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Price BreakoutsHello traders 📊 On this picture here you can see 3 types of breakouts. On the left side you can see breakout examples in an downtrend and on the right side, you can see examples in an uptrend. Breakouts occur when price breaks a certain zone (support or resistance) and in many cases breakouts represent very important moment. This is usually good time to look for opportunity to trade. First type of breakout is "strong breakout". They occur once the price breaks certain zone with a strong candle and continue to move without pullback. Second type of breakout is "retest". Retests are very common and extremely useful. Some of the best trading opportunities are when retest occurs. This means that price went back to test previously broken zone and this is usually good place to buy or sell. Third type of breakout is "fake-out". This is the worst scenario as price quickly goes back after a breakout. Traders usually enter after a breakout, but once fake-out occurs, traders lose as price goes back quickly to hit stop loss. We can not know exactly when fake-out will occur, but the best way to protect your account from this is to wait for the candle to close and to avoid to trade when big news are about to release. Have a great day!
FOREXCOM:XAUUSDEducation
by SanShone
10
The Struggle of Consistency: Navigating DCA in Crypto InvestingHello dear @TradingView community! Today let’s focus on what is Dollar Cost Averaging ? Determining the optimal moment to buy cryptocurrency is often a challenging task due to the high volatility of crypto assets. Prices can fluctuate unpredictably at any given time, leading traders to experience the fear of missing out (FOMO). This fear is commonly felt when the price of a cryptocurrency, such as Bitcoin (BTC), suddenly surges or plunges. During price drops, individuals tend to panic and sell their holdings in a frantic attempt to avoid further losses. Conversely, when prices rise, panic ensues as people worry they don't possess enough coins to sell. As evident, making decisions to buy or sell cryptocurrencies is no easy feat. However, if you seek long-term financial gains from cryptocurrencies without succumbing to the anxiety caused by every price spike, it would be wise to consider the Dollar Cost Averaging (DCA) strategy. Let's delve deeper into what DCA entails and how it functions in the realm of cryptocurrencies. What is Dollar Cost Averaging? Dollar cost averaging is an investment strategy where fixed amounts are regularly invested at consistent intervals, in contrast to a one-time lump sum investment. This approach involves executing transactions regardless of the asset's current price or market fluctuations. It is highly favored by investors and management funds seeking long-term profits from various assets like ETFs, commodities, cryptocurrencies, stocks, and more. How does DCA work? To employ the DCA strategy, you first determine the amount of cryptocurrency you wish to invest. In conventional investing, one would typically invest the entire designated sum in a specific asset. However, with DCA, you invest fixed amounts of USD into Bitcoin or any other asset over a designated period. For instance, you may choose to purchase $100 worth of BTC every month for a 10 year period. When utilizing DCA, the selection of the cryptocurrency becomes crucial. With around 22,904 cryptocurrencies available today, you must pick a coin you believe will appreciate in value and yield profitable returns. You can even choose an ETF which follows the trend (up or down) for any specific asset or basket of assets. To comprehend how DCA operates, consider the following example: Let's assume it is June of 2014, and Katie decides to allocate $10,000 in BTC. In June of 2014, the price of Bitcoin stood at approximately $560 per coin. Instead of investing the entire sum at once, Katie opts for dollar cost averaging throughout the 9 years. From June 2014 to May 2022, Katie spent $100 each month on BTC, disregarding market price fluctuations. After 8 years, she spends almost $9,600 and her earnings reflect the following: The green line in the chart represents Katie’s total investment amount, while the orange line depicts the fluctuation of portfolio size value over the 9-year period. When Katie initiated his investments, both the cost of BTC and his investments were approximately $100. However, as time progressed, the price of Bitcoin underwent changes. By May of 2022, Katie's $9,600 investment had grown to $287,518 worth of BTC, showcasing a growth rate of 2,895%. With maximum gain of $631,540 at bitcoin ATH. Online DCA tools are also available to estimate the earnings from purchasing bitcoins over several months. For example, platforms like dcaBTC enable users to customize their DCA strategy according to their preferences, specifying the amount to purchase, investment frequency, and duration. To successfully implement dollar-cost averaging (DCA) in Bitcoin investing, several key steps need to be followed. These steps involve setting a budget, choosing a reputable cryptocurrency exchange, establishing recurring purchases or utilizing recurring purchases and automated investment platforms (such as Binance, Coinbase, Kraken, Crypto.com or even at Vestinda), and monitoring and adjusting the strategy as necessary. Pros and Cons of Dollar Cost Averaging Let's commence with the pros of dollar cost averaging. By making regular and consistent purchases over time, you mitigate the risk associated with poorly timed lump sum investments. Additionally, since you make regular purchases, you alleviate the fear of missing out and impulsive decision-making prompted by price fluctuations. Cryptocurrency exchanges and platforms charge transaction fees for every trade. While one might assume that DCA would result in higher commission fees, it is essential to remember that this is a long-term strategy. The commission costs are negligible compared to the potential profits that can be realized over several years. Moreover, DCA does not necessitate substantial investments. This strategy involves smaller and consistent purchases, eliminating the need to determine how best to deploy a large sum in one go. Furthermore, if prices suddenly drop at the time of purchase, you can acquire the cryptocurrency at a lower price. However, it is important to note that if the cryptocurrency's price is bullish, you may end up buying at a higher price. This is particularly relevant when dealing with BTC or any chosen cryptocurrency. Many crypto enthusiasts and investors prefer to purchase a significant amount at once, fearing a subsequent price surge in the hours, days, weeks, or months to come. As previously mentioned, with the DCA strategy, you purchase small amounts at regular intervals, regardless of market stability. Should you utilize the DCA Strategy? DCA facilitates maximizing profits with relatively low risk. Although this approach is not devoid of drawbacks, it offers numerous advantages that can be leveraged to your benefit. Hence, is DCA worth your time and money? As always, we recommend thoroughly studying all available information before making any decisions. Save this article to your browser bookmarks for easy reference in the future. Happy trading!
