Bitcoin REALISM I am definitely not going to win any popularity competitions with my comments and thoughts. But that's not the point when it comes to making money.
The main issue for me still in Crypto Land is the lack of realism. The image on the front cover was from a google search of "realism" I guess the confused face made my day. This is exactly how you need to be looking when you read these points below.
I have explained the logic of every major move over the last couple of years and this guys - is no different.
So let's start by exploring the reality of market cap for one. When you buy a stock you have a number of stocks in circulation times that by the price and you can get a market cap. Of course, unlike most companies on the exchange Bitcoin CANNOT just issue new stock. We have to remember some Bitcoin are gone and lost forever so this number will likely end up around 20million and not the full 21m.
The current Market cap is roughly 19,806,000 x $42,897.
Let's call it a little over 820 Billion.
At the ATH of $69,000 we saw $1.302 Trillion.
Lets look at what is needed and an angle of attack if Bitcoin was to hit $500k by Jan 25, 26, 27, 28 or 2029.
This is only one aspect of the story.
Prior to the ETF launch people were saying silly things like "Trillions coming in, $100k imminent"
Blackrock's largest ETF is roughly $354 Billion. This is the SP500 fund founded back in 2001. So 23 years old roughly now.
Here's the actual chart.
What does this mean?
Well, let's say Blackrock decided to close their biggest ETF and throw it all into Bitcoin. That level would still not take us back to the current ATH.
Bullish, Bullish, Bullish - we are still $25,000+ under the current ATH.
So what about other ETF's? Obviously the market is bigger than just Blackrock. Let's look at this aspect too.
Look at the end of 2021 as the ETF market collectively was at it's high. We are talking about $10Trillion in 8,552 ETF's.
I've posted several times about the current COT landscape.
Clearly social media Bitcoin is buzzing and everyone is about to become rich, it's different this time and so on. Well, COT says otherwise.
Back at the top when everyone was calling for $135,000 I said the reason for the drop would be liquidity.
So why is this different?
I said there were two likely scenario's on the table as we moved down. The first was we were in an early stage accumulation, we needed to go up to 32k and back down to the low 20's. This would allow us to travel much higher and sustain such a large move.
The second option was bearish.
Well, I guess the second move played out.
The momentum is still clearly not with us - we are still FWB:25K + under the current ATH - not what one would or should expect after 12 Bitcoin specific ETF's obtaining approval & launching.
Look at the momentum
People seem to fall into the echo chamber and all logic leaves the building. I have been at this game a long, long time. Seen it all before and I am sure I will see it again.
This does not mean I am Bearish or anti Bitcoin - not for one second. I am one of the lucky ones in at the right time, sold a lot on the way up and happy with the current holdings.
All I am trying to emphasis here - is don't get sucked into the void which is not supported by ANY sound logic.
I recently watched a couple of video's with Warren Buffet, another with Jim Rickards.
They both explained something very interesting in a very clear way. Although Anti Bitcoin - what they said made a lot of sense. The same lesson kinda applies to things like gold.
When you buy an asset, the asset can produce for you. So assume you buy a house - you get rental income each month and with the price of the property going up over time you make gains there. Buy a business same thing - Buffet explained this using a farm as the example. Sell grains, cows or whatever you farm. Over time you still hold the asset.
This isn't true for the likes of diamonds, gold or Bitcoin.
Hence it fits into the greater fool theory.
If I sell you my last bitcoin I picked up for less than $200.
You buy it all today at $42,850. You have to find someone else willing to pay you more than the $42,850 in the future. For me, this is the main reason I don't personally care up or down or sideways here. But many in the echo chamber do.
The average price across the breakeven addresses are around $37k - this is Breakeven not profit. So imagine majority of the retail crowd with an average entry after DCA'in at $37k.
These are all things to keep in mind when your playing shorter term moves. ETF's are structured in such a way long term growth can be expected, volatility get's somewhat reduced. You noticed what's happened on the weekends since the launch?
So whilst I expect it to go up in the long run. We need a healthy pullback as to be expected. This gives more time for real accumulation to happen - but this will also put some stress on that average (BE) level of $37k.
Just keep this in mind and one more thing if you want to comment on "oh your wrong - up only" give some logic to support it or I won't bother responding. This move will take time. For me, nothing has changed since 2022. We are not ready for new highs - YET...
Anyway enjoyed or not I thought it was worth another educational post.
Stay safe!
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Mayfairmoney
Market Algo or pain tradesI was reading another trading book today and much like watching the dumb money movie the other day, it prompted me to write another post.
So, you may have heard the expression "the market is an Algorithm" whilst this is somewhat true, it's actually more a sequence, Ralph Elliott, Richard Wyckoff and Edward Jones knew this.
In simple terms, the larger operators or what's known as sophisticated money - chase liquidity pools that are often areas Dumb Money have taken entries or placed stops. Now if it was as simple as this, you could simply write an indicator or be on the winning side 100% of the time. Unfortunately, there's a lot more to it!
When I say the smart kids are taking the dinner money of the dumb kids, you need to appreciate the fact that winning whilst playing against retail traders is like putting the Patriots against your local under 12's side. Or like having the New Zealand All Blacks play against an old people's home in Pakistan. (I am not sure if Pakistan even have a 1st team in rugby).
To gain some understanding, you need to appreciate there's such a thing as "pain trading".
A "pain trade" refers to a situation in financial markets where a significant number of investors or traders find themselves on the wrong side of the market, leading to losses or discomfort. In other words, it describes a scenario in which the market moves in a way that causes the most amount of pain or financial losses to the largest number of participants.
For example, if a majority of traders are positioned for a market to go up, a pain trade would be a sharp and unexpected decline in prices, catching those traders off guard and causing them losses. The term reflects the idea that markets often move in ways that inflict the most damage on the greatest number of participants.
Understanding pain trades is important for investors and traders, as it highlights the potential risks of crowded trades and the importance of risk management strategies to mitigate unexpected market movements. Investors and traders often use various indicators, market sentiment analysis, and risk management techniques to try to avoid being caught on the wrong side of a pain trade.
(Thanks ChatGPT for the summary).
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So take a company like Carvana for example...
This type of move happens over and over again - creating cycles (But not always the same).
In this image above you can see it's likely to have swept long stop losses and then rallied hard.
You probably know about the Gamestop Saga.
I wrote a post on that film recently.
I talked about being on the wrong side - I can't get over how someone could be up $500,000 and still go broke? But it's all in the mindset. Liquidity is the name of the game.
How do these things fit together?
Well, Bitcoin is a prime example - retail mindset is "HODL, Buy the Dip, Diamond hands & Lambo" - whilst as a professional trader, it's enjoying your profits and buying/selling at the expense of the dumb money. These moves are shown as the last post, buy momentum.
Here is the summary image from that post.
Since we had a move up - retail seem to think it's up only, they seem to put all the eggs in the hope Blackrock and a halving will make them rich...
I have read articles like this recently.
After watching the Dumb Money film - you know where following the crowd goes.
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Why is this an important lesson?
It's all to do with pain, where is the maximum pain? Retail sentiment would suggest pain comes in the form of little movement, grinding prices in up moves and fast aggressive drops.
Some context from Blackrock themselves: What is Blackrocks Biggest ETF?
So again, let's add a little logic. Where is liquidity sitting?
If and it's a big if - Blackrock get an ETF approved and it's half the size of their biggest ETF to date, let's then assume Retail flood in and match it dollar for dollar. That market cap would still put us roughly at the current ATH, given coins in circulation.
This again just amplifies, why we are simply - NOT READY, YET!!!
The move I didn't want in 2022, looks to be the biggest liquidity grab we are likely to see in the Bitcoin chart.
We are very, very likely still in an A-B move up for the slow pain of coming back to build sustainable momentum.
Have a Happy New Year all!
Stay safe and see you in 2024!
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
It's a numbers gameI see this more and more, especially in the crypto space. There are some wild stories out there from turning $8k to a billion through to a Pizza for 10,000 Bitcoin.
Here are some home truths. Although most of you won't want to hear this.
You see, as a professional trader - there is 1 key factor, almost a scale balancing between too much and just enough. Everyone pushes for more returns, we are only human after all. We have had stories of Wall Street Titans and Vegas big wins, but there is some simple logic to this.
You might have entered the market after Covid hit the world and wanted an extra income, might have seen a way to make millions from the money the government sent you? The issue is this is no different that rolling a dice in Vegas but without the fun! You possibly saw some influencer selling you the dream - they fail to tell you, they trade on demo accounts and make their income from affiliate links and social media watch time!
When you think of investors like Warren Buffet, you have to understand - he didn't watch an influencer video and say to himself "I want to be like that guy" - investing is often a long term thing and not a get rich quick scheme.
