also included Breakout Bars and Fibonacci Price Retracement concepts. What I really hope you learn from this video is to see price as the true ultimate indicator for your trading decisions. Using technical analysis techniques is fine, but use price as the key element when trying to confirm or reject your trading ideas. I hope this helps you understand that price, action, and reaction through trends, peaks, and troughs are the most important components of the chart. Everything else is peripheral.
AMEX:SPYEducation
by BradMatheny
3
New Product Launch: How to Use TradingView OptionsWe’ve rolled out our newest product and we’re eager to brag about it! It’s an options platform — TradingView Options. More precisely, it’s a powerful set of tools for options traders who want to keep a close eye on every little detail and fine-tune their strategy to perfection. What Are Options? Options are financial derivatives that give the buyer the right, but not the obligation, to buy or sell the underlying asset at a set price within a set period. TradingView Options TradingView Options is designed to illuminate your options trading strategy from the first step to the last one. Get razor-sharp options strategies on gold futures ( COMEX-GC1! ), oil futures ( NYMEX-CL1! ), and many more. Let’s break it down and discuss what it's about. For starters, you’ve got three key components — Strategy Builder, Options Chain, and Volatility Analysis. 1. Strategy Builder Create, test and visualize options strategies with real-time data. Use pre-built strategies filtered by bullish, bearish, or neutral outlooks. Customize strategies with adjustable parameters like expiration dates and strike prices. Get estimates for max profit, max loss, win rate, and more. Compare multiple strategies on a single chart for performance analysis. 2. Options Chain Options chains are broken down into two sections — calls and puts. Strike price is displayed in the center column — it’s where the put or call can be exercised. Next to Strike is IV, %, which stands for Implied Volatility in percentages. Measure options risk with the Greeks: Delta, Gamma, Theta, Vega, and Rho. Easily switch underlying assets with a simple symbol search at the top left. 3. Volatility Analyze market volatility to understand potential price movements and risks. Market Coverage Currently, TradingView Options supports options contracts from major exchanges including CME and its subsidiaries NYMEX, COMEX, and CBOT, alongside NSE , and BSE . Conclusion The new options trading tools by TradingView empower traders with the data and analytical capabilities needed to whip up high-probability strategies and explore new opportunities for profit in global markets. Are you an options trader? What’s your trading style? Let us know in the comments!
NASDAQ:CMEEducation
by TradingView
38
Understanding Bearish and Bullish Bat Harmonic Patterns Understanding Bearish and Bullish Bat Harmonic Patterns: A Professional Guide for Traders In the dynamic world of trading, identifying potential reversal points is crucial for making informed decisions. Two powerful tools that professional traders often rely on are the Bearish and Bullish Bat Harmonic Patterns. These patterns, grounded in Fibonacci ratios, offer insights into market behavior and help in predicting price movements. This article delves into the intricacies of these patterns, providing a comprehensive guide for traders. __________________The Bearish Bat Harmonic Pattern_________________________ The Bearish Bat Harmonic Pattern is a reversal pattern that indicates a potential decline in price after an upward correction. Here's how to identify and interpret this pattern: X-A Leg: The initial move where the price falls from point X to point A. A-B Leg: The price then retraces upwards from point A to point B, typically reaching 38.2% to 50% of the X-A leg. B-C Leg: The price falls again from point B to point C, retracing 38.2% to 88.6% of the A-B leg. C-D Leg: The final leg sees the price rise from point C to point D. Point D is the critical point, expected at the 88.6% retracement level of the X-A leg and coinciding with the 161.8% extension of the B-C leg. Key Fibonacci Ratios: A-B: 38.2% to 50% retracement of X-A B-C: 38.2% to 88.6% retracement of A-B C-D: 88.6% retracement of X-A and 161.8% extension of B-C Trading Strategy: Traders should look for selling opportunities around point D, anticipating a downward move following the completion of the pattern. Entry, Stop-Loss (SL), and Take-Profit (TP) Criteria: Entry: Enter a short position at or near point D. Stop-Loss (SL): Place the stop-loss slightly above point X to account for any potential false breakouts. Take-Profit (TP): Set the first TP at the 61.8% retracement of the C-D leg and the second TP at the 100% retracement of the C-D leg. _________________________The Bullish Bat Harmonic Pattern_____________________ Conversely, the Bullish Bat Harmonic Pattern signals a potential rise in price after a downward correction. Here are the steps to identify and utilize this pattern: X-A Leg: The initial move where the price rises from point X to point A. A-B Leg: The price then retraces downwards from point A to point B, typically reaching 38.2% to 50% of the X-A leg. B-C Leg: The price rises again from point B to point C, retracing 38.2% to 88.6% of the A-B leg. C-D Leg: The final leg sees the price fall from point C to point D. Point D is the critical point, expected at the 88.6% retracement level of the X-A leg and coinciding with the 161.8% extension of the B-C leg. Key Fibonacci Ratios: A-B: 38.2% to 50% retracement of X-A B-C: 38.2% to 88.6% retracement of A-B C-D: 88.6% retracement of X-A and 161.8% extension of B-C Trading Strategy: Traders should look for buying opportunities around point D, anticipating an upward move following the completion of the pattern. Entry, Stop-Loss (SL), and Take-Profit (TP) Criteria: Entry: Enter a long position at or near point D. Stop-Loss (SL): Place the stop-loss slightly below point X to account for any potential false breakouts. Take-Profit (TP): Set the first TP at the 61.8% retracement of the C-D leg and the second TP at the 100% retracement of the C-D leg. ______________________Practical Application and Tips_______________________ To effectively utilize these patterns, traders should: Use Confirmation Indicators: Always combine harmonic patterns with other technical indicators, such as RSI or MACD, to confirm potential reversal points. Practice Patience: Wait for the pattern to fully develop and reach point D before taking action. Risk Management: Implement strict risk management strategies, including stop-loss orders, to protect against potential false signals. Conclusion: The Bearish and Bullish Bat Harmonic Patterns are powerful tools in a trader's arsenal, providing a structured approach to identifying potential market reversals. By understanding and applying these patterns, traders can enhance their decision-making process and improve their trading performance. Remember, like all technical analysis tools, these patterns are most effective when used in conjunction with other indicators and sound risk management practices. Happy trading!