Education
by Vestinda
11
10 MOST important bar patterns to profit trade Bar patterns are elegant tools for every trader who trades on Price Action signals. I present to you 10 bar patterns that you must know! These patterns are easily found on charts and allow for easy placement of stop loss and take profit. Reversal Bar Patterns 1. Reversal Bar 2. Key Reversal Bar 3. Exhaustion Bar 4. Pin Bar 5. Two-Bar Reversal 6. Three-Bar Reversal 7. Three Bar Pullback Volatility Bar Patterns 8. Inside Bar 9. Outside Bar 10. NR7 1. Reversal Bar The low of a bullish reversal bar is below the low of the previous bar, and the close is above the close of the previous bar. The high of a bearish reversal bar is above the high of the previous bar, and the close is below the close of the previous bar. Buy above a bullish reversal bar in an uptrend. Sell below a bearish reversal bar in a downtrend. 2. Key Reversal Bar A bullish key reversal bar opens below the low of the previous bar and closes above its high. A bearish key reversal bar opens above the high of the previous bar and closes below its low. By definition, key reversal bars open with a price gap. Since gaps on intra-day timeframes are rare, most key reversal bars are found on daily timeframes and higher. Buy above a bullish key reversal bar (if you are not sure, wait until the price closes above it, and only then buy). Sell below a bearish key reversal bar (if you are not sure, wait until the price closes below it, and only then sell). 3. Exhaustion Bar A bullish exhaustion bar opens with a downward gap. The price then moves up, and the bar closes near its high. A bearish exhaustion bar opens with an upward gap. The price then moves down, and the bar closes near its low. In both cases, the gap remains unfilled. Additionally, the exhaustion bar should form on high volume. Buy above a bullish exhaustion bar. Sell below a bearish exhaustion bar. 4. Pin Bar It has a long and distinct tail. In bullish pin bars, the lower tail occupies most of the bar. In bearish pin bars, the upper tail dominates. Buy above a bullish pin bar that bounces off a support level. Sell below a bearish pin bar that bounces off a resistance level. 5. Two-Bar Reversal The two-bar reversal pattern consists of two strong bars closing in opposite directions. The bullish version consists of a strong bearish bar followed by a strong bullish bar. The bearish version consists of a strong bullish bar followed by a strong bearish bar. In bullish reversals, buy above the highest point of the two-bar pattern. In bearish reversals, sell below the lowest point of the two-bar pattern. 6. Three-Bar Reversal The bullish pattern consists of the following three bars: 1. A bearish bar 2. A bar with a lower high and a lower low 3. A bullish bar with a higher low and a close above the high of the second bar The bearish pattern consists of the following three bars: 1. A bullish bar 2. A bar with a higher high and a lower low 3. A bearish bar with a lower high and a close below the low of the second bar Buy above the high of the last bar in a bullish pattern. Sell below the low of the last bar in a bearish pattern. 7. Three Bar Pullback Three consecutive bearish bars form a bullish three-bar pullback pattern, and three consecutive bullish bars form a bearish three-bar pullback pattern. In a bullish trend, wait for three consecutive bearish bars to form. Then buy above the next bullish bar. In a bearish trend, wait for three consecutive bullish bars to form. Then sell below the next bearish bar. 8. Inside Bar The inside bar must be completely within the range of the previous bar. In other words, the second bar must have a lower high and a higher low. Place bracket orders around this pattern to trade its breakout in either direction. (A buy order above its high and a sell order below its low. Once one order is filled, cancel the other.) Place only one order (either a buy or a sell) in accordance with the market trend. Wait for the breakout of the inside bar and trade its lack of follow-through. 9. Outside Bar The outside bar is the complete opposite of the inside bar. Its range must exceed the range of the previous bar, i.e. it has a higher high and a lower low. Wait for the breakout of the outside bar and open a position against the market movement. (Especially if the outside bars look like dojis or go against the trend.) Trade its breakout, especially when the outside bar closes near its top or bottom. 10. NR7 This pattern requires the presence of seven bars. If the last bar has the smallest range in the sequence of bars, then this is an NR7 pattern. As a reminder, the range of a bar is the difference between its high and low. Buy on the breakout of the high of the last bar, if the trend is upward. Sell on the breakout of the low of the last bar, if the trend is downward.
Education
by Hellena_Trade
Why You Should Never Hold on to Your Positions Beyond a Certain Good day, traders. I'd like to use this opportunity to advise both new and experienced traders alike that holding (hodling) your position is not recommended beyond a certain point. According to percentage calculations, the return required to recover to break-even increases at a considerably faster pace when losses grow in size (due to compound interest). It goes downward after a loss of 10% because a gain of 11% is required to make up for it.When the loss is 20%, it takes a 25% gain to make up the difference and return to break-even. To recoup from a 50% loss, a 100% gain is needed, and to reach the initial investment value after an 80% loss, a 400% gain is needed. Investors who experience a bear market must understand that it will take some time to recover, but compounding returns will aid in the process. Think about a bear market where the value drops by 30% and the stock portfolio is only worth 70% of what it was. The portfolio increases by 10% to reach 77%. The subsequent 10% increases to 84.7%. The portfolio reached its pre-drop value of 102.5 percent after two further years of 10 percent gains. Consequently, a 30 percent decline requires a 42 percent recovery, but a four-year compounding rate of 10 percent returns the account to profitability.I will be doing a second part to this post on the idea of "DOLLAR COST AVERAGING" (DCA). The math behind stock market losses clearly demonstrates the need for investors to take precautions against significant losses, as depicted in the graphic above. Stop-loss orders to sell stocks or cryptocurrencies that are mental or limit-based exist for a reason. If the market is headed towards a bear market, it will start to pay off once a particular loss threshold is reached. Investors occasionally struggle to sell stocks they enjoy at a loss, but if they can repurchase the stock or cryptocurrency at a lesser cost, they will like it. Never stop learning I would also love to know your charts and views in the comment section. Thank you
FX:XAUUSDEducation
by CRYPTOMOJO_TA
2
BIASES THAT EXPLAIN WHY TRADERS LOSE MONEYHello traders, today we will talk about WHY TRADERS LOSE MONEY BIAS WHAT IT MEANS… HOW IT INFLUENCES TRADERS Availability People estimate the likelihood of an event based on how easily it can be recalled. Traders put too much emphasis on their most recent trades and let recent results interfere with their trading decisions. After a loss, traders often get scared or try to get back to break even. Both mental states lead to bad trading quickly. After a win, many traders get over-confident and trade loosely. You must be aware of how you react to recent results and trade with a high level of awareness. Dilution effect Irrelevant data weakens other more relevant data. Using too many tools and trading concepts to analyze price could weaken the importance of the core decision drivers. I wrote about redundant signals and how to combine the right tools here: click here Gambler’s fallacy People believe that probabilities have to even each other out in the short term. Traders misinterpret randomness and believe that after three losing trades, a winning trade is more likely. The probabilities don’t change based on past results. Even after 10 losses in a row, the next trade does not have a higher chance of being a winner. Anchoring Overestimating the importance of the first available piece of information. Upon entering a trade, people set their whole chart and analysis in reference to their entry price and don’t see the whole picture objectively anymore. You must always have a plan BEFORE you enter a trade. Insensitivity to sample size Underestimating the variance for large and small sample sizes. Traders too often make assumptions about the accuracy of their system based on just a few trades, or even change parameters after only a few losers. A decent sample size is 30 – 50 trades. Do not alter anything about your approach before you have reached this number. And make sure that you follow the same rules to get an accurate picture of your trading within the sample size. Contagion heuristic Avoiding contact with objects people see as “contaminated” by previous contact. Traders avoid markets/instruments after having a large loss in that instrument, even when the loss was the fault of the trader. Hindsight We see things that have already occurred as more probable than they were before they took place. Looking back on your trades and fishing for explanations why the trade has failed, even though those signals weren’t obvious at the time. Do not change your indicator or setting after a loss to come up with explanations or excuses. Accept that losses are normal and always follow your plan. Hot-hand fallacy After a successful outcome on a random event, another success is more likely. Traders believe that once they are in a winning streak, things become easier and they can “feel” what the market is going to do next. I wrote about the hot-dand-fallacy in trading before: click here Peak–end rule People judge an event based on how they felt at the peak of the event. Traders look at a losing trade and only see how much