Here's a few examples to hit home.
This is boring, not worth it - so instead you seek higher returns, that opens up the possibility of falling into scams, listening to the wrong crowd and having dreams. To be honest, it's probably more enjoyable spending a day at the races.
With a smaller account, you can grow it a little, add to it on the next pay day and of course compound the investments.
As you move up the scale.
This is probably where most "semi serious" market goers start. It's often a flurry into the market cash in hand. The assumption often the same; you have done well to amass a lumpy investment, your clearly good at the field you have been in to earn your pot. Why wouldn't you be a good trader? After all, these kid influencers are making millions on their demo accounts.
Jump to the next level...
Your either a captain of industry, you have had your own business or you have a kind daddy.
How you got here is not important, staying here is.
When you trade with a medium sized account you start to think a little different. Instead of looking for 900x returns, you start thinking about investments that are a little less risky. This is the scales I mentioned earlier. You are now in the space of a good return might be good enough. Too high of a risk, means you are thinking of safe guarding your cash.
Here's where the Professionals play the game differently. Trying to make 1-5% is a lot more sustainable than trying to land a 900x return.
You have to remember 90% of traders lose 90% of their accounts in 90 days...
This can easily be attributed to things like;
Buying signals
Following influencers
Over trading
Trading too small a timeframe
Trying to find a silver bullet
As a professional - you can seek smaller returns, spend less time in front of the charts and let your money work for you, instead of you doing all the chasing!
As the amount of capital rises, so does your desire for risk. You might still have the appetite for returns but not at the cost of risk.
As a professional trader, you can afford the luxury of trading a bias and scaling into a trade - you will find fund managers who have what's known as secondary investment capital (in essence to add to winning positions).
So although this is not going to be what you want to hear, it's what you need to know.
There's always chasing the dream, but why not wake up and make it a reality?
Enjoy the weekend all!
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Tradingview Volume toolsI've been using Tradingview for just over 8 years now. When I initially started using it I was transitioning from using Footprint tools. I would use techniques that in essence allowed you to see inside a candle. Coupled with techniques such as "DOM" Depth of Market and Cumulative Delta. After a while you get to see some of this stuff without the need of indicators.
Tradingview have steadily added various tools to the platform and with a little help from being able to code your own tools it's made it an interesting space to play.
So here's a quick overview on the abilities, encase you have yet to explore. This is not a lesson on volume as such, just educating you as to what the possibilities can be.
Most would have seen or at least know about the volume on the X axis.
This simply gives an idea of the happening of that particular candle, of course things can alter or yield different results based on settings and time frames.
we've taken the time to incorporate this simple volume in one of our own indicators. Which is coupled with a Stochastic and a few other bits.
It can also be used standalone for spotting divergence for example. You can see how the volume up and price up yet in the third price move up, volume has lowered.
There are also various styles of showing this volume data - one such tool is Weiss waves.
These are great in conjunction with techniques such as Elliott Waves and Wyckoff. I've shown this over the last two years here on TradingView and both of these techniques have been very useful on Bitcoin during this time.
I mentioned CVD the cumulative Volume Delta, here you can see this under the Weiss Wave indicator. Like I said, have a play around with these on your own charts. You will spot some interesting things once you get to know them. Try various instruments as well as timeframes.
More recently I posted a video on using Chat GPT to build a pinescript indicator. Here's the link to that post.
Well, I've taken that a few steps further.
What started as an idea in terms of using Footprint, X axis volume and then what's called periodic volume profile. I personally like to turn the bars/candles off when I got this on.
Here's another view - this is the session volume profile and periodic volume combined without the candles being visible.
This new indicator extracts various pieces of data and paints key levels based on my old trading style. As you can see today, this is showing like a magnet where the key levels in Bitcoin are likely to be. There's a bit more to it than that but in essence, its what I am showing here.
To finish with you have two other tools here on Tradingview - one which is fixed range volume, just as it says on the tin. You can see volume inside a range you determine.
I have used a low and a high here to find the PoC - Point of Control.
Then finally, you have visible range; this I tend to use less personally, but I know many people like it. This allows you to view the volume profile based on what you have visible on the chart. As you can imagine, as you zoom in n out, it can change.
Like I said, this is not a lesson on each tool - it's an intro to, for you to spend the time to play around with these tools. Feel free to ask questions below.
Enjoy the rest of the week!
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Smart money dumb tradesThe major issue with 99% of retail, is that they seek tops and bottoms. They watch a video or read a post and DIVE not knowing, or understanding some simple logic.
To be a successful trader you need a level head. As soon as you realise profits are made in a range and not by trying to time market tops and bottoms, there more you succeed. There are thousands of techniques out there, some that have a high hit rate, others that don't, some are complex and some are simple. In instruments such as Bitcoin - you also now have tools such as on chain data. The issue is and will always be, liquidity. Money is made by someone else losing!
Retail will see things like Elliott wave and dismiss it - "ah it's old, ah it's broken, ah I don't get it..." We as humans can find the good, the bad and the ugly with all techniques.
All we are really trying to do is, re-affirm our personal opinions, defending loyalties and find angles to attack anything that is not aligned with our desired outcome. Hindsight equals the ability to explain the past but in doing so, creates an illusion that we "now understand" it all makes sense. People don't understand because they cannot explain it. Regardless of wanting to or not. Our own unique perspective is built on our own unique experiences - trying to make sense of the complicated situation.
The reason I talk about this - is that when you only take snippets of data from one source, or worse, several sources. It's so easy to get confused and mix up your own beliefs. In this current BTC scenario - people are desperate for a bottom to be in. It's all they seek, so when an influencer or educator mumbles the words - bottom, they assume it's to the moon we go. Thus, supporting the personal belief and desire.
Every professional trading strategy, requires confirmation. If the expectation is we rise from here - we need logic as to why? if it is we are likely to drop - then, what's the reason for that drop?
Over the last 2 years, I have made some of my Bitcoin calls public. There is a lot more behind the scenes that does not get posted, so what you should not do is - read a small percentage of a post or watch the first few minutes of a live stream and dive in. Your missing the bigger picture!
This doesn't just apply to my posts - this is in general. This will help you in the long run. You need your own level of understanding for the logic behind the move.
I can show post like this back in March this year;
And the outcome was as predicated -
We grabbed liquidity and dropped seeking a better accumulation range.
I've talked about value areas - this post goes back another year...
The outcome -
For me, it's knowing the "why".
The lesson here - is no obtain a bias of your own. Work on that to see inside the move.
My view is pretty much as I have talked about this last 14-18 months...
We have seen some stopping action.
Now you look out for a range -
Obvious liquidity in this zone.
So this is 100% a lesson and not a call. Now look at the range in detail, you will see a fair value level hidden in there.
Same goes for knowing the "why" - as Bitcoin becomes more institutional, it becomes more and more respectful. But as it does, tops and bottoms are still not what your targeting. Look at this from Feb last year from the first rally all time high.
Look at the post date.
These things are playing a game - it's all about understanding the rules.
On the way back up from the low shown in March last year, why would there be evidence for a truncation?
This image was the 24th of August. We go on to climax just above the 65k region...
Liquidity is the name of the game..
This post is the first in the Liquidity series of posts here on @TradingView
Have a great weekend!
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Why is trading so emotional?
In August last year, I published an educational post around Fibonacci. There's also thousands of articles and books available on the topic. But how does it fit with being emotional?
Often people talk about Algos, smart money concepts and a load of other terms. All trying to make sense of the market, Fibonacci isn't magical or mystical. It's a set of simple numbers that work - due to humans wanting to see patterns in everything they look at.
Here's the article from last year - feel free to click it and go through that one as well.
The issue I have when educating people - is there is always a desire to find an automated solution. I keep saying, if algos are that good - we wouldn't have school, doctors or firemen; they would all be sipping cocktails on a beach far away! If you want to learn technical analysis, you really need to dig deep into the emotional analysis. People like Dow, Elliott and Wyckoff (for me, are not technical gurus) they merely understood - human psychology made waves, changed sentiment - the bigger players in the markets know this. It's why most news outlets and websites around TA push writers who only talk MA's and RSI's. It keeps fresh sheep on track.
The market is all about liquidity - these levels are created at psychological levels & from there, it's copy, paste, repeat.
Take a look at this on the current Bitcoin move down from the All Time High.
Swing 1 = 618 of A-B
Swing 2 = 100% of the A-B
Swing 3 = 100% of the A-B
Swing 4 = 618 of the A-B
Swing 5 = 1.23 range and 1.27 range of the A-B
Then even when you step down a level you can see the move inside the moves looking similar. Local support is 618...
When I started posting on @TradingView publicly - I explained why we where seeing value areas and re-accumulation for the first times.
