Raw VS Percentage Volatility FormatA Quantitative Comparison of "Buying & Selling Pressure" and "Average Bullish & Bearish Percentage Change"
In market analysis, the choice of averaging method can profoundly influence the insights derived. The "Buying & Selling Pressure " and "Average Bullish & Bearish Percentage Change" indicators demonstrate the unique strengths of fixed-period and candle-count-based averaging approaches.
Key Differences Between Fixed-Period and Candle-Count Averaging
Fixed-Period Averaging in BSP:
➡︎ In "Buying & Selling Pressure", candle metrics are averaged over a defined period (e.g., 14 bars).
➡︎ This provides rapid insights into market sentiment changes, making it ideal for tracking incentive shifts and volatility in real time.
➡︎ However, because this method includes all candles in the averaging window, it may reflect short-term fluctuations, offering less stability compared to candle-count-based methods.
Candle-Count Averaging in ABBPC:
➡︎ "Average Bullish & Bearish Percentage Change"uses a predefined count of bullish or bearish candles for averaging percentage changes.
➡︎ This produces stable and reliable values, which are less sensitive to noise and better suited for risk and reward assessment.
➡︎ The focus on specific candle states ensures that only relevant market behaviors contribute to the averages.
Using Percentage Change for Risk Definition
One of the greatest strengths of the "Average Bullish & Bearish Percentage Change" indicator is its ability to assist in risk and reward calculations with much more market related figures instead of raw values of volatility:
Defining Risk
The average percentage change of bearish candles can serve as a dynamic stop-loss level.
For example, if the average bearish percentage change over the last 10 candles is 2%, a trader can set a stop-loss at 2% below their entry to account for typical market behavior.
Quantifying Reward:
The average bullish percentage change helps identify realistic profit targets.
If the average bullish percentage change over the last 10 candles is 3%, a trader can set a target at 3% above their entry to maintain a favorable risk-to-reward ratio.
Dynamic Adjustments:
As the market evolves, these average percentage changes update, allowing traders to adjust their risk and reward levels in real time for better precision.
Quantitative Advantages of Percentage Change Averaging
Normalization Across Price Levels:
Percentage changes enable consistent comparison across assets with vastly different price ranges.
Enhanced Stability for Risk Assessment:
Candle-count averaging smooths out noise, offering a reliable basis for setting risk parameters like stop-losses and profit targets.
Improved Predictability:
By isolating specific candle behaviors, percentage-based metrics provide clearer signals for trend-following or mean-reversion strategies.
Advantages of BSP’s Fixed-Period Averaging
Despite being less stable, "Buying & Selling Pressure " excels in areas requiring speed and adaptability:
Fast Incentive Tracking:
Period-based averaging adapts quickly to changing market conditions, providing timely insights into shifts in buying or selling pressure.
Broad Volatility Capture:
BSP includes all candles in the defined period, capturing overall market dynamics, including sudden spikes or reversals.
Real-Time Decision Making:
Its responsiveness makes it highly suitable for momentum or breakout trading strategies.
Bottomline:
Use "Average Bullish & Bearish Percentage Change" for stable, consistent data ideal for risk assessment, particularly when defining dynamic stop-loss levels or profit targets based on average percentage changes.
Use "Buying & Selling Pressure " for its speed and adaptability in tracking real-time shifts in market incentives and capturing volatility.
Community ideas
Why Tesla is a Good Longterm Bet ?Hello friends and mates greetings from my side, I hope you all are doing well and doing good trading too so today we will try to discuss some key facts that why Tesla presents a compelling good opportunity for a long term investment so let's start quickly.
Why Tesla is an Indispensable Asset in a Long-Term Investment Portfolio
Tesla Inc. (NASDAQ: TSLA) has emerged as one of the most transformative enterprises of the modern era. Renowned for its pioneering efforts in the electric vehicle (EV) sector, Tesla has transcended its automotive origins to establish a formidable presence in energy storage, solar energy, and artificial intelligence (AI), thereby reshaping multiple industries. For astute, long-term investors, Tesla embodies an unparalleled proposition, driven by relentless innovation, formidable brand equity, and strategic alignment with critical, future-defining sectors.
1. Commanding Supremacy in the EV Sphere-:
Tesla unequivocally leads the burgeoning EV market, which is poised for exponential expansion as global governments and conscientious consumers pivot away from fossil fuels. Key pillars underpinning Tesla’s preeminence include:
First-Mover Ascendancy: Tesla catalyzed the EV revolution, setting the benchmark for excellence in quality, range, and technological sophistication.
Global EV Adoption Surge: Industry prognoses suggest EVs will comprise 60% of global automotive sales by 2030, presenting Tesla with a colossal growth canvas.
Technological Prowess: Tesla’s vehicles are distinguished by cutting-edge battery efficiency, robust autonomous driving systems, and seamless over-the-air software updates, conferring a formidable competitive advantage over traditional automakers.
2. Pioneering Innovation Beyond Automotive Horizons-:
Tesla’s scope of influence extends far beyond the realm of EVs, rendering it a multifaceted investment anchored in diverse, high-growth domains:
Energy Storage Prowess: Tesla’s Powerwall, Powerpack, and Megapack solutions are revolutionizing renewable energy ecosystems, enabling efficient storage of solar and wind energy.