they were in profit at the maximum, but don’t look at what went wrong afterwards. Do not change your reference point when in a trade and have a plan for your trade management and when to exit before entering a trade. Simulation heuristic People feel more regret if they miss an event only by a little. Price that missed your target only by a little bit, or a trade where you got stopped out just by a few points can be more painful than other trades. The outcome is out of your control and you cannot influence the price movements. The only thing you can do is manage your trade within your rules. Social proof If unsure what to do, people look for what other people did. Traders too often ask for advice from other traders when they are not sure what to do – even when other traders have a completely different trading strategy. You must take responsibility for your actions and results. And not rely on someone else. Framing People make decisions based on how it is presented; a gain is more valuable than a loss and a sure gain is more valuable than a probabilistic greater gain. Traders close profitable trades too early because they value current profits more than a potentially larger profit in the future. Cutting winners too soon is a huge problem. If this is an issue for you, reducing screen time can be helpful. Do not watch your trades tick by tick. Sunk cost We will invest in something just because we have already invested in it. before Adding to losing trades because you are already invested, even though no objective reason to add exists. You must define your stop loss in advance and then execute it without hesitation when it has been reached. Confirmation Only looking for information that confirms your beliefs, ideas and actions. Blanking out reasons and signals that don’t support your trade and just looking for confirmation. Especially when traders are in a loss, they only look for supportive information. Stay objective! Overconfidence People have a higher confidence than what their level of skill actually suggests. Traders misjudge their level of expertise and skill. Consistently losing traders don’t see that it’s their fault. Analyze your results objectively and get a trading journal to add even more accountability. Selective perception Forgetting those things that caused discomfort. Traders forget easily that their own mistakes and wrong trading decisions caused the majority of their losses. Do not blame the marjets, unfair circumnstances, your broker or any other outside event. You are the one who is responsible for making it work. It’s totally up to you and blaming others won’t help you make progress. Which bias is the one that is causing you the greatest troubles? What are you workin on right now? Let me know in the comments below and I will answer with tips and ideas on how to overcome your struggles. This chart is just for information Never stop learning I would also love to know your charts and views in the comment section. Thank you
NASDAQ:AAPLEducation
by CRYPTOMOJO_TA
4
The ABCD Pattern: from A to DHello dear @TradingView community! Are you familiar with the ABCD pattern? The ABCD pattern is a highly effective tool utilized in trading to identify potential opportunities across diverse markets, including forex, stocks, cryptocurrencies, and futures. This pattern takes the form of a visual and geometric arrangement, characterized by three consecutive price swings or trends. When observed on a price chart, the ABCD pattern exhibits a striking resemblance to a lightning bolt or a distinctive zig-zag pattern. Importance of the ABCD Pattern The significance of the ABCD pattern lies in its ability to identify trading opportunities across different markets, timeframes, and market conditions. Whether the market is bullish, bearish, or range-bound, the ABCD pattern remains a reliable tool. By recognizing the completion of the pattern at point D, you can get a perspective trade entries. Furthermore, the ABCD pattern helps you determine the risk-to-reward ratio before initiating a trade. When multiple patterns converge within the same timeframe or across different timeframes, it strengthens the trade signal and increases the likelihood of a profitable outcome. Finding an ABCD Pattern The ABCD pattern has both a bullish and bearish version. Bullish patterns indicate higher probability opportunities to buy or go long, while bearish patterns suggest opportunities to sell or go short. To identify an ABCD pattern, it is essential to locate significant highs or lows on a price chart, represented by points A, B, C, and D. These points define the three consecutive price swings or legs of the pattern: the AB leg, the BC leg, and the CD leg. Trading is not an exact science, so traders often employ Fibonacci ratios to determine the relationship between the AB and CD legs in terms of both time and price. This approximation assists in locating the potential completion of the ABCD pattern. When patterns converge, it increases the probability of successful trades and enables you to make more accurate decisions regarding entries and exits. Types of ABCD Patterns There are three types of ABCD patterns, each having both a bullish and bearish version. To validate an ABCD pattern, specific criteria and characteristics must be met. Here are the characteristics of the bullish and bearish ABCD patterns: 📈 Bullish ABCD Pattern Characteristics (buy at point D): To effectively trade the bullish ABCD pattern, you might consider the following characteristics: 1. Find AB: Identify point A as a significant high and point B as a significant low. During the move from A to B, ensure that there are no highs above point A and no lows below point B. 2. After AB, then find BC: Point C should be lower than point A. In the move from B up to C, there should be no lows below point B and no highs above point C. Ideally, point C will be around 61.8% or 78.6% of the length of AB. However, in strongly trending markets, BC may only be 38.2% or 50% of AB. 3. After BC, then draw CD: Point D, which marks the completion of the pattern, must be lower than point B, indicating that the market has successfully achieved a new low. During the move from C down to D, there should be no highs above point C. 4.1 Determine where D may complete (price): To determine the price level at which point D may complete, Fibonacci and ABCD tools can be utilized. CD may equal AB in price, or it may be 127.2% or 161.8% of AB in price. Alternatively, CD can be 127.2% or 161.8% of BC in price. 4.2 Determine when point D may complete (time) for additional confirmation: For additional confirmation, you can analyze the time aspect of the pattern. CD may equal AB in time, or it may be around 61.8% or 78.6% of the time it took for AB to form. Additionally, CD can be 127.2% or 161.8% of the time it took for AB to form. 5. Look for Fibonacci, pattern, trend convergence: Convergence of Fibonacci levels, pattern formations, and overall trend can strengthen the trade signal. Therefore, you should look for instances where these elements align. 6. Watch for price gaps and/or wide-ranging candles in the CD leg: As the market approaches point D, it is important to monitor for any price gaps or wide-ranging candles in the CD leg. These may indicate a potential strongly trending market, and you might expect to see price extensions of 127.2% or 161.8%. 📉 Bearish ABCD Pattern Characteristics (sell at point D): To effectively trade the bearish ABCD pattern, you might consider the following characteristics: 1. Find AB: Identify point A as a significant low and point B as a significant high. During the move from A up to B, ensure that there are no lows below point A and no highs above point B. 2. After AB, then find BC: Point C should be higher than point A. In the move from B down to C, there should be no highs above point B and no lows below point C. Ideally, point C will be around 61.8% or 78.6% of the length of AB. However, in strongly trending markets, BC may only be 38.2% or 50% of AB. 3. After BC, then draw CD: Point D, which marks the completion of the pattern, must be higher than point B, indicating that the market has successfully achieved a new high. During the move from C up to D, there should be no lows below point C and no highs above point D. 4.1 Determine where D may complete (price): To determine the price level at which point D may complete, Fibonacci and ABCD tools can be utilized. CD may equal AB in price, or it may be 127.2% or 161.8% of AB in price. Alternatively, CD can be 127.2% or 161.8% of BC in price. 4.2 Determine when point D may complete (time) for additional confirmation: For additional confirmation, you can analyze the time aspect of the pattern. CD may equal AB in time, or it may be around 61.8% or 78.6% of the time it took for AB to form. Additionally, CD can be 127.2% or 161.8% of the time it took for AB to form. 5. Look for Fibonacci, pattern, trend convergence: Convergence of Fibonacci levels, pattern formations, and overall trend can strengthen the trade signal. Therefore, you should look for instances where these elements align. 6. Watch for price gaps and/or wide-ranging bars/candles in the CD leg: As the market approaches point D, it is important to monitor for any price gaps or wide-ranging bars/candles in the CD leg. These may indicate a potential strongly trending market, and you might expect to see price extensions of 127.2% or 161.8%. 💜 We would love to hear your feedback! Did you find the article on the ABCD pattern helpful? We strive to provide valuable and informative content for traders like you. Your feedback is important to us as it helps us improve our articles and better serve our readers. Please take a moment to share your thoughts and suggestions. Did the article cover the topic comprehensively? Were the explanations clear and easy to understand? Is there anything you would like us to add or elaborate on? We appreciate your time and input. Thank you for being a valued reader, and we look forward to hearing your feedback!