BINANCE:ADAUSDEducation
by trading_jupiter
9
Brilliant Basics - Part 1: Trendlines"Champions are brilliant at the basics." - John Robert Wooden, legendary basketball coach. In trading, just like in sports, mastering the fundamentals forms the foundations for exceptional performance. Welcome to the first part of our educational series, Brilliant Basics . In this series, we'll explore how mastering the fundamentals lays the groundwork for achieving high-level performance in trading. Today, we focus on trendlines, a crucial tool for any trader aiming to understand market momentum. Simple Elegance Trendlines are so simple in their design that their importance can often be dismissed. A child could map the swings of a market and tell you whether the line was upward or downward sloping. Yet, this simplicity is precisely what gives trendlines their potency. Past performance is not a reliable indicator of future results The elegance of trendlines lies in their ability to distil market movements into an easily interpretable format. This simplicity does not mean they lack depth; rather, it means they are accessible to all traders, regardless of experience level. Here’s why their simplicity is so important: Clarity in Chaos: Markets can be noisy and unpredictable, but trendlines help to bring order to this chaos. If drawn correctly, they provide a clear visual representation of the market’s overall direction and volatility. Universal Application: Trendlines can be applied to any market, on any timeframe. Whether you are trading stocks, commodities, or forex, trendlines work the same way, making them a universal tool in a trader's toolkit. Consistent Feedback: Trendlines offer immediate visual feedback on price action. If a trendline is respected by the market, it reinforces your analysis. If it is broken, it signals a potential change in momentum or trend. How to Draw Trendlines Correctly Drawing trendlines might seem straightforward, but there are specific guidelines to ensure they are both accurate and useful: 1. Identify Swings: Begin by identifying the swing highs and swing lows on your chart. For an uptrend line, connect at least two higher lows. For a downtrend line, connect at least two lower highs. Ensure these points are significant swings and not minor fluctuations. Past performance is not a reliable indicator of future results 2. Avoid Cutting Prices: A trendline should not intersect any price action between the points it connects. Drawing a trendline that cuts through price bars undermines its validity and the potential insights it can offer. The line should clearly touch the chosen swing points without cutting through the price action in between. Draw multiple high quality trendlines rather than a ‘line of best fit’. Past performance is not a reliable indicator of future results 3. Consistency: Maintain a consistent approach when drawing trendlines. Use the same criteria for identifying swing points and avoid forcing a trendline to fit the data. This consistency helps in making objective and reliable trading decisions. Trendline Fans and Their Insights A single trendline can offer valuable insights, but using multiple trendlines—forming a trendline fan—can provide a deeper understanding of market momentum and potential changes in trend. Rising Momentum: In an uptrend, if the subsequent trendlines are steeper, it indicates increasing momentum. Each steeper line shows that buyers are stepping in more aggressively. However, should trendlines increase in steepness exponentially this leaves the trend vulnerable to exhaustion. Past performance is not a reliable indicator of future results Ebbing Momentum: Conversely, if the subsequent trendlines in an uptrend are less steep, it indicates decreasing momentum. This situation suggests that while prices are still rising, the strength of the upward movement is waning. Past performance is not a reliable indicator of future results Practical Applications Understanding the simplicity of trendlines enhances their practical application in trading. Here’s how you can leverage their elegance: Momentum Assessment: As we’ve seen with the trendline fans, the steepness of a trendline or progressive steepness of a trendline fan can give a valuable real-time insight into market momentum. Support and Resistance: Trendlines act as dynamic support and resistance levels. In an uptrend, the trendline or trendline fan serves as a support levels where price may bounce back up upon testing. In a downtrend, the trendline acts as resistance, where price might reverse downward upon touching. Past performance is not a reliable indicator of future results Entry Signals: Trendline breaks can serve as entry signals, especially when used on multiple timeframes. A break above a downtrend line on a lower timeframe, in-line with a bigger picture uptrend could create an attractive buying opportunity. The inverse is true with a break below an ascending trendline on a lower timeframe. Past performance is not a reliable indicator of future results Exit Signals: Trendline breaks can serve as exit signals. A break below an uptrend line or multiple uptrend lines in a trendline fan might indicate a potential reversal and an exit point. Past performance is not a reliable indicator of future results Summary: The simple elegance of trendlines makes them an indispensable tool in technical analysis. Their straightforward nature belies the depth of information they can provide, making them accessible yet useful. By mastering the basics of drawing and interpreting trendlines, traders can gain a clearer understanding of market trends and make more informed trading decisions. As we continue our Brilliant Basics series, stay tuned for Part 2, where we will explore support and resistance levels. Understanding this fundamental concept will further enhance your ability to identify potential reversal zones. 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. 80.84% 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.