These levels were starting to show signs of the crypto space being institutionalised. This is important to understand, as much like Fibonacci levels, the price would now act in a different way to psychological levels. In stepped Wyckoff and you could see from before and after - where and why the price would go.
Before
Here's the AFTER shot.
Lucky Guess? Well - maybe on the way back from the 28k levels highlighted in March, the very same fibs became obvious. If we where seeing Elliott waves form you could therefor measure the fib extensions.
This was August the 24th - read the comments as to why the drop was coming (4 move) and why we would likely see the drop just above the old all time high.
By October we had seen the forecasted extension levels getting hit - a retest followed this and we dropped.
So, like I said - there's nothing magical, it's all about sentiment and psychology. Learn this and you will progress as a trader.
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Key levels and why, then how to spot themI've written several articles around various educational topics here on @TradingView all of which have their individual application and use case.
This latest post will go into how you can identify key value areas, or what I like to call "Auction areas".
In essence these are areas or zones where Dumb money becomes active, often at highs or lows & usually in the wrong general direction. You only have to look as far as this guy and nearly 2 million followers - buying the ATH's of Bitcoin last year.
In December 2020 I wrote an article on Bitcoin here & why it was starting to show signs of becoming institutionalised.
And slowly set the path as to why we are then likely to see "Value areas" being formed.
In Feb 2021 I followed this up with the identification of a value area.
As you can see; this is how powerful these levels become
These levels are only part of the bigger picture - but you will see how and why they are relevant, how they can be used to find both highs and lows - as well as giving a larger picture bias on the general direction of the move.
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Now you have a little context.
To understand why they work, you need to appreciate, what they are - As I mentioned above, these are zones where Dumb money get excited! It's as simple as that.
Many indicators are designed and shared to mask true market cycles; people will spend years trying to find the secret sauce. However, things like Bollinger Bands, MACD's are only fuelling the dumb money machine. Take Moving averages for an example - if we have an aggressive uptrend, you should expect a sloping moving average. With a few buttons and presses in the settings, you can edit a moving average to fit the chart.
So strip it all back.
What you are looking for is, areas of consolidation - these areas are indecision zones where buyers and sellers are actively seeking value. These levels create the foundation of the value area range. This can then be used alongside liquidity pockets and used to enter or exit trades. Click this image below and see the levels get tagged, this is due to the collection of Dumb money stops & entries, followed by a reversal into the lower liquidity area.
Ok so how are they identified? Well, first of all you have consolidations; these tightening ranges of price will highlight the auction has began, we now have both buyers and sellers active.
As you can see in this chart above; we have two large areas to the upside of untapped liquidity...
Zoom in and you will see heavier zones whereby volume was heavy, but price hardly moved - this is a hint towards liquidity sitting there.
If you apply a simple tool like "Fixed range volume" you will see the profiles are concentrated around these levels; hence acting like a magnet to price.
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A great example of this was to use the levels created, in conjunction with Fibonacci extension levels to spot a potential zone for the upside (into unchartered territory) of Bitcoin's new ATH.
This was clear as early as August, we would tag the old liquidity levels and plummet back below 40k very quickly.
The levels are useful, especially when combing with other techniques such as Elliott, but when you apply Fib's and can spot key extension levels; it's a lot more likely to be pulled towards such levels if there is a consolidation cluster. This is merely "Dumb Money" value areas being bought and sold. Optimal for institutional players, or as Richard Wyckoff called them "Composite Man".
Looking at COT data and knowing the levels - meant we were 100% less likely to see $135,000 in December last year; CM was selling into the retail crowd.
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So now you can see areas of interest, these levels are permanently set - although they become weaker over time, they still represent value for both buyers and sellers and are likely to become support and resistance at later points in time.
There are several strategies and methods to use this knowledge, some of which I will post in later posts. But I would advise you go away and try and spot some of these levels on other charts.
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Wyckoff Schematics broken downBack last year I posted an educational post on the Wyckoff Distribution schematic I was seeing on Bitcoin. This was the logic behind the "Rocket Call" back last March.
It was knowing where to search for an accumulation (which it was not) or a distribution. There are a couple of tell tail signs outside of Wyckoff literature that can assist in knowing which is which for various reasons (not for this post).
So at the 60k marker first time around, I could see the logic for a Distribution and it revealed it's hand very early on. I wrote this educational post around the topic.
Knowing Wyckoff - it's more to do with human psychology than technical analysis - many people said at the time, oh it's 100 years old, can't work in crypto etc, etc. Unfortunately as the human race, we are getting dumber and dumber, making these schematics almost more valuable in today's markets.
After we had our move "Rocket" post. I covered another educational post hinting at the accumulation phase - naturally, the price drops and rises as the waves.
In this post I covered the key for the terminology used in these schematics.
Below you will see some info on the phases of an accumulation schematic.
Accumulation Schematic
Phase A
The selling force decreases, and the downtrend starts to slow
down. This phase is usually marked by an increase in trading
volume. The Preliminary Support (PS) indicates that some buyers
are showing up, but still not enough to stop the downward move.
The Selling Climax (SC) is formed by an intense selling activity as
investors capitulate. This is often a point of high volatility, where
panic selling creates big candlesticks and wicks. The strong drop
quickly reverts into a bounce or Automatic Rally (AR), as the
excessive supply is absorbed by the buyers. In general, the trading
range (TR) of an Accumulation Schematic is defined by the space
between the SC low and the AR high.
As the name suggests, the Secondary Test (ST) happens when the
market drops near the SC region, testing whether the downtrend is
really over or not. At this point, the trading volume and market
volatility tend to be lower. While the ST often forms a higher low in
relation to the SC, that may not always be the case.
Phase B
Based on Wyckoff’s Law of Cause and Effect, Phase B may be
seen as the Cause that leads to an Effect.
Essentially, Phase B is the consolidation stage, in which the
Composite Man accumulates the highest number of assets. During
this stage, the market tends to test both resistance and support
levels of the trading range.
There may be numerous Secondary Tests (ST) during Phase B. In
some cases, they may produce higher highs (bull traps) and lower
lows (bear traps) in relation to the SC and AR of the Phase A.
Phase C
A typical Accumulation Phase C contains what is called a Spring. It
often acts as the last bear trap before the market starts making
higher lows. During Phase C, the Composite Man ensures that
there is little supply left in the market, i.e., the ones that were to sell
already did.
The Spring often breaks the support levels to stop out traders and
mislead investors. We may describe it as a final attempt to buy
shares at a lower price before the uptrend starts. The bear trap
induces retail investors to give up their holdings.
In some cases, however, the support levels manage to hold, and
the Spring simply does not occur. In other words, there may be
Accumulation Schematics that present all other elements but not
the Spring. Still, the overall scheme continues to be valid.
Phase D
The Phase D represents the transition between the Cause and
Effect. It stands between the Accumulation zone (Phase C) and the
breakout of the trading range (Phase E).
Typically, the Phase D shows a significant increase in trading
volume and volatility. It usually has a Last Point Support (LPS),
making a higher low before the market moves higher. The LPS
often precedes a breakout of the resistance levels, which in turn
creates higher highs. This indicates Signs of Strength (SOS), as
previous resistances become brand new supports.
Despite the somewhat confusing terminology, there may be more
than one LPS during Phase D. They often have increased trading
volume while testing the new support lines. In some cases, the
price may create a small consolidation zone before effectively
breaking the bigger trading range and moving to Phase E.
Phase E
The Phase E is the last stage of an Accumulation Schematic. It is
marked by an evident breakout of the trading range, caused by
increased market demand. This is when the trading range is
effectively broken, and the uptrend starts.
There is an awful lot more when it comes to understanding Wyckoff - such as volume, but it is too much to put in a handful of posts. These posts are done to give you an insight into trading Wyckoff.
Another useful post on this topic is this below;
People tend to look at Wyckoff on a Tick chart, a 1min or 15 minute chart - the same rules apply and are potentially more beneficial and applicable on the higher timeframes, seeing a weekly move play out in terms of a schematic could take several months. It's all about knowing what to look for.
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Do you know how to use trendline breaksNot often do you get an opportunity to show a real world example of a text book move - live.
Here's a simple educational post showing the two major types of breaks of the trend.
This is the current price level as of the 24th of Jan 2022.
You can see this as a corrective break - the main reason for this, is that the chart is only the 1 hour, whereas if you zoom out to the 4 hour you will see this move about to happen on the chart.
If you go back only a couple of days - you will spot this on the chart.
Here you can look at the Stochastic indicator and see what it's showing during the move up the trendline. How you can anticipate the break and even have a pretty good idea as to it being either corrective or impulsive ahead of time.
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If you are unsure of how to apply trendline or where they should go; take a look at this post below; click the image for the post.