Education
by Vestinda
11
WORLD'S TRADING TITANS: The Top 10 Traders Who Ruled the Market.This article is about the world of iconic traders. They've left a profound mark on the world of trading, inspiring countless traders with their strategies and insights. Jesse Livermore Jesse Livermore, often referred to as the "Great Bear of Wall Street," was a self-taught trader who started his journey at the age of 14 and became one of the most influential traders of his time. He made (and lost) several fortunes betting against the market during the 1907 Panic and the 1929 Crash. Livermore's trading strategy was heavily based on price movements and market psychology, rather than intrinsic value of companies. He was known for his supreme discipline, focusing on timing, price patterns and his well-known adage: “The big money is not in the individual fluctuations but in sizing up the entire market and its trend.” One of Livermore's core principles was the importance of letting the market, rather than emotions, dictate when to buy and sell. He believed in following the big market trend, also known as trend following. His rules around cutting losses quickly, letting profits run, and adding to winning positions are still religiously followed by many traders. Lastly, Livermore emphasized the importance of patience in trading. He famously said, "It was never my thinking that made the big money for me. It always was my sitting...Men who can both be right and sit tight are uncommon." This highlights the importance of waiting for the right opportunities and not overtrading, a lesson that remains relevant for traders today. Livermore's life serves as both an inspiration and a cautionary tale for traders, reminding us of the potential rewards and risks that come with trading. George Soros George Soros is a legendary trader known as "The Man Who Broke the Bank of England." In 1992, he bet against the British Pound, believing that it was overvalued relative to other currencies, notably the Deutsche Mark. His bet paid off, earning his fund an estimated $1 billion in a single day. Soros' trading style falls under a global macro strategy, which involves making large bets on economic trends in various asset classes like currencies, bonds, and commodities across the globe. His ability to detect significant changes in economic conditions and market sentiment, combined with an aggressive risk tolerance, contributed to his extraordinary profits. Central to Soros' approach is the concept of reflexivity, a theory he developed. Reflexivity posits that market perceptions can shape the underlying economic fundamentals, which in turn influence market perceptions, creating a feedback loop. According to Soros, markets are not always in equilibrium or accurately reflecting fundamentals, and these discrepancies can create lucrative trading opportunities. Soros has been a prominent figure not just in trading, but also in philanthropy and politics. His trading career serves as a testament to the potential of a global macro strategy and the importance of understanding both market sentiment and macroeconomic fundamentals when making trading decisions. Despite his success, Soros' strategy involves a high level of risk and requires deep knowledge of global economics, and thus may not be suitable for all traders. Paul Tudor Jones Paul Tudor Jones is one of the most successful traders in the world, known for his ability to navigate and profit from volatile markets. He gained fame after predicting and profiting handsomely from the 1987 stock market crash, a feat which earned him a legendary status in the trading world. Jones' trading style is predominantly macro, meaning he makes bets based on economic trends and events around the world. He trades in a variety of markets, including equities, commodities, currencies, and bonds, and is known for his versatility and adaptability. An avid user of technical analysis, Jones employs chart patterns, price movements and other analytical tools to identify trading opportunities. He combines this with a deep understanding of market fundamentals to create a comprehensive trading strategy. One of Jones' most well-known tenets is his focus on risk management. He is often quoted saying, "If you have a losing position that is making you uncomfortable, the solution is simple: Get out." This reflects his belief that protecting capital and managing losses is more important than chasing profits, a strategy that has served him well throughout his career. Jones is also known for his philanthropic efforts. He founded the Robin Hood Foundation, a charity that combats poverty in New York City. His story reminds traders of the importance of risk management, adaptability, and giving back to the community. Richard Dennis Richard Dennis, a commodities trader from Chicago, is a trading legend who rose to fame in the 1970s and 80s. Starting with a small loan, he quickly amassed a fortune, earning him the moniker "Prince of the Pit." But Dennis is perhaps best known for his role in a unique trading experiment that sought to answer an age-old question: Are traders born or made? Dennis' personal strategy centered on trend following - buying when prices increase and selling when they decrease, essentially riding the market's momentum. He believed that price, and how it changes over time, is the most crucial piece of information for a trader. To settle the debate on whether trading could be taught, Dennis and his partner William Eckhardt conducted the "Turtle Traders" experiment in the 1980s. They selected a group of individuals with no trading experience, trained them for two weeks using a simple set of rules based on trend following, and then provided them with money to trade. The experiment's results were astounding. Over the next four years, the Turtles earned an average annual compound rate of return of over 80%. This proved Dennis' theory that anyone could learn to trade, given the right system and discipline to follow it. Dennis' story is a powerful reminder that successful trading is not just about inherent talent but also about discipline, a well-defined strategy, and the ability to follow that strategy consistently. Stanley Druckenmiller Stanley Druckenmiller is a highly respected figure in the world of trading, known for his impressive track record and his role in some of the most legendary trades in history. As a fund manager for George Soros, Druckenmiller was instrumental in the trade that "broke the Bank of England," earning a profit of $1 billion. Druckenmiller's approach to trading is top-down, which means he first considers macroeconomic factors and themes, and then identifies the best investments within that context. He is not averse to placing large, concentrated bets when his confidence in a trade is high. This approach requires a deep understanding of economics, keen intuition, and a high tolerance for risk. Risk management is an essential aspect of Druckenmiller's strategy. He is known to go all in when he's confident in a trade, but he is also quick to exit a position when he realizes he's made a mistake. As he often says, "The first thing I heard when I got in the business...is bulls make money, bears make money, and pigs get slaughtered. I'm here to tell you I was a pig." Druckenmiller has an impressive ability to make bold and accurate market predictions. For instance, he successfully predicted and profited from the dot-com bubble's burst in 2000, and later, the financial crisis of 2008. While his aggressive style and remarkable intuition might not be replicable by every trader, Druckenmiller's story underscores the importance of understanding macroeconomic themes, being confident in your convictions, and the crucial role of risk management in trading. Ray Dalio Ray Dalio, the founder of Bridgewater Associates, one of the world's largest and most successful hedge funds, has left an indelible mark on the world of finance with his innovative approach to investing and risk management. Dalio pioneered the risk parity strategy, which aims to balance the allocation of risk, rather than the allocation of