CAPITALCOM:GOLDEducation
by Capitalcom
5
Why longer term charts are importantI took a look at the weekly gold/silver ratio and noticed a few significant patterns. For example, there was a notable acceleration downward following the break of a 3-year uptrend a couple of weeks ago. Additionally, there is support at the 74.65/63 level, which has been in place since January 2022. This observation reminded me of the importance of examining long-term charts, regardless of your trading time frame. Longer-term charts provide essential context and clarity that short-term charts often lack. Why everyone should be looking at longer term charts: 1. Identifying Trends Long-term charts help in identifying significant trends that might not be visible in short-term data. 2. Smoothing Out Volatility Short-term data is often noisy, with frequent fluctuations that can obscure the underlying pattern. Long-term charts smooth out this volatility, providing a clearer picture of the fundamental movement and reducing the influence of random, short-term events. 3. Contextualizing Current Movements Long-term charts place current price or economic movements in a broader context. This helps investors and analysts understand whether a recent change is part of a larger trend or not. 4. Historical Comparisons These charts allow for comparisons with past periods, making it possible to identify cycles, recurring patterns, and historical precedents. This historical perspective can be invaluable for forecasting future movements and making informed predictions. 5. Assessing Risk and Reward By examining long-term performance, investors can better assess the potential risks and rewards of an investment. Understanding how an asset has performed over various market cycles helps in evaluating its stability and growth potential. 6. Avoiding Emotional Bias Short-term market movements can evoke strong emotional responses, leading to impulsive decisions. Long-term charts provide a more detached view, helping investors stay focused on long-term objectives and avoid reacting to short-term market noise. Conclusion In summary, long-term charts offer a comprehensive view that is critical for understanding trends, reducing noise, contextualizing current events, making historical comparisons, assessing risk, avoiding emotional decisions, developing strategies, and analysing economic cycles. They are an indispensable tool for anyone involved in financial markets or economic analysis, providing the clarity and perspective necessary for informed decision-making. Disclaimer: The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
TVC:GOLDSILVEREducation
by The_STA
7
Trapped traders provides a great Short opportunity on DOW The plan for the session was to trade short off resistance on the DOW after an initial opening drive higher. The short side was the play and paid out nicely for patient sellers. In the video I talk through the key Price Action for the move and prime trade areas on the DOW Index. ANY QUESTIONS, JUST LEAVE IN THE COMMENTS !! ** If you like the content then take a look at the profile to get more ideas and learning material ** ** Any Comments and likes are greatly appreciated **
CBOT_MINI:YM1!Education
by TradeTheStructure
4
Want to spot a turning point in trend before it happens?Want to spot a turning point in trend before it happens? Use Elliott wave parallel channel This chart shows the GBP/JPY currency pair using monthly candlesticks. The advance from Sep 2011 to June 2015 can be labeled as an impulse wave (A). From that high, the pair declined in three waves labeled as wave (B) of a Zigzag A-B-C correction with an expanding diagonal characteristic in the C wave position. As a rule, in a Zigzag rally, wave B notably terminates above the origin of wave A. When wave (C) advance of a zigzag rally is in operation, we can forecast where wave (C) might end. We can use Elliott wave channel projection by connecting the origin of wave (A) with the end of wave (B) and then drawing a parallel line from the end of wave (A). As a guideline, the resulting channel gives us a potential target for the wave (C) endpoint. Moreover, we can also use ratio analysis to improve the odds. As a guideline, in Zigzag formations, wave (C) commonly ends after traveling the same length as wave (A). Observe this level corresponds with the Elliott wave channel projection. This cluster of evidence hints at wave (C) advance from Mar 2020 is in late stages and that prices are approaching a major top.
Education
by Aquanet_Market_Forecast
17