Solar Energy Integration: Tesla’s Solar Roof and solar panel offerings aim to democratize solar energy adoption, synergistically complementing its energy storage capabilities.
AI and Robotics Ambitions: Tesla’s advancements in Full Self-Driving (FSD) systems and the advent of humanoid robots like Optimus position the company as a vanguard in artificial intelligence and robotics innovation.
These ventures collectively diversify Tesla’s revenue streams, fortifying its position across interdependent, future-centric industries.
3. Demonstrable Financial Resilience-:
Tesla’s robust financial trajectory underscores its capacity to scale operations profitably, a critical determinant for long-term investors:
Sustained Revenue Expansion: Tesla’s consistent revenue growth is propelled by escalating vehicle deliveries and burgeoning energy product sales.
Profitability Milestone: Unlike many high-growth enterprises, Tesla has attained sustained profitability, with enviable operating margins in an industry notorious for its razor-thin margins.
Free Cash Flow Generation: Tesla’s proficiency in generating free cash flow enhances its ability to reinvest in transformative growth initiatives and insulate itself against economic volatility.
4. Visionary Leadership and Strategic Foresight-:
Tesla’s meteoric ascent is inextricably linked to the visionary stewardship of its CEO, Elon Musk. Musk’s audacious goals, coupled with his unrelenting focus on innovation, have cemented Tesla’s status as a global juggernaut. While the company is not immune to leadership risks, Musk’s unparalleled track record of disrupting industries—from PayPal to SpaceX—augurs well for Tesla’s sustained innovation trajectory.
5. An Impenetrable Competitive Moat-:
Tesla’s fortified competitive position renders it an arduous adversary for rivals seeking to erode its market share:
Iconic Brand Affinity: Tesla’s brand is synonymous with ingenuity and environmental sustainability, engendering unparalleled loyalty among its consumer base.
Gigafactory Ecosystem: Tesla’s expansive gigafactory network facilitates vertical integration, operational efficiency, and scalable production capacity.
Data-Driven Advantage: Tesla’s extensive fleet generates billions of miles of real-world driving data, endowing it with an unrivaled edge in autonomous driving technology development.
6. Tailwinds from Transformative Macro Trends-:
Tesla is uniquely positioned to capitalize on prevailing macroeconomic and societal shifts:
Global Decarbonization Mandates: Regulatory imperatives worldwide are accelerating the adoption of EVs and renewable energy solutions, directly benefiting Tesla.
Technological Breakthroughs: Innovations in battery technology and AI will further bolster Tesla’s product differentiation and profitability.
Emerging Market Penetration: Tesla’s foray into underserved geographies, including India and Southeast Asia, opens new frontiers for sustained growth.
7. Contemplating Risks and Mitigation Strategies-:
While Tesla presents a compelling long-term case, prudent investors must acknowledge and account for potential risks:
Valuation Excesses: Tesla’s valuation metrics often invite scrutiny. However, its unparalleled growth trajectory and market dominance arguably validate a premium valuation.
Competitive Pressures: Entrenched automakers and agile EV startups are intensifying market competition. Nevertheless, Tesla’s unwavering focus on innovation and efficiency continues to outpace rivals.
Regulatory Flux: Changes in governmental incentives or policies may pose challenges. Tesla’s diversified portfolio mitigates overreliance on any singular revenue stream.
8. Historical Stock Performance: A Testament to Vision-:
Tesla’s stock has delivered extraordinary returns to early investors, reflecting its ability to consistently surpass expectations. While historical performance is not an infallible predictor of future outcomes, Tesla’s demonstrable track record of pioneering achievements and market leadership enhances its appeal as a cornerstone investment.
Conclusion-:
Tesla transcends its identity as a mere automaker, it is a technological colossus and energy innovator poised to dominate pivotal high-growth sectors. With its unparalleled brand equity, robust financial fundamentals, and visionary leadership, Tesla is a quintessential holding for any long-term portfolio. Investing in Tesla is not merely a stake in a company; it is an endorsement of a future defined by technological ingenuity, environmental stewardship, and transformative progress. For discerning investors willing to weather short-term fluctuations, Tesla offers a rare amalgamation of growth potential and enduring relevance in a rapidly evolving world.
This post does not give any kind of buy or sell advice. Here only the fundamentals of Tesla company have been discussed. I hope you all like it and I think that soon I will be able to share some of my trading ideas on this.
Best Regards- Amit
Hope you like this publication.
Quantum Mechanics & Market Behavior At this stage of my research, I would like to share the primary inspirations behind my style of analysis. As you've already noticed, I don’t create forecasts, as they are subjective and inherently disconnected from the objective nature of markets. Instead, I focus on predictions grounded in the captured dynamics of market behavior in order to actually get closer to its causality.
"QUANTUM MARKET"
In the unpredictable world of trading, price action often mirrors the strange principles of quantum mechanics. Concepts like wave function collapse, entanglement, chaos theory, the multiverse, and even the double-slit experiment provide a unique lens to understand why markets behave as they do—particularly when they defy the majority of forecasts and move in unexpected directions.