capital, in a portfolio. His "All Weather" portfolio, designed to perform well across various economic environments, is a prime example of this strategy. It is diversified across different asset classes such as stocks, long-term and intermediate-term bonds, and commodities, designed to balance risks of inflation, deflation, and economic growth. Dalio believes that economic events and market behavior are cyclical, a concept he outlines in his book "Principles." Understanding these cycles, according to Dalio, is key to making successful investment decisions. He combines these economic principles with a fundamental and quantitative analysis to make his investment decisions. Dalio also champions the idea of radical transparency in the workplace, arguing that open and honest communication leads to better decision-making and helps avoid persistent problems. He applies this philosophy to his own investment process, using a systematic, rules-based approach to decision-making that reduces the role of emotions and subjective judgment. Dalio's approach underscores the importance of diversification, understanding macroeconomic principles, and systematic, rules-based decision-making in investing. While Dalio's strategies might require a high level of understanding and are not suitable for all investors, his principles and methodology offer valuable lessons for investors of all levels. Ed Seykota Ed Seykota is a trading legend and pioneer of systematic trading who used computerized systems to follow price trends long before such practices were commonplace. Notably, he turned $5,000 into $15 million over 12 years, proving the potential of trend-following strategies. Seykota's trading methodology is deeply rooted in the principles of trend following. He believes in going with the flow of the market, buying when prices are increasing, and selling when prices are decreasing. Seykota’s approach was to identify long-term trends and then take positions in those directions, riding them for as long as they remained intact. Seykota is also known for his emphasis on psychology and personal discipline in trading. He often stresses the importance of understanding one's emotional responses to gain and loss, and managing those feelings effectively to make rational trading decisions. Seykota famously said, "Win or lose, everybody gets what they want out of the market." Moreover, Seykota is a strong advocate of risk management. He believes that managing risk is a key element of long-term success in trading. He often talks about setting stop-loss levels and adjusting them according to market movements to protect his portfolio from significant losses. Seykota's story offers key lessons in the power of trend-following strategies, the importance of psychological discipline, and the crucial role of risk management in trading. Despite the sophistication of his methods, the core principles behind Seykota's success can provide valuable guidance for traders of all levels. Linda Bradford Raschke Linda Bradford Raschke, a prominent figure in the trading world, is known for her technical and fundamental analysis of the futures and equities markets. With a trading career spanning over three decades, Raschke's success underscores the importance of consistency, discipline, and a thorough understanding of market dynamics. Raschke's approach to trading is methodical and rule-based. She uses a mix of chart patterns, indicators, and market cycles to guide her trading decisions. One of her best-known strategies is the "Holy Grail" setup, which combines a moving average with the ADX indicator to identify potential breakouts in the market. In addition to technical analysis, Raschke pays close attention to market fundamentals. She believes that while patterns and indicators can signal trading opportunities, understanding the underlying factors driving market movements is crucial to making informed decisions. Raschke also emphasizes the importance of discipline and risk management. She believes that sticking to a well-defined trading plan, and not letting emotions influence trading decisions, are key to successful trading. As she often says, "Discipline is the ability to sit and wait." Raschke's experience reminds us that successful trading requires a mix of technical knowledge, a deep understanding of market dynamics, and a strong sense of discipline. Whether you're a novice trader or a seasoned veteran, Raschke's approach offers valuable insights. Michael Steinhardt Michael Steinhardt, the founder of Steinhardt, Fine, Berkowitz & Co., is one of Wall Street's most successful hedge fund managers, known for producing remarkable annual returns over a 30-year career. His aggressive, contrarian approach to trading has left a lasting impact on the industry. Steinhardt's approach is characterized by a philosophy he calls "variant perception." He believes in making investments that are contrary to prevailing market views, often taking high-risk positions that other investors shy away from. His ability to spot opportunities where others see none, backed by deep analysis, has been a crucial part of his success. Steinhardt's investment decisions are informed by a comprehensive understanding of macroeconomic factors, as well as a thorough analysis of individual companies and sectors. He holds both long and short positions in a variety of asset classes, demonstrating a remarkable ability to navigate a wide range of market conditions. Risk management is also central to Steinhardt's approach. He is known for taking large positions in his high-conviction ideas, but he also keeps a keen eye on the potential downside and is swift to cut losses when a trade doesn't go as planned. Steinhardt's story underscores the importance of deep research, conviction, and risk management in trading. It also highlights the potential of contrarian investing strategies for those willing to buck the trend and take on higher levels of risk. Remember, however, that such strategies require deep market understanding and are not suitable for all traders. Jim Simons Jim Simons, the founder of Renaissance Technologies, is a unique figure in the world of trading. With a background in mathematics and a deep understanding of code-breaking from his time as a code breaker during the Vietnam War, Simons has pioneered the use of quantitative trading strategies, achieving extraordinary success. Simons' approach to trading is fundamentally different from many of his peers. Instead of relying on traditional methods of analysis or macroeconomic insights, Simons employs complex mathematical models to uncover patterns in price data that are invisible to the human eye. His fund, the Medallion Fund, is famous for its consistent high-performance, with an average annual return of 35% after fees since 1988. Quantitative trading, or "quant trading," relies on powerful computers to process massive amounts of data and execute trades. This approach requires deep knowledge of mathematics, statistics, and computer science, and it stands as a testament to the potential of using technology in trading. At the heart of Simons' strategy is the belief that markets have more in common with the chaotic, unpredictable world of natural phenomena than they do with the logical, rational models of traditional economics. This realization led him to apply mathematical concepts to financial markets, with remarkable success. Jim Simons’ approach, while highly complex and require significant expertise, shows us the power of mathematics and technology in understanding and capitalizing on financial markets. His story also highlights the potential for innovative, unconventional thinking in trading. That wraps up our highlight of the top 10 traders who've revolutionized the trading world with their strategies, innovation, and sheer tenacity. But trading is ever-evolving and there are countless talented individuals out there. Who do you think should be on this list and why? Share your thoughts, let's spark a conversation. Stay tuned for more educational content and subscribe to our page if you enjoy our educational materials.