Last year I managed to catch a live example of another text book move; this was the move down (distribution) on the Bitcoin move from 64k. Using slightly more advanced techniques. But it's similar core concepts at work. If you haven't seen the Wyckoff distribution post, again here's the link.
And Finally - the biggest dose of education you will find on @tradingview_
I hope this is useful to you, if you are trading crypto right now.
Have a great week!
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Lessons for the year and into 2022Over the last year I have spent a lot of time on @TradingView writing up educational content, I have tried to apply drawings to my charts to express some lessons in simple yet easy to follow and understand walkthroughs.
Here's a chronology regardless of your experience and level.
Let's start with Psychology - this is the life and soul of the market, if humans where not so predictable then we would have a completely different looking chart. Humans spot patterns - even when they are not there. We try and assume, we get greedy, fearful and often just outright stupid. Entering trades at wrong times, listening to fake guru's and not doing the work ourselves. When you understand the emotional aspect of trading, your already 50% of the way to becoming a successful trader!
In this post (click the images for each individual post) - you will see how the basic emotions work at various aspects of the chart.
In a more simplistic form I broke the market phases down in relation to the post above, this time using the Simpsons as the best way to let traders relate to such phases;
Homer is brilliant!
Again - once you understand some of the basic psychology you can start to create a framework around investing, it will help build a plan. In this next post I wrote about the reasons why people get into crypto - the thrill of the ride, the desire to make it.
Once you got a feel for what it is your looking to do and you are wanting to play in the crypto sphere - here's a post that will help you on assessing an alt coin, the process of going through your own due diligence rather than listening to a youtube guru. A lot of what you need to know when searching for the next big thing, is already written in the business itself - this will include everything from the founders, the plan, money raised and so on.
Ok so let's step over to some of the technical aspects of trading;
Here's a post on the simple trendline - for you experienced traders jump this and the next Moving average post.
From trendlines to Moving Averages;
These kinds of tools coupled with some basic off the shelf indicators will get you going on your your journey - but you have to remember over 70% of retail traders lose money. There's even an industry quote that states 90% of new traders lose 90% of their account in 90 days. When everyone is using the same Moving averages, MACD and RSI - all it does is lends itself to the type of emotional analysis mentioned in the psychology section. So trade carefully.
ALWAYS deploy proper risk management and do your own due diligence.
Here's the basic on using the MACD if you do want to use it along with the 50 and 200 Moving Averages ;-)
All new traders want to buy the dip! But how; well here's a little advice on that too.
This is where it get's interesting;
Going back over 100 years there was a cluster of hyper intelligent traders, these techniques are still widely used today and just as relevant in crypto as they where for commodities and stocks when they where first introduced.
Here's the introduction;
Personally I feel these guys where not technical analysts but emotional analysts - they understood various aspects of why the charts do what they do, why the human mindset drives the target levels, the patterns are created and so on.
From here we can cover the technical viewpoint;
Here is an intro to Dow theory...
Elliott waves;
And even Wyckoff;
It was this post that many of you know me for - this was the method used in March to call the incoming top for Bitcoins first major move down.
However, the greatest tool of all for doing any kind of Technical Analysis is likely to be Fibonacci;
A very old technique and amazing to see the levels get tagged each step of the way, this can be applied to various other strategies and techniques.
The whole crypto space is filled with rubbish advice, scams and people claiming to make money. The truth is, like every other trading instrument - it's a dog eat dog world and you need to be able to take care of yourself. I wrote this article explaining why common sense is not that common anymore - logic seems to go out of the window when it comes to crypto. So please keep a level head.
Life ain't linear - Yes this is a drawing; took AGES!!!
I've tried to cover as much useful info for the @TradingView community as possible throughout the year. Here's another couple of posts that you might find interesting;
Do you know what is going on, inside the candle?
Chart patterns?
Even covered the art of the Pivot Point.
What don't you know about dark pools?
Or the difference in Volume profiles?
Or even if your interested in making your own indicators?
And to finish with on the technical side- Here's a couple of good books to get you going into 2022!
If you haven't followed me throughout the year and seeing this for the first time - here's every swing & supporting logic for the Bitcoin move throughout the year.
And to finish with NFT's and the METAVERSE.
and this one;
Hope you have had a great 2021! 2022 will be even better! Have a great NEW YEAR's eve and see you on the other side!!!
Feel free to give me a follow here and comments always welcome!
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
So what is the METAVERSE?Think of it like building blocks of a new form of communication.
Now in the vague sense, you could replace metaverse with cyberspace. And for you less technology versed people, think of it like "online" or "digital" a lot of the time the term will be referring to an array of various technologies.
Like most things in life there are pro's and cons to this - whilst playing games with your friends or taking zoom meetings for work could be done face to face but not face to face using holographic technology, other elements of the metarverse will include things like NFT's, AI, AR and OBVIOUSLY Crypto along with other elements such as digital land.
Think of it like a fake world - where you can social distance till your hearts content.
As we transition into the METAVERSE;
AI, AR as well as limiting and restricting our own travel. Monitoring each and every interaction let alone every transaction.
So to over simplify the metaverse - think of it like the way we interact with technology rather than a specific technology. Evolution, a few years back a business partner bought me an Amazon Echo device for Christmas, I said to him what will I do with that?! I ended up with electricity going down for two days and realised how much I used it, I now have 11 Alexa's at home, lights, heaters, TV controls, surround sound, even heated beds. All controlled by Alexa. So much so, I can connect through the app of one of the cars and Alexa will tell me where the car is or how much fuel is left.
So this all started long ago - imagine the game sims;
You will soon be able to visit virtual galleries, play board games or online games with your friends like being in the same room. Go shopping and pay in crypto.
Hang a digital Mona Lisa on the pretend wall that you can view when you stick your fighter jet helmet on.
As we have seen with NFT's it has the potential for a big play overall, it's just a question of finding the correct problem to wrap such a solution. Whilst NFT's give a clear advantage to content creators by paying royalties throughout the process - with such high gas fees, the advantage is somewhat limited. At the moment we are going through the teething process in a very infant market. What can it become? I don't know.
I wrote a post a few weeks ago on NFT's - be good to get your opinions on this topic too. click the link to follow through to the post.
It al translates to a digital economy in essence. where people can create, buy, and sell goods. And, in the more idealistic visions of the metaverse, it's interoperable, allowing you to take virtual items like clothes or cars from one platform to another.
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Pro's n con's of the MetaVerse;
Ok as a pro - it's pretty cool technology and as I mentioned about my Alexa consumption, I am sure there will be practical applications for it. There of course will be completely pointless use cases also. This is where my first fear comes in; the definition of a market bubble.
Then you read news like this...
Tokens.com Corp, a Canadian investment firm focused on crypto assets, announced it had closed on the “largest metaverse land acquisition in history” through its subsidiary Metaverse Group, whose real estate portfolio spans several different virtual worlds and is reportedly worth “in excess of seven figures.”
So the trick is clearly going to be how companies monetize their purchases and who's left carrying the bags?
I can say it's going to be an interesting discussion with my grandmother "nan I bought a virtual painting for $2m to hang on a virtual wall inside my virtual mansion I paid another $5m for. Put your headset on and I'll teleport you over. OH hang on, I've been hacked or maybe the server just needs resetting" here response - "WTF you been talking about for the last 10 minutes?"
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So I guess to wrap it up - it's now going to be a race to create a viable business model to package up the hype.
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
You won't like this one BITCOINFor the die hard crypto fanatics; you won't like this idea one bit. This is coming from someone who was Bullish from 2011, so don't shoot it down without giving it a read either.
You might have seen the film: Wall street, money never sleeps?
Well, in this film Gekko shows a chart on the wall of his apartment;
This chart shows the Tulip Mania curve, it was insane - below, I have taken the story from Investopedia (word for word) and below each section I will edit it ever so slightly...
First - here's a little background.
What Was the Dutch Tulip Bulb Market Bubble?
The Dutch tulip bulb market bubble, also known as 'tulipmania' was one of the most famous market bubbles and crashes of all time. It occurred in Holland during the early to mid-1600s when speculation drove the value of tulip bulbs to extremes. At the height of the market, the rarest tulip bulbs traded for as much as six times the average person's annual salary.
Today, the tulipmania serves as a parable for the pitfalls that excessive greed and speculation can lead to.
Here's the chart up close;
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History of the Dutch Tulip Bulb Market’s Bubble
Tulips first appeared in Europe in the 16th century, arriving via the spice trading routes that lent a sense of exoticism to these imported flowers that looked like no other flower native to the continent. It is no surprise then that tulips became a luxury item destined for the gardens of the affluent: according to The Library of Economics and Liberty, "it was deemed a proof of bad taste in any man of fortune to be without a collection of tulips."