The Collapse of the Market Wave Function
In quantum mechanics, a particle exists in a state of possibilities described by its wave function until it is measured. When observed, the wave function "collapses" into one definite outcome. Similarly, in markets, price exists as a spectrum of probabilities, influenced by fundamental data, sentiment, and technical levels. These probabilities reflect the collective forecasts of traders, analysts, and institutions.
The "collapse" of the market wave function can be likened to the moments when price unexpectedly moves against the prevailing sentiment, proving the majority wrong. For instance, when experts predict a bullish breakout, only for the market to reverse sharply, it resembles the moment a quantum system resolves into a state that surprises its observers.
This metaphor highlights the fragile relationship between market expectations and actual outcomes. Just as the act of measurement influences a quantum system, the collective observation and positioning of traders directly impact market movements.
The Multiverse of Price Action
The Many-Worlds Interpretation (MWI) of quantum mechanics posits that every possible outcome of a quantum event occurs, creating branching universes for each scenario. This offers a useful metaphor for the multiverse of market possibilities, where price action simultaneously holds countless potential paths. Each decision by traders, institutions, and external forces influences which path the market ultimately "chooses," much like the branching of quantum states into separate realities.
When the market takes an unexpected turn, it can be thought of as moving into a "branch" of the multiverse that was previously considered improbable by the majority. For example:
A widely anticipated bullish breakout may fail, with the price collapsing into a bearish reversal. This outcome corresponds to a "parallel universe" of price action where the market follows a path contrary to the consensus. When they say market has its on path, chances are they're definitely referring to approach from Fractal Market Hypothesis.
The moment traders observe the market defy expectations, their reality shifts into this new "branch," leaving the discarded probabilities as theoretical relics.
While traders only experience one "reality" of the market—the observed price movement—the multiverse perspective reminds us that all potential outcomes coexist until resolved by market forces.
Chaos Theory: The Hidden Order Behind Market Behavior
Markets may appear chaotic, but their movements are not entirely random. Instead, they follow principles reminiscent of chaos theory, where complex systems display patterns that arise from underlying order.
In trading, this hidden order emerges from the entanglement of price action—the intricate relationship between buyers, sellers, sentiment, and external events. Counter-oscillations of opposing forces, such as bullish and bearish sentiment that has stake in patterns. When these forces reach a critical point, they can produce dramatic reversals or breakouts.
A fascinating aspect of this hidden order lies in the measurement of cycle intervals, which can decrypt the path and stops of price action. These intervals, often influenced by Fibonacci ratios, reflect the inherent chaos of the market while maintaining a surprising consistency. In chaotic systems, the ratios of results inherit the domestic chaos properties of the system itself. This means the measured intervals not only explain past behavior but also project future movements, where price has no option but to adhere to the golden ratio in its path, regardless of direction.
Tools like Fibonacci Channels on TradingView combine these ratios with the angle of the trend, revealing fractal-based timing measurements that highlight potential trend shifts. These tools demonstrate how price action, driven by the chaotic yet structured forces of the market, aligns with these self-similar patterns over time.
Entanglement and the Double-Slit Experiment in Markets
Einstein described quantum entanglement as "spooky action at a distance," where the state of one particle instantaneously influences another, no matter how far apart they are. Markets also mirror another iconic quantum experiment: the double-slit experiment, which demonstrates how particles behave as waves when unobserved but collapse into definitive points when measured.
In the double-slit experiment, an electron passes through two slits, existing as a wave of probabilities until observed. Without observation, it creates an interference pattern, suggesting it travels through both slits simultaneously. However, when measured, the electron collapses into a single state, taking a definitive path through one slit and landing at a specific spot on the detector.
Price action behaves in a strikingly similar way. Just as an electron "feels" it is being observed and alters its behavior, ongoing price action appears to respond to the collective observation of millions of traders. Despite this intense scrutiny, price action frequently surprises both bulls and bears, defying expectations as if reflecting the duality of probability and definitiveness.
When unobserved or in a state of uncertainty, markets exhibit wave-like behavior, oscillating between potential paths. Trends consolidate, creating a balance of opposing forces. However, as traders act on their observations—placing bets, setting stop losses, or predicting breakouts—price "collapses" into a definitive state, choosing a path that often defies the collective expectations of the market.
Logical Deductions
Understanding the market through the lens of quantum mechanics, chaos theory, and the multiverse offers valuable insights for traders:
Expect the Unexpected: Just as a quantum particle's state cannot be precisely predicted, markets are inherently probabilistic. Even the most widely expected outcomes can collapse under the weight of unforeseen variables or simply change of incentive during overheat volatility.
Beware of Herd Mentality: When the majority aligns behind a forecast, the market becomes entangled in their collective assumptions. This might create conditions for a dramatic reversal, much like how a quantum system shifts into an unanticipated state.
Recognize Counter-Oscillations: Price action is driven by the push and pull of opposing forces. Trends often mask the tension beneath, and understanding these dynamics can help traders anticipate critical turning points.
Measure Cycles with Ratios: Fibonacci-based tools, when combined with trend angles, reveal fractal rhythms and the frequency of reversals. These measurements help traders predict price shifts with greater accuracy.