CBOE:VIXEducation
by financialflagship
TYPES OF CURRENCY PAIRSWhen trading Forex, it is essential to know about the different types of currency pairs, as some pairs are much riskier to trade than others, especially for those with minimal trading experience. Major Currency Pairs Before we discuss major currency pairs, we should first list the major currencies individually. The eight major currencies are: US dollar (USD) Euro (EUR) British pound (GBP) Japanese yen (JPY) Swiss franc (CHF) Canadian dollar (CAD) Australian dollar (AUD) New Zealand dollar (NZD) As listed above, there are eight major currencies but there are only seven major pairs because a major pair includes the U.S. dollar. Major pairs are the most traded currency pairs on the forex market. They account for the highest average trade volume and have the most liquid markets, as well as the lowest risks and spreads offered by brokers. The seven major currency pairs are: EUR/USD – Euro / US dollar GBP/USD – British Pound / US dollar USD/JPY – US dollar / Japanese yen AUD/USD – Australian dollar / US dollar USD/CHF – US dollar / Swiss franc USD/CAD – US dollar / Canadian dollar NZD/USD – New Zealand dollar / US dollar Note that AUD/USD and USD/CAD are sometimes also referred to as commodity currencies. Minor Currency Pairs Minor currency pairs (also known as cross pairs or crosses) always include two major currencies but not the U.S. dollar. Crosses are not as popular and as highly traded as the major pairs. This means they can be riskier than a major pair and will attract wider spreads from brokers. Their liquidity can also be low at times, presenting a challenge for inexperienced traders in a thin volume environment. Here are a few examples of minor currency pairs: EUR/GBP – Euro / British pound EUR/JPY – Euro / Japanese yen GBP/JPY – British pound / Japanese yen AUD/NZD – Australian dollar / New Zealand dollar NZD/JPY – New Zealand dollar / Japanese yen GBP/CAD – British pound / Canadian dollar Exotic Currency Pairs Exotic currency pairs consist of a major currency paired with a currency from a developing and emerging nations as well as certain developed nations. These currency pairs trade in a far less liquid market compared to the majors and minors as they are traded less frequently. This causes their spreads to be much higher than those of the major and minor pairs. Here are a few examples of exotic currency pairs: EUR/TRY – Euro / Turkish lira USD/ZAR – US dollar / South African rand AUD/MXN – Australian dollar / Mexican peso USD/HKD – US dollar / Hong Kong dollar NZD/THB – New Zealand dollar / Thai baht CAD/NGN – Canadian dollar / Nigerian naira Risks and Spreads Major currency pairs have the most liquidity and as a result, attract lower spreads, whilst minor and exotic pairs are much riskier and attract wider spreads. Liquidity & Volatility Due to high liquidity in the major currency pairs market, they are consistent and predictable, whilst minor and exotic pairs can be volatile and extremely unpredictable at times. Please also see images below for visual examples of the difference in price behaviour of the different pair types. MAJOR PAIR & CROSS PAIR MAJOR PAIR & EXOTIC PAIR CROSS PAIR & EXOTIC PAIR Which is the best currency type to trade for new traders? We will be a posting an educational article on this in the future delving into details regarding this question. Trade safely and responsibly. BluetonaFX
Education
by BluetonaFX
5
LESSON 1: TRADE THE LIQUIDITY OR BE THE LIQUIDITYWhat is Liquidity in Forex Trading? Liquidity is the presence of orders at specific prices in the market, ensuring that transactions can take place without disruptions. When traders talk about liquidity, they are usually referring to the resting orders in the market. These orders can be absorbed or targeted by banks and financial institutions (BFIs) to influence the patterns of price movement. Liquidity can be found throughout the market, although certain areas may have higher levels than others. The good news is that it is indeed possible to learn how to identify and recognize liquidity patterns. Liquidity comprises a variety of orders that gather in the market, including limit orders, stop loss orders, and stop limit orders. These orders come into play when prices reach specific levels of supply or demand in the market. Understanding liquidity is essential in comprehending how prices move. Why do you need to understand Liquidity? Liquidity is crucial for predicting price movements. Analyzing liquidity, along with market structure, supply and demand, and order flow, provides insights into potential price directions. It's important to consider liquidity alongside trend analysis and supply and demand to understand market conditions effectively. Highly liquid markets can be manipulated by large banks or institutions, leading to liquidity shortages, price slippage, and poor trade execution. Recognizing liquidity pools during slow sideways price movements is key. What are the main types of Liquidity in Forex trading? 1. Buy-side liquidity (see chart for example) Buy-side liquidity refers to the accumulation of orders above a range or high, including buy-stop limits and stop losses placed by sellers and breakout traders. Banks and financial institutions (BFIs) may target these orders to fuel temporary or sustained bullish price movements. 2. Sell-side liquidity (see chart for example) Sell-side liquidity refers to the collection of orders situated below a range or low, including sell-stop limits and stop losses placed by buyers and breakout traders. Banks and financial institutions (BFIs) can target these orders to generate temporary or sustained bearish price movements. Similar to buy-side liquidity, sell-side liquidity serves a crucial role in the market dynamics. Do you have any questions? feel free to ask. Cheers, David
Education
by jabariofafrica
10
CORRELATION IN TRADINGHave you ever noticed a time when a certain product went up and another similar product went down at around the same time? Or when that product went down and another product also went down at the same time? If the answer is yes, then what you noticed was 'product correlation' in action. What exactly is product correlation? In the financial markets, correlation is a statistical measure of how two products move in relation to each other. Product correlation tells us whether two products tend to move in the same or opposite direction or whether they move completely independently of each other without any discernible pairing pattern over a specific period of time. Let us look at an example from a Forex (currency pair) trade (visual chart examples further below): If EURUSD goes up and USDJPY goes down, this is called a NEGATIVE correlation and if GBPUSD goes down and AUDUSD also goes down, this is called a POSITIVE correlation. When trading forex in particular, it is vital to remember that since currencies are traded in pairs, no one currency pair is ever totally isolated. Therefore, if you plan on trading more than one currency pair at a time, it is very important to understand how different currency pairs move in relation to each other. Correlation also applies to other types of products such as gold, silver, stocks and indices. Let us take a more detailed look at how correlation is worked out. Correlation is computed into a number known as the "correlation coefficient". This number ranges between -1 and +1: •Perfect negative correlation (an exact correlation coefficient of -1) means that the two respective products will move in the opposite direction 100% of the time. •Perfect positive correlation (an exact correlation coefficient of +1) implies that the two respective products will move in the same direction 100% of the time. •If the correlation is 0, the movements between the two respective products are said to have no correlation and their movements are completely independent from each other. In other words, there is no way to predict how one product will move in relation to the other. POSITIVE CORRELATION NEGATIVE CORRELATION PLEASE NOTE!!! Although correlation exists in the financial markets, it is NOT set in stone as a guarantee. Firstly, the correlation coefficient between products in the financial markets is rarely, if ever, at +1 and -1. Secondly and more importantly, every individual product has its own UNIQUE supply and demand measures and also has buyers and sellers that have their own UNIQUE motivations and goals in relation to that specific product. When a product goes up or down, this does NOT necessarily mean that it will always follow in line or go the opposite way to another product. Trade safely and responsibly! BluetonaFX