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The first ₿itcoin appeared on the internet circa 2009; becoming a luxury item to own, a symbol of hope and freedom. it seem to mirror the quote exactly "a proof of bad taste in any man of fortune to be without a ₿itcoin wallet".
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Following the affluent, the merchant middle classes of Dutch society (which did not exist in such developed form elsewhere in Europe at the time) sought to emulate their wealthier neighbors and, too, demanded tulips. Initially, it was a status item that was purchased for the very reason that it was expensive.
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The middle class want affluence and wealth and see Crypto as a way to make money the easy way - thus driving up price, of such a status item.
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Cycles
The market moves in cycles which can be broken down into waves, this can then be forecasted using tools such as Fibonacci to predict price in the future.
In Elliott wave principle; You have cycles that fit into time. While exact time spans may vary, the customary order of degrees is reflected in the following sequence:
Grand supercycle: multi-century
Supercycle: multi-decade (about 40–70 years)
Cycle: one year to several years, or even several decades under an Elliott Extension
Primary: a few months to two years
Intermediate: weeks to months
Minor: weeks
Minute: days
Minuette: hours
Subminuette: minutes
So we would have to count the current move as a Cycle on the current count and a primary cycle inside of that (Monthly & weekly in essence) as in theory we are still inside a 1 move of anything larger.
This is the current (perceived count);
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Back to the Tulips
According to Smithsonian Magazine, the Dutch learned that tulips could grow from seeds or buds that grew on the mother bulb. A bulb that grew from seed would take seven to 12 years before flowering, but a bulb itself could flower the very next year. So-called "broken bulbs" were a type of tulip with a striped, multicolored pattern rather than a single solid color that evolved from a mosaic virus strain. This variation was a catalyst causing a growing demand for rare, “broken bulb” tulips which is what ultimately led to the high market price.
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According to some technical guys, ₿itcoin can be mined and with enough equipment 1 full coin can flower over a year - due to the halving, which causes an increase in demand. It is driven to high market prices.
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In 1634, tulipmania swept through Holland. The Library of Economics and Liberty writes, "The rage among the Dutch to possess was so great that the ordinary industry of the country was neglected, and the population, even to its lowest dregs, embarked in the tulip trade.
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In 2021 ₿itcoin swept the world reaching as far as El Salvador. The rage amongst the Tweeter crowd was so great that, every man and his dog neglected common sense and even with stimulus money being used to embark on the ₿itcoin ladder.
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At this point; you probably hate this! I understand, majority of people only want opinions that mirror their own beliefs - trust me, I'm Bullish overall, I want a buy n hold strategy, but I cannot ignore factors out of my control. Regulation, Government stupidity and the world melting.
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Some simple logic.
Back in March I posted simple roadmap;
Inside the post (click the image above) you will see exact co-ordinates for the move and the current situation. See below;
+++++++++++++++++++++++++++++++++++++
So where next and why?
If we are seeing a monthly 3 being formed (cycle phase) then we will go into another decline. Collecting new found liquidity at the high.
And this making larger cycle 1 when it hits the 5th of this current cycle.
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Some more on Tulips
A single bulb could be worth as much as 4,000 or even 5,500 florins—since the 1630s florins were gold coins of uncertain weight and quality it is hard to make an accurate estimation of today's value in dollars, but Mackay does give us some points of reference: among other things, 4 tuns of beer cost 32 florins. That's around 1,008 gallons of beer, or 65 kegs of beer. A keg of Coors Light costs around $90, and so 4 tuns of beer ≈ $4,850 and 1 florin ≈ $150.4 That means that the best of tulips cost upwards of $750,000 in today's money (but with many bulbs trading in the $50,000 - $150,000 range). By 1636, the demand for the tulip trade was so large that regular marts for their sale were established on the Stock Exchange of Amsterdam, in Rotterdam, Haarlem, and other towns.
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A single ₿itcoin could be worth as much as $67,000 which is hard to make an accurate estimation as it could be as little as $8,200 if you buy on Binance (and you have fast reflexes) Depending on where you drink beer, depends on how you can compare this. In Norway you can pay upward of $9, whereas In Antananarivo you can buy a beer for 6 cent.
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It was at that time that professional traders ("stock jobbers") got in on the action, and everybody appeared to be making money simply by possessing some of these rare bulbs. Indeed, it seemed at the time that the price could only go up; that "the passion for tulips would last forever." People began buying tulips with leverage, using margined derivatives contracts to buy more than they could afford. But as quickly as it began, confidence was dashed. By the end of the year 1637, prices began to fall and never looked back.
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At the time ETF's become available, it seems like the price can only go up. This Bull run will last forever, people start using leverage to buy ₿itcoin. Then - maybe a correction sets in.
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Never happen I hear you say; I often get asked about Plan B and the model - which of course makes some sense. But people are only reading the words and not seeing the chart;
Firstly, what happens when you see yellow dots? we go orange, yellow - boom.
Ok and then secondary to that; look at the line straight across until mid 2024 >
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Play this move out - another I posted in March this year, the logic was there for what I would regard as a weekly 3-4 move up for 5 giving a monthly 3. As per the Elliott post above in the roadmap.
Here's the outcome;
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Tulip conclusions;
A large part of this rapid decline was driven by the fact that people had purchased bulbs on credit, hoping to repay their loans when they sold their bulbs for a profit. But once prices started their decline, holders were forced to liquidate—to sell their bulbs at any price and to declare bankruptcy in the process. Smithsonian Magazine indeed notes that "hundreds who, a few months previously had begun to doubt that there was such a thing as poverty in the land suddenly found themselves the possessors of a few bulbs, which nobody would buy," even at prices one-fourth of what they paid. By 1638, tulip bulb prices had returned to from whence they came.
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A large part of what will be seen as a shock horror, will be people thinking they have diamond hands until the wife finds out they have over leveraged a position that might not come back for (2 years) - unable to pay back loans on money borrowed to buy crypto. No poverty in the world, is of course the dream.
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The Bubble Bursts
By the end of 1637, the bubble had burst. Buyers announced they could not pay the high price previously agreed upon for bulbs and the market fell apart. While it was not a devastating occurrence for the nation's economy, it did undermine social expectations. The event destroyed relationships built on trust and people's willingness and ability to pay.
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Prior to 2024; people announced they could not afford to hold such positions and the game mostly passed to the wealthy who could buy when the blood is running in the streets. This destroying the trust and belief, re-affirming the "rich get richer and the poor, get REKT"
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Bullish or Bearish - I hope you enjoyed it.
I've been lucky, planted my bulbs and waiting for the to flower. If the price comes back right I'll add to the position.
Just be careful, use proper risk management and don't just buy the hype. Do some research for your own entries.
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
TradingView tools for educational artWhy I use cartoons in my education;
After trading for 21 years, I really like to simplify my charts - when trading I tend to only use one indicator - and that is more confluence & confirmation than entry/exit.
What I find that works well, when teaching students, is visual. Getting the message over in a fun way - it is easy to remember the content. In doing this, I have found that using @TradingView has become a very useful addition and in recent months I have enjoyed making content for education in the community here.
This has also taken a new path as NFT's have taken off and TV could be used for that element too. So what I wanted to do was share some of the recent posts all in one place and walk you through my latest one - step by step.
**** YOU CAN CLICK THROUGH EACH IMAGE FOR THE ACTUAL POST ****
The other thing you can do is use the drawing tools to create visual representations of patterns, candles and other useful tricks to share with the community. One recent post was this - the 3 page cheat sheet.
This was built using the path tool and trend lines.
Similar content to explain more complex Technical Analysis.
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And of course some of the fun stuff;
This post was a huge hit, talking you through the emotions of being a trader, I tried to use Homer as the 'average' man that we can all relate to at times,
Relaxed when the market is strong
Through to Hope!
As panic sets in.
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Other posts using images;
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So when starting, I decide on the message I am trying to get over. Then select a theme or a character. From there, it's a question of If it will be incorporated with the chart active or not - again another useful feature on @TradingView - you can toggle the bars, lines, candles off if you use the little eye icon on the symbol in the top left.
In this example walk-through I am making a Fibonacci based image for a new Fibonacci post.
So I started with the angles - I used the angle line tool first and then copied with 'ctrl' & drag to the next levels.
This give me the lines I needed to start the overlay.
And then I could start building up and around - point to point.
Now you can start to see the spiral come together.
I then start adding detail, playing with the colour setup and so on.
Even adding a Fib box in the middle.
Still getting the colour configuration right.
Removing the lines from behind.
And the final image.
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So as you can imagine, sometimes it takes a long time to build one of these types of posts. But it's worthwhile when it helps deliver the message.
I hope this is insightful and a good glimpse into how to use the charts for fun & education.