Embrace the Multiverse: Just as the Many-Worlds Interpretation suggests all outcomes coexist until resolved, traders should recognize that multiple possibilities are always present in the market. Being prepared for alternative scenarios helps mitigate risk and improve decision-making.
General Interconnectedness:
Markets are a dynamic interplay of order and chaos, shaped by the entanglement of opposing forces and the constant tension between consensus and contrarian dynamics. The collapse of the wave function—those moments when price defies expert predictions—reminds us of the deep complexities underlying actual behavior of masses.
Through the lens of the multiverse, every market outcome can be seen as a branching reality, where the price action we observe is just one of many potential paths. By embracing this perspective, traders can better navigate the intricate dance of probabilities and entanglement, understanding that markets are not linear systems but ever-changing, interconnected realities. This mindset empowered me to thrive in the environment of duality, where adaptability and probabilistic thinking are the actual keys to understanding price mechanism in Financial Markets.
Disclaimer:
You don’t have to accept these observations as true. Always trust your own judgment and cultivate independent thinking. Personally, I find that the behavior of particles at the quantum scale is the closest phenomenon that mirrors the chaos of the market.
6 Things to Do before you start Investing and Trading1. Build an Emergency Fund
▪️Why it's important: Having an emergency fund ensures you have a financial cushion for unexpected expenses (e.g., medical bills, car repairs, job loss). Without this safety net, you may be forced to sell investments or go into debt if something unforeseen happens.
▪️How to do it: Aim for 3-6 months' worth of living expenses in a liquid, easily accessible account like a savings account. Focus on saving first before putting money into investments.
2. Pay Down High-Interest Debt
▪️Why it's important: High-interest debt, especially from credit cards, can severely hinder your financial progress. The interest on these debts is often higher than the returns you could earn from investments in the short term.
▪️How to do it: Prioritize paying off high-interest debts first (e.g., credit cards), then move on to other debts like student loans or car loans. Consider strategies like the debt snowball or debt avalanche method.
3. Define Your Financial Goals and Priorities
▪️Why it's important: Knowing what you're investing for (e.g., retirement, a down payment on a house, education, or travel) will help you choose the right investment vehicles and timeframes. It also provides motivation and direction.
▪️How to do it: Set SMART (Specific, Measurable, Achievable, Relevant, Time-bound) financial goals. Break them down into short-term, medium-term, and long-term goals. This helps you align your investments with your needs.
4. Know Your Cash Flow
▪️Why it's important: Understanding your income and expenses is essential for managing your finances and determining how much money you can consistently allocate to investing. If you don't have a clear picture of your cash flow, you might overextend yourself or miss opportunities.
▪️How to do it: Create a monthly budget to track your income, fixed expenses, and discretionary spending. Consider using a budgeting tool or app to make this process easier. Be honest about where you can cut back to free up funds for investing.
5. Track Your Net Worth
▪️Why it's important: Tracking your net worth gives you a clear picture of your overall financial health. It's a snapshot of what you own (assets) minus what you owe (liabilities). This helps you measure your progress over time and adjust as needed.
▪️How to do it: List all your assets (e.g., savings, investments, real estate) and liabilities (e.g., mortgages, student loans, credit card debt). Update this regularly to see how your financial situation is evolving. You can use free online tools or apps to make this process easier.
6. Understand the Basics of Investing and Trading
▪️Why it's important: If you're going to invest or trade, you need to understand the fundamental principles behind both activities. This includes knowledge of risk, returns, diversification, asset classes (stocks, bonds, real estate), and how markets operate.
▪️How to do it: Read books, take online courses, or follow credible financial blogs and YouTube channels. It’s important to grasp concepts like risk tolerance, time horizon, and the different types of investments (stocks, mutual funds, ETFs, etc.). Understanding these principles will help you avoid common mistakes and make informed decisions.
Prop Trading - All you need to know !!A proprietary trading firm, often abbreviated as "prop firm," is a financial institution that trades stocks, currencies, options, or other financial instruments with its own capital rather than on behalf of clients.
Proprietary trading firms offer several advantages for traders who join their ranks:
1. Access to Capital: One of the most significant advantages of working with a prop firm is access to substantial capital. Prop firms typically provide traders with significant buying power, allowing them to take larger positions in the market than they could with their own funds. This access to capital enables traders to potentially earn higher profits and diversify their trading strategies.
2. Professional Support and Guidance: Many prop firms offer traders access to experienced mentors, coaches, and support staff who can provide guidance, feedback, and assistance. This professional support can be invaluable for traders looking to improve their skills, refine their trading strategies, and navigate volatile market conditions.
3. Risk Management Tools: Prop firms typically have sophisticated risk management systems and tools in place to help traders monitor and manage their exposure to market risks. These systems may include real-time risk analytics, position monitoring, and risk controls that help traders mitigate potential losses and preserve capital.
4. Profit Sharing: Some prop firms operate on a profit-sharing model, where traders receive a share of the profits generated from their trading activities. This arrangement aligns the interests of traders with those of the firm, incentivizing traders to perform well and contribute to the overall success of the firm.
Overall, prop firms provide traders with access to capital, technology, support, and learning resources that can help them succeed in the competitive world of trading. By leveraging these advantages, traders can enhance their trading performance, grow their portfolios, and achieve their financial goals.