Education
by BluetonaFX
5
The Debt Ceiling AgreementThe debt ceiling is a limit set by the U.S. Congress on the amount of debt that the federal government can have outstanding. This debt is primarily made up of two components: debt held by the public (like U.S. Treasury bonds held by investors) and intragovernmental holdings (like those in the Social Security Trust Fund). From a financial perspective, the debt ceiling is significant for several reasons: 1. Creditworthiness of the United States: The U.S. government is seen worldwide as an issuer of risk-free assets, primarily because it has never defaulted on its debt. If the debt ceiling is not raised in time, it could potentially lead to a default, shaking the world's confidence in U.S. government securities. This could increase the interest rates that the U.S. has to pay to borrow money in the future. 2. Global Financial Markets Stability: U.S. Treasury securities are used as a benchmark for many other types of credit and are widely held by financial institutions around the world. A default could cause significant upheaval in these markets and potentially lead to a financial crisis. 3. Economic Recession : A default could lead to severe economic consequences. It could cause a sharp decrease in government spending (since the government couldn't borrow to finance its operations), which could in turn lead to job losses and potentially a recession. Treasury Secretary Janet Yellen warned of this risk in the case of the 2023 debt ceiling negotiations. 4. Budgeting and Planning: The debt ceiling also has implications for how the government budgets and plans its finances. When the debt ceiling is reached, the Treasury Department has to use "extraordinary measures" to keep the government funded, which can create uncertainty and inefficiency. 5. Political Tool: While not strictly a financial point, it's worth noting that the debt ceiling has often been used as a political tool. Lawmakers may refuse to increase the debt ceiling without certain concessions, such as spending cuts or policy changes. This can lead to financial uncertainty, as was the case during the 2023 debt ceiling negotiations. The negotiations that led to the agreement were marked by considerable compromise. President Biden, for instance, noted that the agreement represented a compromise where not everyone got what they wanted but was nonetheless an important step forward1. House Speaker Kevin McCarthy, despite opposition within his own party, committed to passing the bill within 72 hours of its introduction on the House floor. This commitment was a testament to the urgency felt by lawmakers due to the looming threat of a potential default on the U.S. debt obligations. The agreement was a product of compromise and necessity, driven by the urgent need to avoid a default on U.S. debt obligations. It included a two-year budget deal holding spending flat for 2024 and imposing limits for 2025, effectively reducing spending as Republicans had insisted. This was in exchange for raising the debt limit for two years, until after the next election. The deal would boost spending on the military and veterans' care and cap spending for many discretionary domestic programs. However, the specifics of these spending caps remained subject to further debate between Republicans and Democrats. Conclusion The 2023 U.S. debt ceiling negotiations showcase the intricate dynamics of American politics and its intersection with economic policy. They underscore the importance of compromise in a divided government and the challenges that ideological divergences within parties can pose to such compromise. These negotiations and their outcome also highlight the potential economic implications, such as the risk of default, that can arise when political disagreements hinder prompt fiscal decisions.
FRED:GFDEGDQ188SEducation
by financialflagship
6
🌲 How Music Truly Influences Traders 🌲 Hello TradingView Family In This Post we will talk about Music Analysis in Trading, unraveling its potential to enhance trading experiences. Whether you're a Seasoned Trader in need of fresh Insights or a Trading Newbie aiming to fine-tune your game, we'll uncover how music can groove with your day trading activities. *Some Tips : Having a Good Diet is Really Helping you, Especially Eat some Banana & Broccoli 🍌 🥦 Before Trading. `LET'S GET STARTED ` ⛵🎶 FIRST SESSION : HARMONIC EMOTIONAL RESILIENCE. 🌲🌷🎶 Emotions and trading go hand in hand, but did you know that music can be a secret weapon? It's true! By harnessing the power of catchy tunes, traders can level up their emotional intelligence and keep their cool even when the market gets wild. Picture this: you're in the midst of a rollercoaster ride with your trades, and suddenly, a melody starts playing. It's a feel-good tune that instantly lifts your spirits and brings a smile to your face. That's the magic of music! By creating a playlist full of uplifting and calming tracks, you can create your personal sanctuary in the world of trading. When things get tough, and stress is at its peak, music becomes your anchor. Those soothing melodies gently wash away anxiety and stress, giving your mind the clarity it needs to make rational decisions. And if you need an extra boost, energizing and motivational tracks can pump up your mood, boost confidence, and ignite your inspiration. So, remember, in the world of trading, don't underestimate the Power of Music. Adding a little rhythm to your trading routine can work wonders! By grooving to some tunes, you can tap into your Inner Zen and keep their emotions in check. No more impulsive actions driven by fear or greed – just disciplined and strategic moves. And hey, music isn't just for the soul, it's for the portfolio too! Positive vibes make for a more enjoyable and fulfilling trading experience. So crank up the volume and let the melodies boost your Emotional Intelligence. Create an atmosphere of emotional well-being and Mental Resilience, leading to better trading performance. Who knew Trading could be so Harmonious? SECOND SESSION : UNDERSTANDING PSYCHOLOGY OF MUSIC 🧙🏻‍♂️ Music wields a profound sway over the human psychology. The selection of music exerts a tangible influence on a trader's mindset and emotional state,. Diverse genres like melodies, and rhythms evoke a plethora of emotional reactions. Consider, for instance, that lively and dynamic compositions can instill motivation and positivity, while tranquil and soothing Harmonies induce Relaxation and Sharpened Focus. By astutely handpicking music that aligns with the desired trading mindset, you can exploit the psychological impact of sound to your advantage. During periods of intense market volatility when Scalping or Day Trading, Calming Melodies can Reduce Anxiety. Conversely, during Backtesting in the Market Reading News, Reviewing Trades Invigorating Melodies can Invigorate Attentiveness and Reduce Boredom. Moreover, music has the ability to create a sense of familiarity and comfort. By consistently incorporating specific tracks or playlists into the trading routine, you can develop a conditioned response, signaling the brain that it is time to enter a focused and alert state for trading activities. Ambient Sounds or Instrumental Tracks can also be Beneficial in Creating an Immersive Trading Environment. Nature sounds, or Instrumental Music without lyrics can help drown out distractions and enhance concentration, enabling traders to maintain a deep level of focus on Market Analysis, Backtesting and Decision-making. Understanding the Psychology of Music allows you to use music as a tool to Manage Emotions, Reduce Stress, Boost Confidence, and Maintain a Disciplined Mindset Throughout your Trading Sessions. 