And of course with the rise of NFT's - you could build your own art here on @TradingView
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Global events - the last 18 Months. I recently posted a timeline of Bitcoin events as well as record several videos on the current Elliott Wave moves around Bitcoin, DXY and a few Forex pairs.
Here’s a link to the Bitcoin timeline;
Looking back at the last 18 months or so now, I wanted to cover some of the significant events that have taken place, which would have had some (but not as much as you think) of an effect on the Elliott counts as a whole. For those of you not familiar with Elliott, there is a link in the ‘related ideas’ section covering the basics.
So, let’s go back in time;
Brexit announced back in 2016 – carried through and completed in 2020.
Thus, kicking off the year with a fair size event, the global markets not quite sure what the fall out would be, where the damage would come and of course if there where to be profitable positions to obtain. An awful lot of hesitation & fear seen in the market.
Jump forward to the next big event; although COVID-19 was technically pre 2020, the real effects did not start to emerge until early 2020 when the world went into LOCKDOWNS, crazy mayhem soon followed and has not really disappeared since.
After the world starts to go mad! A few other things happen during this period!
- Oil goes negative for the first time in HISTORY
- Gold hits $2,000
- S&P creates an all-time high
If this was not enough to cause global confusion, we also had an interesting period in the United States.
All though there are plenty of other events that have shaped this last 18 months or so, you can clearly see with so much – the charts will be a little more sporadic, a little harder to read. So, although methods such as Elliott and Wyckoff are still very powerful.
Even Wyckoff Schematics got a good run in the social media platforms! (Probably kicked that off in March) 😉
Interesting times ahead - @TradingView community, take care of yourself and keep in mind! It’s been a crazy 18-months, 2 years!
**(This is not a trade idea, even a bias - it's just highlighting how insane these last 18-months have been)
For education on Wyckoff and Elliott - see my bio below;
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Welcome to The Pivot Point.So whilst most people just see them as lines on a chart, I don't find many people know how to calculate them or have any real strategy around them.
Here's an intro to Pivot Points;
Summary
Pivot points are used by traders in equity and commodity exchanges. They're calculated based on the high, low, and closing prices of previous trading sessions, and they're used to predict support and resistance levels in the current or upcoming session. These support and resistance levels can be used by traders to determine entry and exit points, both for stop-losses and profit taking.
How to Calculate Pivot Points
There are several different methods for calculating pivot points, the most common of which is the five-point system. This system uses the previous day's high, low, and close, along with two support levels and two resistance levels (totaling five price points), to derive a pivot point. The equations are as follows, with the added R & S 3!
Indicators
You may have already seen but @TradingView has a couple of built in indicators for pivots such as this one below; where these levels are automated for you.
For stocks, which trade only during specific hours of the day, use the high, low, and close from the day's standard trading hours.
In 24-hour markets, such as the forex market in which currency is traded, pivot points are often calculated using New York closing time (4 p.m. EST) on a 24-hour cycle. Since the GMT is also often used in forex trading, some traders opt to use 23:59 GMT for the close of a trading session and 00:00 GMT for the opening of the new session.
While it's typical to apply pivot points to the chart using data from the previous day to provide support and resistance levels for the next day, it's also possible to use last week's data and make pivot points for next week. This would serve swing traders and, to a lesser extent, day traders.
This info is all on free sites such as investopedia.com & Babypips.com
Alternative Methods
Another common variation of the five-point system is the inclusion of the opening price in the formula:
And a method by Tom DeMark;
Pivot points can be used in two ways. The first way is to determine the overall market trend. If the pivot point price is broken in an upward movement, then the market is bullish. If the price drops through the pivot point, then it's is bearish.
Some people use pivot points in short term/scalp type strategies - One such method is the rejection;
where as another is taking the break of;
The Bottom Line
Pivot points are a great way to identify areas of support and resistance, but they work best when combined with other kinds of technical analysis
Pivot points are based on a simple calculation, and while they work for some traders, others may not find them useful. There is no assurance the price will stop at, reverse at, or even reach the levels created on the chart. Other times the price will move back and forth through a level.
www.investopedia.com
Here's another example of how they are used in one of our custom indicators - to help assess the current trend and various levels.
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
What you may not realize...Over the last couple of months, I have posted several educational articles. This one is to show how some of the tools widely used in trading can actually fit together.
I wrote a post a while ago about Dow Theory and how it fits into most modern technical analysis.
Click on each link to get the in depth content from the posts
When looking at a trend, cycle or major market move. The best place to start is from the biggest time frame available. This giving an overall bias for the overall trend, some people will refer to this as the monthly, super cycle, major trend. It basically means as large as you want. This can be based on your trading style, no point trying to obtain a bias on a minute chart.
For me I like the bias based on monthly Elliott wave moves;
Again click the image for the full post, at the bottom of this post in related ideas there is also basic level 2 Elliott.
Once you have the bias we can work out exactly where we are, like one of those street maps in a city.
We can use Fibonacci levels to drill down into potential areas of interest and targets for both the extensions and retracements.
Here is another article posted recently as an intro to Fibonacci;
Once you can identify potential areas of interest, you can drill down again into more advanced techniques such as Wyckoff.
In Wyckoff terms - I wrote a couple of articles and recorded several streams on the logic for the BTC call at the top in the middle of February, before the "Rocket post in March" all based on the info mentioned above here.
In this post, I covered the basics of Wyckoff and it's simple logic
Before going into the types of schematics here below;
The Wyckoff schematics is a little more advanced than the other techniques here, but when you know where you are in the cycle, they become a lot easier to identify.
In the "related ideas" section I covered a chronology of education, covering other topics like buying the dips, MACD, Trendlines and Moving Averages.
I hope this post gets you thinking about how it all fits and works together.
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
A technique from 1202 - Really? images
Who was Fibonacci?
Fibonacci (1170 – c. 1240–50), also known as Leonardo Bonacci, Leonardo of Pisa, or Leonardo Bigollo Pisano was an Italian mathematician from the Republic of Pisa, considered to be "the most talented Western mathematician of the Middle Ages".
Fibonacci popularized the Hindu–Arabic numeral system in the Western world primarily through his composition in 1202 of Liber Abaci (Book of Calculation). He also introduced Europe to the sequence of Fibonacci numbers, which he used as an example in Liber Abaci.
You may have seen this?
This is what’s called the Golden ratio. I am not looking to go into depth on Fibonacci use cases, spirals, fans, arcs, circles, wedges and channels. However, it was important to mention so you can go away and do your own research on Fibonacci beyond this “welcome to” post.
Why is this useful for trading?
The Fibonacci sequence is quite possibly the most used tool in trading stocks, Forex, Commodities and even crypto.
In mathematics, the Fibonacci numbers, commonly denoted Fnuch that each number is the sum of the two preceding ones, starting from 0 and 1.
However, you are probably more familiar with Fibonacci extension and retracement levels.
It’s all based on the same logic.
Fibonacci numbers appear unexpectedly often in mathematics, so much so that there is an entire journal dedicated to their study, the Fibonacci Quarterly. Applications of Fibonacci numbers include computer algorithms such as the Fibonacci search technique and the Fibonacci heap data structure, and graphs called Fibonacci cubes used for interconnecting parallel and distributed systems.
They also appear in biological settings, such as branching in trees, the arrangement of leaves on a stem, the fruit sprouts of a pineapple, the flowering of an artichoke, an uncurling fern, and the arrangement of a pine cone's bracts.
Just look at this image once more!
So what?
The fact that these numbers appear in nature, it has clearly been adopted in art and architecture – this is due to the human desire for pattern recognition. It’s built into our DNA, the fact that we as a collective want to identify such patterns, will in fact drive charts.
I have written articles on Elliott Waves - which again is quite possibly one of the biggest use cases for Fibonacci, definitely an easy way to see the powers at work.
Here’s a link to one such article;
How to use Them?
If you have been trading for some time you are most likely familiar with Fibonacci techniques, if you are new, here is some basic logic to get you started.
As mentioned above there are several tools for Fibonacci, as a new trader I would suggest only looking at extensions and retracements to start you off.
Retracement
These levels often work well as support and resistance, you will find opportunities to enter on pullbacks (retracements) against the overall trend. Common levels here are 23.6%, 38.2%, 50% (although it’s not technically a real fib level, another topic for another time) then of course the 61.8% and the 78.6%.
How to draw these on the chart – you are looking for 3 points let’s assume A,B & C. You are looking for A to be at the start of your trend. Often this will be a swing low or high.
Let’s assume we are looking at an uptrend and we want to see the pullback. A would be placed here as above.
The next step is to use the extension tool and click A and drag to point B as below;
and the pullback level;
Now we have a move A to B we can start to look for areas of interest, in this example we can see the pullback was to the 38.2% level.