CHOCH vs BOS !!WHAT IS BOS ?
BOS - break of strucuture. I will use market structure bullish or bearish to understand if the institutions are buying or selling a financial asset.
To spot a bullish / bearish market structure we should see a higher highs and higher lows and viceversa, to spot the continuation of the bullish market structure we should see bullish price action above the last old high in the structure this is the BOS.
BOS for me is a confirmation that price will go higher after the retracement and we are still in a bullish move
WHAT IS CHOCH?
CHOCH - change of character. Also known as reversal, when the price fails to make a new higher high or lower low, then the price broke the structure and continue in other direction.
Market Structure Identification !!Hello traders!
I want to share with you some educational content.
✅ MARKET STRUCTURE .
Today we will talk about market structure in the financial markets, market structure is basically the understading where the institutional traders/investors are positioned are they short or long on certain financial asset, it is very important to be positioned your trading opportunities with the trend as the saying says trend is your friend follow the trend when you are taking trades that are alligned with the strucutre you have a better probability of them closing in profit.
✅ Types of Market Structure
Bearish Market Structure - institutions are positioned LONG, look only to enter long/buy trades, we are spotingt the bullish market strucutre if price is making higher highs (hh) and higher lows (hl)
Bullish Market Structure - institutions are positioned SHORT, look only to enter short/sell trades, we are spoting the bearish market strucutre when price is making lower highs (lh) and lower lows (ll)
Range Market Structure - the volumes on short/long trades are equall instiutions dont have a clear direction we are spoting this strucutre if we see price making equal highs and equal lows and is accumulating .
I hope I was clear enough so you can understand this very important trading concept, remember its not in the number its in the quality of the trades and to have a better quality try to allign every trading idea with the actual structure
What is Confluence ?✅ Confluence refers to any circumstance where you see multiple trade signals lining up on your charts and telling you to take a trade. Usually these are technical indicators, though sometimes they may be price patterns. It all depends on what you use to plan your trades. A lot of traders fill their charts with dozens of indicators for this reason. They want to find confluence — but oftentimes the result is conflicting signals. This can cause a lapse of confidence and a great deal of confusion. Some traders add more and more signals the less confident they get, and continue to make the problem worse for themselves.
✅ Confluence is very important to increase the chances of winning trades, a trader needs to have at least two factors of confluence to open a trade. When the confluence exists, the trader becomes more confident on his negotiations.
✅ The Factors Of Confluence Are:
Higher Time Frame Analysis;
Trade during London Open;
Trade during New York Open;
Refine Higher Time Frame key levels in Lower
Time Frame entries;
Combine setups;
Trade during High Impact News Events.
✅ Refine HTF key levels in LTF entries or setups for confirmation that the HTF analysis will hold the price.
HTF Key Levels Are:
HTF Order Blocks;
HTF Liquidity Pools;
HTF Market Structure.
MY APPROACH TO MAKING MONEYMy main trading principle is that the price always moves from swept liquidity levels to untouched liquidity levels by forming structure on the way.
Liquidity and Structure is a key for my trading system.
Commodities: Safeguarding Your Wealth in Uncertain TimesInvesting in Commodities: A Comprehensive Guide
In the quest for a balanced investment portfolio, commodities emerge as a crucial component, contributing to diversification and risk management. Commodities refer to raw materials or primary agricultural products traded globally, ranging from oil and gold to corn and wheat. Their unique characteristics offer investors opportunities to safeguard their assets and potentially profit during economic fluctuations, making them an essential element in mitigating risks associated with stock and bond markets.
At their core, commodities are fundamental materials employed in the production of goods and services, acting as a foundation for the global economy. These assets can be traded, bought, or sold, with their market value primarily driven by supply and demand dynamics. Unlike equities or fixed-income instruments, which represent ownership stakes or debt commitments, commodities are tangible resources that investors can physically possess or leverage for financial gain.
The primary allure of commodities lies in their potential to hedge against inflation and enhance portfolio diversification. Their often independent price movements compared to traditional asset classes, like stocks and bonds, make them valuable during times of economic uncertainty. For instance, when inflation rises, the prices of commodities frequently increase, preserving investor purchasing power and protecting against currency devaluation.
Commodities can be broadly classified into two categories:
- Hard Commodities: This group includes energy resources such as oil and natural gas, as well as metals like gold, silver, and platinum.
- Soft Commodities: These encompass agricultural products like wheat, corn, and coffee, along with livestock such as cattle and hogs.
By diversifying investments across both categories, investors can tap into various market trends and opportunities, whether it’s responding to geopolitical events affecting oil prices or poor harvests leading to increases in agricultural commodity costs.
Investing in commodities can take several forms, each with distinct characteristics and associated risks. Here are the main avenues available to investors:
- Direct Purchase
Buying physical commodities—like gold bars or silver coins—allows investors to own tangible assets. This method provides a straightforward hedge against inflation but comes with challenges in terms of storage and security, particularly for significant investments.
- Futures Contracts
Futures contracts are agreements to buy or sell a specified quantity of a commodity at a predetermined price on a future date. While futures trading can yield high returns due to leverage, it also poses substantial risks, requiring a thorough understanding of market dynamics and careful management.