🧙🏻‍♂️ FINAL SESSION : TOP DOWN IN MUSICAL ANALYSIS 🌲🌷🎶🎶🦜🌲 Just like conducting a Top-Down Analysis in trading, you can apply a similar approach to Musical Analysis. Intrigued? Let's groove on! Start your trading day by shaking off that sleepiness with an energizing track that kicks your motivation into high gear. Let the beats and melodies set a Positive tone, preparing your mind to tackle the challenges and opportunities that lie ahead. And hey, this strategy works for real-life challenges too! When it's time for Analysis and Backtesting, instrumental music or tracks with minimal lyrics are your go-to jams. These tunes help you concentrate and keep distractions at bay. They create the perfect soundtrack for diving deep into market data and making those well-informed decisions that can lead to success. But what about After Take Profit or Stop Loss, Reviewing Trades or Reading Some Data & News? Well, it's time to switch gears and select calming melodies or ambient sounds. These soothing tunes create a serene atmosphere that promotes clear thinking. Take a mindful approach to evaluating your trading performance, reducing stress, and gaining a fresh perspective on areas for improvement. Now, here's where the real fun begins: experimenting with different genres, styles, and rhythms! Classical music might strike a chord with some, while others groove to electronic or ambient tunes. Find the music that resonates with your trading style and preferences, enhancing your overall trading experience. So, embrace the beat, let the music be your guide, Remember, it's not just about numbers; it's about finding harmony in your trades and enjoying the process along the way. CONCLUSION 🧙🏻‍♂️🌲 By choosing the perfect tunes that sync with your trading style and personal taste, you can create a Zen Trading Atmosphere that boosts Focus, Concentration, and your overall Mood. The Rhythm and Genre of the Music can influence your energy Levels and establish a groove that complements your Trading activities. Don't be afraid to explore various music genres, styles, and rhythms to discover the melodic landscape that clicks with your trading goals. Adapt your musical selection to different phases of your trading routine, leveraging its power to cultivate the right mindset for each activity. Just remember, music is more than just background melody—it's the secret ingredient to your trading experience. And Wishyou Good and Profitable Weeks, I Love Writing this Post, If You Care Please Drop A Boost Button!! 🚀 Happy trading, and may the rhythm be with you!! See You - 🦜🌷🌲 Amazing Free to Use Image By : Indigo Blackwood
NASDAQ:MULNEducation
by Zestiria
1
Mastering Oscillators In TradingOscillator indicators are technical analysis tools that show the rate at which a particular asset's price or other aspect is changing. Oscillators help traders identify potential trend reversals, trend continuations, and overbought or oversold conditions. These are general strategies that can apply to most oscillators. We would like to cover these in detail so you can ensure that you are using your oscillators to the fullest of their potential. There are literally thousands of oscillators to choose from on TradingView. All of them probably have a solid use case, but there are a handful of oscillators that have stood the test of time. Those titans of the oscillator category would include the Moving Average Convergence Divergence (MACD), Relative Strength Index (RSI), and Stochastic Oscillator. 1. Trading with Oscillators: Identifying Entry and Exit Points To use oscillators for trading, traders can look for signals to enter or exit trades. For example, a bullish signal could occur when the indicator crosses above its centerline, indicating that the trend is shifting from bearish to bullish. A bearish signal could occur when the indicator crosses below its centerline, indicating that the trend is shifting from bullish to bearish. Depending on if you are currently in a trade or considering a trade these bullish/bearish signals can be used as either an entry or exit signal. Traders can also use the momentum of oscillator indicators to identify overbought or oversold conditions. An asset is considered overbought when the oscillator is above a certain threshold, such as 70. Conversely, an asset is considered oversold when an oscillator is below a certain threshold, such as 30. Traders can use these thresholds to identify potential reversal points. Highly overbought can be power areas to look for entry or exit signals. 2. Oscillator Divergences: Confirming Trend Reversals and Continuations One of the most popular ways oscillators are used is by looking for divergences between the indicator and the price of the asset being analyzed. For example, a bullish divergence could occur when the price of an asset is making lower lows, but the oscillator is making higher lows. This could be an indication that the trend is about to reverse from bearish to bullish. Conversely, a bearish divergence could occur when the price of an asset is making higher highs, Oscillator is making lower highs. This could be an indication that the trend is about to reverse from bullish to bearish. 3. Using Oscillators in Combination with Other Technical Indicators While oscillators can be an incredibly powerful tool on their own, traders can also use them in combination with other technical indicators. For example, traders can use moving averages to confirm oscillator signals. If the oscillator generates a bullish signal and the price of the asset is above its 50-day moving average, it could be a strong indication that the trend is shifting from bearish to bullish. We see a similar use case in a bearish scenario to follow a trend! Traders can also use momentum in combination with other oscillators, such as the relative strength index (RSI) or the Stochastic RSI. These indicators provide additional confirmation of momentum signals and can help traders avoid false signals. This is actually one of our favorites as the Stochastic RSI is a measure of the momentum of the RSI. So their respective signals can complement very well. Putting It All Together Traders can put this knowledge forward to use most oscillators correctly to adjust their trading strategies and adapt to changing market conditions. We also recommend looking at information the creator of an oscillator has put out in regard to how to properly use the indicator. Traders can use these strategies to help modify or change their positions. For example, if the chosen oscillator used for an asset is weakening, it could be an indication that the trend is about to reverse. Traders can adjust their strategies accordingly by taking profit from their long positions or entering short positions. Similarly, if the chosen oscillator for an asset is strengthening, it could be an indication that the trend is about to continue. Traders can adjust their strategies accordingly by adding to their long and short positions or entering new long or short positions. In conclusion, oscillators are an extremely powerful technical analysis tool that can help traders identify potential trend reversals, trend continuations, and overbought or oversold conditions. By using oscillators in combination with other technical indicators and adjusting their trading strategies to adapt to changing market conditions, traders can improve their trading performance and achieve greater success in the markets.
Education
by LeafAlgo
2