Some people are critical on the levels, for me I like it to tag the level and if it goes a little deeper then I still like it, if it doesn’t tag the level I would round it down to the lower level. Meaning if it fails at say 37.9% I would like to still think of it as only the 23,6% fib level. But there is no hard and fast rule on this.
Now this gives me A and B with a 38% pullback for C.
One way to trade using this could be a simple Buy at the break of B with a stop “Below” C
Not telling you this is what you should do, it’s just one method some do use. Obviously, you could increase the stop and put it under A instead.
Difference between Retracement and Extensions?
The data you gather by assessing the pullback becomes valuable when looking for potential targets, so whilst we used 2 touch points (A & B) for getting the retracement level, the most accurate extension forecasting tool would be to use all 3 (A, B and C). Although it can also be done by using only A and B as well, It’s another one of those not so clear rules.
Whilst the retracement tool gives us the pullback, the extension will give us some target areas.
Let’s start with the simple (not my preferred) method;
This is known as the extensions – 2 points (A, B) drag the curser from A to B and click and then back to A and click off.
With this method you will notice in your back-testing those areas of interest will often be at the 61.8% of the A to B move. This means if A + B = 100, then the target would be around 161-2.
Also, the 100% of the A-B move giving a target example of 200 and lastly the 1.618 level. Giving a target of 261-2 level. Again, no hard fast rule. This is just something seen over and over again.
Expansion levels
To start with go from A to B with the extension tool and pullback to C and click off. Assume you are using @TradingView
Much like the Extension you will notice similar characteristics of the moves up (in this example of the uptrend)
Something interesting
I mentioned above this is a great tool to use alongside Elliott Waves, here’s an example of how this works and can fit into the charts.
In this image above we use the same A point as a starting point, B becomes the 1 and 2 becomes the C. We can then work the Fibonacci extension & expansion levels to determine where 3 is likely to go. And then we can use the retracement for the pullback for (4) as well as new extensions for the projection of the 5th wave.
A few months back, I wrote an article here on tradingview on the psychology on the charts, it’s worth highlighting that here.
Click the link/image to view the article;
Nothing is 100% certain, but using these methods will help give you a better understanding of waves and swings, logic for pullbacks and reason for extension levels.
I hope this helps someone out here!
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
The greatest teacher, failure is.Why I add drawings to my TA - mostly as I have time and enjoy entertaining on serious topics. Brighten up the world of @TradingView for you guys.
In the recent months since the Rocket call - (BTC Drop to 30k from 60k+) its been a slow steady burn on the weekly 3-4 move in terms of Elliott Wave. I have spent the time putting together some educational content as well as some of the defined logic for the drop itself, the moves down and of course the current situation.
If you haven't been following the post, here are a few to help you along.
1) Elliott Roadmap (click the image for a link to the post)
This is how it's playing out;
2) Wyckoff Distribution - during the move down, many people turned to "Wyckoff" as it was widely publicised by the media and the usual crypto GURU. The irony was, back in March they all had it as Re-Accumulation.
(Click image for link to post)
Taken this further and into stage 2 of the basics;
(Click link)
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3) I have written on the topic of assessment of alt coins, crypto in general and buying the dips. (click on the links again for posts)
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4) Streams; Myself or @Paul_Varcoe put out daily streams, Paul usually does the 10:30 AM (UK Time) and myself the 3:30 PM (UK Time) Recently we have been talking about the length of time, expectations and logic supporting the moves and dynamics.
www.tradingview.com
www.tradingview.com
Paul's stream are done as a viewers request series, so go ask him what you want.
If you dedicate the time to read through these articles above and watch the couple of streams posted here. It will all make sense, feel calm like Yoda. Enjoy your trading!
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Buy at the tops & sell the bottoms! Richard Ney spoke about think of the market like a warehouse, the owners of the warehouse CM (composite man) needs to fill the building with inventory, they need to sell some as they acquire more - issuing news releases of their grand launch. But their whole objective is to buy at the wholesale rate & sell at retail prices.
Think of this in a simple chronology form;
Strong hands buy cheap and sell at a higher price – to the retail clients, willing to pay more. This is usually due to the retail buying the tops and selling the bottoms.
If you take a look at the CryptoQuant chart - replicated from their site, into @TradingView
You will notice the drop off towards the end of Feb. this was in essence the buyers climax. I’ve had several people ask – why would the big boys bail at 40k? Again, you need to think of the wholesale/retail scenario. CM buys low and sells high, retail buy high and sell low.
If you apply some Elliott logic here, you will see we were at a weekly 3 & that was finished with a daily 5 – giving the need of a correction (in Warehouse terms) selling inventory, in trading lingo – it’s distribution.
Here I posted the map in March;
As you can see it played out as expected.
Let’s go back to the Wholesale logic by Mr Ney; This is by far the easiest way to think about it. The primary goal of composite man (the market maker) or in the warehouse owner. Is to make money. To do this, they acquire stock or BTC and fill their warehouse(fund).
In the accumulation phase, CM (Composite man) needs enough inventory to make it worthwhile, making demand – you will see positive news, attracting the retail to the store. The whole process is about supply and demand. Does he have enough supply for the demand?
The warehouse will not be filled with only one truck – it will take several months and multiple deliveries to accumulate enough stock/BTC. Then the emphasis is put on mass marketing! Think a Musk tweet, positive news and so on! Attracting retail buyers – who now have confidence in the product on sale as it’s shot up recently. Supply seemingly limited and demand high!
As buyers buy – CM is selling as seen by the Blockfi wallet image above. Price driven up as supply becomes exhausted and demand is peaked!
Now what? – well Price is too much for CM to want to buy anything back at an ATH. He wants it back at a new fair value – wholesale price.
So, the best thing to do is – cause a little fear and doubt, a political statement or a tweet or two in today’s world. The media is basically yesterday’s news, tomorrow. But so many people buy into it and that allows for the puppeteering.
And this is known as the distribution phase. We are now at a 1,3 or 5 Elliott wave. Let’s go with only at 1 in Elliott terms. CM can’t frighten retail too much and needs to keep the dream alive. Or there would be no dumb money buying into the next rally. So, the distribution & re-accumulation phase often blends in the 2nd wave of an Elliott move. If you look inside, you will see the ABC type moves giving hope to retail and gathering a strong position to go again.
All CM is doing is filling the shelves in the warehouse. He continues to buy new inventory and sell the old (hedging) And once there’s enough supply to make a new campaign – off he goes, selling to the world.
If news is bad at the highs, retail suckers would not buy anymore & CM would be left carrying the weight. Instead, the news is good, knowing a drop is imminent. The same applies at the bottom, if news is good – then retail will be buying in preparation for a move up. CM knows how to balance these moves without showing his hand. It’s knowing that retail fools – will always try to catch the bottom and stay in until the top. And you wonder why it is that retail lose 75% of the time or more!
CM simply takes advantage of the retail’s fear and greed. I recently wrote another TradingView article on emotional analysis.
This explains a little as to why Elliott, Wyckoff and Dow theory are still used today.
The logic from re-accumulation or Elliott 2 – goes on into 3, down to 4 and then up to 5. Before the cycle is completed and a new cycle starts. We cover this in more depth with the education. But I hope you get the general idea here.
Enjoy the rest of the weekend!
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Un-Common Sense...I have recently recorded a video titled “Fear + Greed = Stupidity”
I would say that lack of patience is the number one problem of traders who have come to me for mentoring or education over the years doing this.
There is a term used in the industry known as the 90-90-90 rule;
90% of traders, lose 90% of their money in 90 days. Just think about that for a second!
There are two types of money, 'smart money' and 'dumb money'. You, 'retail' traders are 'dumb money'.
The investment banks and institutions consider themselves the 'smart money'. Their job is only to move the dumb money into the pockets of the smart money, and they do this every day, all day long. (making the rich richer & the poor ...............well broke).
It amazes me, that it takes several years to go through university for many professions, yet the assumption is that you can work part time as a trader (after the 9-5) and come and dominate in crypto or FX – and we wonder why 90% lose 90% of their money in 90 days…
In order to make money in the markets, you need liquidity. The 'dumb money' provides the liquidity that the 'smart money' uses to get in and out of trades. Trading is a zero-sum game, every single penny you make is because some other poor soul lost it. For every buyer there's a seller and vice-versa (in an efficient liquid market).
Have a read of this little parable by @Paul_Varcoe
Think of the ‘business model’ of the exchanges and brokers; many have built their empires on this one simple rule – they are happy to give leveraged accounts to people as they know it’s only ‘dumb money’ that take them up on the offer, pushing people into the funnel is a repetitive cycle. Many brokers offer commission to introducers for what’s known as “FTD’s” first time deposits. Some offer introducers commission on spreads. They know all too well; the dumb money pouring in is the fuel for the machine.