- Commodity ETFs
Exchange-Traded Funds (ETFs) that track the prices of individual commodities or a basket of them offer a more passive investment option. These funds provide liquidity and diversification without the need for physical ownership or the complexities of futures trading.
- Commodity Stocks
Rather than investing directly in commodities, one can consider buying shares of companies engaged in the production of commodities, such as mining firms or oil companies. This strategy allows investors to benefit indirectly from commodity price movements while also receiving dividends.
- Contracts for Difference (CFDs)
CFDs are agreements that enable investors to speculate on commodity price movements without owning the underlying assets. This trading method is well-suited for experienced investors looking to capitalize on short-term market fluctuations but comes with amplified risks due to leverage.
Gold Futures Monthly Chart from 1975
- Hedge Against Inflation
Commodities are often viewed as a safe haven during inflationary periods. As general prices rise, so too do commodity values, making them an effective strategy for preserving purchasing power.
- Portfolio Diversification
Incorporating commodities into an investment strategy can enhance diversification. They generally exhibit low or negative correlations with stocks and bonds, helping to cushion portfolios against market downturns.
- Cyclical Performance
Commodities typically respond to economic cycles, performing well during times of growth when demand increases. Conversely, they may benefit from investor behavior during market instability, particularly in the case of precious metals.
- Supply and Demand Insights
Investors can leverage the fundamental principles of supply and demand to identify profitable investment opportunities. For instance, seasonal changes or geopolitical disruptions may create market imbalances affecting commodity prices.
While the potential rewards of commodity investing are considerable, the associated risks warrant careful consideration:
- Price Volatility
Commodity markets can be highly volatile. Investors may face sharp price swings, influenced by speculation, macroeconomic trends, or unexpected changes in supply and demand, which can lead to significant financial losses.
- Geopolitical Instability
Conflicts and political events can disrupt commodity supply chains, spurring unexpected price changes. For example, sanctions on oil-exporting countries can impact global supply and drive up prices.
- Environmental Changes
Natural events, including droughts and extreme weather, significantly impact agricultural commodities, while environmental regulations can affect energy-related assets. These factors introduce unpredictability and risk into commodity investments.
Silver Futures Monthly Chart from 1975
Interested in exploring commodity investments? Here’s a step-by-step guide to help navigate this investment landscape:
- Evaluate Your Risk Appetite
Before you commence commodity trading, assess your risk tolerance. If you prefer stable investments, consider allocating funds to less volatile commodities or diversified commodity ETFs. Conversely, if you’re open to high-risk scenarios, explore potential opportunities in more volatile markets.
- Select the Right Commodities
Research and identify commodities that align with your financial goals. For instance, gold may serve as a hedge against inflation, while industrial metals may thrive during economic growth phases.
- Determine Your Investment Method
Choose from various investment methods, whether direct purchases, futures, ETFs, stocks, or CFDs. Each approach carries its risk/reward profile, so it’s paramount to select one that suits your investment strategy.
Cocoa Futures Monthly Chart from 1980
Looking ahead to 2024 and beyond, several trends will shape the landscape of commodity investing:
- Transition to Green Energy
The ongoing shift toward renewable energy is poised to affect traditional fossil fuels, especially oil. As nations aim to reduce carbon footprints, the demand for oil may taper, albeit gradually, while renewable energy commodities like lithium and cobalt gain momentum.
- Emerging Markets Demand
Countries in rapid industrialization, particularly in Asia, are expected to drive demand for industrial metals. Investors should keep a close watch on these markets as they become increasingly vital players in the global commodity landscape.
- Rising Interest in Renewable Commodities
As the world gravitates toward sustainable practices, the demand for renewable commodities essential for electric vehicles and clean energy technologies is anticipated to surge. This shift presents exciting investment opportunities aligned with the growing push for decarbonization.
Copper Futures Monthly Chart from 1988
In conclusion, investing in commodities presents both opportunities and challenges. For those looking to diversify their portfolios and hedge against inflation, commodities can be an attractive option. However, the inherent volatility and unique risks make it crucial for investors to carefully consider their financial objectives and risk tolerance.
By staying informed about market trends, employing sound strategies, and understanding the dynamics of both supply and demand, investors can navigate the complex world of commodities to potentially achieve long-term success. Embracing this asset class effectively entails a proactive approach, ensuring alignment with broader investment goals in an ever-evolving financial landscape.
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CHECKLIST CHECKLIST
This video is an audio recording to explain the methods of building good trading habits and filters the winning day from lossing days
Understanding Leverage in Forex: Steep Risks and Big RewardsLeverage is the not-so-secret sauce to accelerate your gains at breakneck speed or blow up the entire operation if you don’t know what you’re doing (or you just want too much.) It’s a simple concept with profound implications—a multiplier that lets traders control positions far larger than the capital they actually have. Sounds like a dream, right? But in forex , dreams can turn into nightmares faster than you can say “margin call.”
Let’s unravel this seductive, high-stakes game changer.
❔ What Is Leverage?
“We were always leveraged to the hilt when we bought something and ran out of money, we would look at the portfolio and push out whatever appeared to be the least attractive item at that point,” explains Jim Rogers, George Soros’s partner, in Jack D. Schwager’s book “Market Wizards: Interviews with Top Traders.”
At its core, leverage is borrowed capital. When you trade with leverage, you’re essentially using your broker’s money to amplify the size of your position. Let’s say you want to invest $1,000 and use a leverage ratio of 100:1. This means you can control a position worth $100,000. A small 1% movement in your favor equals $1,000 in profit—doubling your initial investment in a single move. Sounds good, doesn’t it?
But here’s the catch: leverage works both ways. A 1% move against you wipes out your entire $1,000. It’s the double-edged sword that can turn modest accounts into heavyweights—or into dust.
🧲 The Allure of Amplified Gains
Forex traders are drawn to leverage like moths to a flame, and for good reason. The ability to turn small price movements into significant profits is exhilarating and means you don’t have to chip in gargantuan amounts of cash to make bank.
In a market where currency pairs often move fractions of a percentage daily, leverage is what makes those movements meaningful. Without it, most traders would struggle to eke out gains worth their time.
Consider a scenario where you’re trading a major currency pair like the EUR/USD . The price moves 50 pips in your favor, and each pip is worth $10 on a standard lot. Without leverage, you might only afford a micro lot, making your profit $5—not exactly a game changer. But with 100:1 leverage, you control a full lot, turning that $5 into $500. Suddenly, your modest deposit has real firepower.
This potential for outsized returns is intoxicating, especially for new traders. But like any powerful tool, misuse can be catastrophic.
💣 The Flip Side: Risks That Loom Large
If leverage is the hero of ever-moving forex trading space , it’s also the villain. For every dollar it helps you earn, it can take away just as quickly. While a 50-pip move in your favor feels like striking gold, the same move against you might be a financial disaster.
Even seasoned traders aren’t immune to the dangers of leverage. The forex market is inherently volatile, with prices influenced by everything from central bank policies to geopolitical tensions. Leverage amplifies these fluctuations, turning minor market noise into account-draining chaos if you’re not prepared.
Here’s the brutal truth: most traders underestimate the risks of leverage. Maybe because it’s so common they’ve gotten used to it. Overleveraging—taking on more risk than your account can handle—is the silent account killer. And it doesn’t take a market meltdown to wreck your balance. A sudden spike caused by unexpected news or a tweet can trigger a margin call, leaving you with nothing but a hard lesson.
🤙 Margin Calls: The Grim Reality
Let’s talk about margin calls, the dreaded phone call (once upon a time) no trader wants to receive—except it’s not a phone call anymore. It’s an automated popup notification from your broker informing you that your account equity has fallen below the required margin. Essentially, you’ve run out of money to sustain your positions and the broker is stepping in to close them before you owe more than your account balance.
This is where overleveraged and undercapitalized traders often meet their doom. A market move that would’ve been a minor setback on a properly sized position becomes a catastrophic loss when leverage is maxed out and equity is dried up. The lesson? Never let your enthusiasm for big trades overshadow your need for risk management.
🎯 Mastering Leverage: The Balanced Approach
Leverage isn’t inherently bad—it’s neutral. Like any tool, its impact depends on how it’s used. Successful traders respect leverage. They don’t treat it as a shortcut to riches but as a calculated risk multiplier.
Risk management is the cornerstone of surviving—and thriving—in a leveraged environment. This includes using stop-loss orders to limit potential losses, never risking more than an acceptable percentage of your account on a single trade and maintaining sufficient margin to weather market fluctuations.
And let’s not forget the importance of choosing the right leverage ratio. Many brokers offer leverage as high as 500:1, but that doesn’t mean you should take it. A lower ratio, like 10:1 or 20:1, gives you more breathing room and reduces the chances of wiping out your account. And if you decide to go for the upper echelons of leverage, say 100:1, then you should consider scaling down your positions to get that same breathing room.
🤔 The Psychology of Leverage
Leverage does more than magnify financial outcomes; it amplifies emotions too. The thrill of quick profits can lead to overconfidence, while the fear of losses can paralyze decision-making. Understanding your psychological tendencies is crucial when trading with leverage.
Patience and discipline are your best allies. Stick to your trading plan, avoid impulsive decisions, and don’t let the lure of high leverage cloud your judgment. The goal here isn’t just to make money once or twice—it’s to stay in the game for as long as possible.
So, how do you handle leverage? Are you the as-good-as-your-last-trade trader or you’re the more cautious, risk-averse type? Comment below and let’s spin up the discussion!
Importance of 50%, in MCAs we analyzed before ( read here ), the price movement on Cardano has been completed. It is trending upward now.
The main entry point for the ARZ Trading System is when we have a pullback from more than one S&R level on the border of drawn MC boxes (#1). Either MC, LTP or UTP.
Here we see sometimes this alignment will happen on 50% of the boxes, which is acceptable when it is in the direction of the major and minor trend (#2 & #3).
Watch 4H:
- Strong Bullish: Target 1: $0.9414, Target 2: $0.9890
- Strong Bearish: Target: $0.8459
Keynote: until the minor trend is not violated , the next target points are based on the base MC box size.
Why Your Stop Losses Are Always Hit?-The secret of MarketWhy Your Stop Losses Are Always Hit: The Secret Behind Price Action
In the market, there is a very important concept called IPDA
What is IPDA?