Humans are naturally designed to lose; we have the fear of being hurt and the welcoming of pleasure, this goes on to create more endorphins. So, when we see a red P&L or open position, we naturally want it green so we leave the losses run. On the HOPE of it coming back. But when we are green, we cut the profits for the FEAR of it turning red. Again, step back and have a think about this point.
Now combine what I have just said above;
Fear + Greed = Stupidity and smart money are here to make you broke, as well as the fact that exchanges have based their business off the 90-90-90 rule.
What to do about it?
1. Do you use wide stops? If so, you’re just making the brokers rich and guaranteeing losses on your part. After all, the market always trades towards the stops. How else will it shake out all the weak players before making the real move? Using the right techniques, you can learn to enter and manage your risk a whole lot better.
Many “gurus” will be teaching methods that most retail traders fall for, this is another machine for making money off dumb money. I have seen these educators talk about not using stops or trading standard off the shelf tools.
You ever hear some guru say "The price is about to break support off the back of a hanging man, RSI is overbought and price broke out of the Bollinger band channel. It has also crossed under the 21-week EMA" (or some other shait like this), just remember that the price doesn't care, it'll go wherever the composite man needs it to go...
2. Statistics show there are certain times to trade various chart formations, stochastic are great in ranging markets and RSI are better suited for trending conditions. All of the dumb money are busy trading RSI in range bound markets as it’s the only tool they know how to use. Knowing when to use tools will go a long way – you get to a point of not really needing them, but until then acquire some more tools for the tool-box. A screwdriver is no good for hammering in a nail.
3. Do you know when to reverse your position? Since the market loves to catch everyone going the wrong way, this is a great and highly profitable tactic, but you have to know how and when to do it. I had a ton of people tell me how wrong I was on the call made in March for BTC – perma bulls, in an exhausted market. Glad to say my 30k call for the drop from 62,500 was on point. Over shot by 2k, but what’s that among friends? (See rocket post, in the related ideas)
You have to work the market both ways, or at least learn to sit out during the corrective phases. They do happen from time to time!
4. Making a plan – people are busy trying to catch the bottom, this is reminiscent of that lego batman scene “first time” after several attempts of calling the bottom. They will be right at some point. The number of posts on TradingView calling the BTC spring in the most recent drop – scary. When building a plan, it should be focused on risk management and a systematic approach for both entries and exit.
I would much rather catch 60-80% of the swing with high probability, than try to obtain the full A to B move with little possibility.
5. I encourage the traders I mentor to “Trade less. Earn more.” You need to learn that its better to make a bit with 95% certainty than to try to make 100% with only a 10% chance of hitting the home run! And in this way you keep your liquidity costs low and add to your earnings at the end of the year.
If you’re looking to trade crypto – take a look at this;
On the psychology side;
And finally here’s the logic for why the cycles can last a “little longer” – see yesterday’s stream!
www.tradingview.com
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Educational chronology Over the last couple of Months, I have published some educational content here @TradingView and wanted to correlate them into one post as they now cover several pages.
Starting with some of the fundamentals and into more of the advanced topics;
EACH IMAGE IS A LINK TO THE ACTUAL POSTS
Starting with Psychology - one of the most important things to pick up on early. There are some great books on trading psychology, one of the best in my personal experience is Trading In the Zone by Mark Douglas.
I expanded on this psychology one - by adding cartoons to break down the stages.
As for some good books see this post;
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When starting (many new traders are joining sites such as TradingView) for crypto. So when assessing companies/coins to invest in - it's good to have some depth on the company. Here's a guide on assessing alt coins;
Another relevant topic in crypto - as there will be dips! IS how to buy the dips.
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Chart basics
Trendlines;
Moving Averages;
Mixing timeframes on the chart;
A little more advanced
MACD;
Confusion in Indicators;
Gann Fans;
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Emotional analysis - Elliott & Wyckoff
Why I called this emotional analysis - is that the way Elliott & Wyckoff could read the situation above the chart price, the fact that human behavior drives markets. Composite man (Wyckoff story) controls the markets based on understanding how humans think. Means this is less technical and more emotional.
Elliott Basics;
Elliott Level 2;
Wyckoff;
Wyckoff chart basics;
Basics 2;
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Another topic worth mentioning is COT (Commitment of Traders) a report issued once a week on the large money moves, in simple terms.
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I know there is a lot here in one post - but I hope it helps going through the basics like this and you can save for reference. This was mainly due to all of these posts being over several pages in my profile. This way it's all accessible.
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Do you know the inside of the candle?A typical candle will have an Open, High, Low, Close. You will see these referred to in some text, articles and indicators as O,H,L,C
Below is the structure of both a Bullish (Green) & Bearish (Red) Candle
The cycle shown below, is the action within a candle, think about this – the candle opens at say 100, it dips to 95 and starts gaining ground to 120, before dropping a little to 115 and closing there.
Why is this important?
Think of it like a football (soccer) match – the game starts and plays out during a set time, much like the candle – and at the end we have a score. The actions in the match tell the story, but it’s the end result that counts.
So, what is the story?
The middle of the candle known as the body is equal to the spread and gives a clue as to the sentiment of this particular candle.
Sentiment
A wide spread gives the indication of strong sentiment, of course if the candle is red with a long body it would be strong bearish sentiment.
If the body is narrow – it suggests a weak bias overall.
Do the wicks matter? – well yes, of course. They tell another story, the wick can give you the equivalent of the match highlights – how much time/effort was committed in the oppositions half. If you think of it still as a sports match.
Although the body (spread) is small this image shows a different type of strength, well actually it is more weakness to the upside than downside strength. The market has tried to push higher and failed.
Wicks in some more detail.
Inside the wick you can see effort with lack of reward. Shown in the image above, this can be exaggerated and emphasised if accompanied by a small body or spread. Especially in the other direction. By this I mean a large wick on the top and then the bar closing red would have emphasis on bearish sentiment – however, a small red body would show little buying interest but no real intent to the downside.
The candles can tell a story, often on their own. However various formations give more detail and can be used to identify events prior to a major move.
This is especially powerful when used with some other methods, that can zone in on areas of interest.
Did you know?
Inside @TradingView indicator tab; there is a sub section for candlestick patterns – to automate the recognition.
This feature has several scripts for Doji, Engulfing, Hammers, Spinning tops and many more.
This was only a quick dive into candlesticks – nothing major and not much depth, but as usual, I hope this helps even with the appreciation of what a candle represents.
Some additional educational posts;
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Volume Profiles on TradingViewIf you are new to @TradingView
Or a new trader, there is a pretty useful feature called volume profiles - available with paid membership of Tradingview. This is a quick introduction to and not a full lesson on how to use, strategies or techniques (will post one if there is interest for that).
TradingView's own definition of Volume profile
Volume Profile is an advanced charting study that displays trading activity over a specified time period at specified price levels. The study (accounting for user defined parameters such as number of rows and time period) plots a histogram on the chart meant to reveal dominant and/or significant price levels based on volume. Essentially, Volume Profile takes the total volume traded at a specific price level during the specified time period and divides the total volume into either buy volume or sell volume and then makes that information easily visible to the trader.
Source - www.tradingview.com
Types of volume profiles available
First there is session volume
As it says on the tin - session volume calculates the volume of transactions during the session, boxed off individually on a session by session basis.
Inside the session volume;-
Second type of volume profile is "Visible range" - again not much of an explanation needed, however - this one is a little more tricky as a lot of novice traders spend a lot of time flipping between charts, time frames and so on. So you need to be careful as it will compute, whatever you have in view on the chart.
Here we can see the value area, just like the session - but for the visible range.
I have also highlighted the region outside of the value zone - grey area in orange boxes. (for this example) and of course the point of control.
By zooming out to another swing high you can see how this changed the profile.
This is due to the fact we are now viewing on the chart a different range - A bigger swing with more info inside the calculation.
The third type of volume profile on TradingView is the fixed range;
In simple terms - this kind of works between the two; you can highlight what you want, but it is then anchored much like the session volume.
In this example above, I have shown the fixed range to match a visible range - larger left and the profile larger on the right. As well as a smaller fixed range showing the original smaller range form the visible range image 1.
Mix and match - or different use cases;
There are several different ways to apply volume, the use case, the logic & the strategy will depend on what one or what combo works best for you. As I mentioned above, I will do a lesson on strategies for volume if requested.
In this example below; I have shown a fixed range and a session profile.
And finally - just to reiterate, there are several techniques when trading volume, at a glance here you will see a cluset of "PoC's" consolidating at a high before the price moves on down over several sessions.
This is just one application.
As always, I hope this helps some newer traders out there get into volume profile, It can be a powerful tool when you know how to use it.
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