Interbank Price Delivery Algorithm (IPDA) is a core concept proposed by Michael J. Huddleston (ICT) to explain the logic behind price behavior in financial markets. It is a hypothetical algorithm that describes how the global market can achieve price delivery and liquidity management through algorithms.
Definition:
IPDA describes a systematic algorithm used to:
Manage liquidity: Ensure adequate buy and sell orders are available in the market.
Engineer price movements: Trigger traders’ orders, such as stop-losses or pending orders, to fulfill liquidity requirements.
Offer fair value: Provide seemingly "fair" prices to attract market participants.
The algorithm primarily targets:
Liquidity above/below old highs and lows: Stop-loss orders concentrated around obvious price levels.
Inefficient price action (Fair Value Gaps): Filling price inefficiencies created during rapid market moves.
How It Works?
Accumulation: Price consolidates within a range, building up buy and sell orders.
Manipulation: A sharp price move triggers traders’ stop-losses or entices them into taking positions, creating liquidity for institutions.
Distribution: Price eventually moves to the intended target zone, completing liquidity collection and redistribution.
These behaviors are often observed as:
Stop Hunts: Sweeping liquidity at key levels before reversing.
Return to Balance: Price filling imbalances such as Fair Value Gaps or testing Order Blocks.
Practical Applications of IPDA in Trading
Identifying Liquidity Zones:
Look for potential stop-loss levels above highs or below lows.
Using SMC Tools:
Combine IPDA with tools like Order Blocks, Fair Value Gaps, and Imbalances for a structured approach.
Anticipating Price Targets:
Predict where price is likely to move based on liquidity engineering and market context.
Overall,IPDA (Interbank Price Delivery Algorithm) serves as a foundational principle in ICT trading methodologies, asserting that market movements are not arbitrary but systematically governed by a sophisticated algorithm designed to manipulate prices and ensure liquidity for major financial institutions. By analyzing the mechanics and behavioral patterns of IPDA, traders can achieve a more nuanced understanding of price action, enabling them to refine their trading strategies with greater precision and alignment with institutional dynamics.
If you have any questions, please comment below or leave a comment in the private chat
Any mistakes are welcome to correct
BB, the correct way of usage - Part OneLike EMA, Bollinger Bands are famous indicators that can be used to analyze the market. We discussed the current usage of EMA in parts One , Two , and Three , and we will continue to do so. Now, let's talk about BB.
In ARZ Trading System, we have a specific rule for this indicator, to find the best spot to enter the market.
- BB settings: 20 period, 2 deviation.
BB meaning:
1. When its bands are converging, we are close to a breakout. We have to consider MC boxes and EMAs to analyze what direction it might break out.
2. When diverging, we are in a breakout. If price movement continues and still we see the bands diverging, we are still in breakout mode.
3. When bands are flat, we are in a ranging market.
In our system, the best place for entering into a reversal position is when at the same time, the price has touched MC ( what is MC? ) and BB levels, just as follows:
- The MC candle is shown. we expect the market to retrace after reaching the UTP level.
- After breaking the UTP level in candle #1, the price couldn't cross and close and retraced in #2 inside the UTP area. So, MC is still valid.
- From #2 to #3 we have no reason to trade upward.
- In #3 the price has touched both LTP level and BB. So, we look for a buy position.
- in #4 we analyze the market as a seller. Because the price has touched both the support of MC and BB.
- in #5 again we see a similar situation as #3, so we are buyers.
- in #6, the price couldn't cross and close after the breakout candle, so MC is still valid.
Credit Spread Layout and indicatorsRecently trading view introduced options ticker data.
Here is an example on one useful trading layout where you can look at the underlying asset, in this case TQQQ. The main indicator is a forked BS options model from @QuantNomad.
The other two options are call option tickers expiring in 2 days at different strikes.
I'm also using a modified version of the seasonality indicator to apply a modified Kelly criterion and estimate the max position size with my risk tolerances and macro economic outlooks (this can be used for your options budget).
The fun thing is, you can now get the real options pricing and not just a theoretical value using the security ticker. In this example "TQQQ241122C78.0" and "TQQQ241122C77.0" can be used to generate credit spread options pricing using real time data. You can also theoretically generate volitility buy stop and sell stop orders using ADX and other methods which I'm finding is pretty awesome.
Day 1 , strategy 1. Learn how to use the adaptive ema indicator Day 1 , strategy 1. Learn how to use the adaptive ema indicator.
Number of entries showed.
when to buy or sell showed
what trades i took showed
important - you can trade without options too.
Roles in the market-LC (Liquidity Consumer)LC (Liquidity Consumer) refers to liquidity consumers in the forex market, the demand side of market liquidity. They execute trades by accepting quotes and play a crucial role in driving market liquidity and price discovery. Below is a detailed explanation of LC:
1. Definition of LC
• Liquidity consumers are market participants who obtain quotes from Liquidity Providers (LP) and execute trades.
• LCs can be individuals, institutions, or brokers. Their primary purpose is to trade using the two-way quotes provided by LPs or distribute liquidity to end users.
2. Types of LC
LCs can be categorized into the following types based on the nature of the participants:
(1) Retail Forex Brokers
• Role:
Brokers obtain forex market quotes (bid and ask prices) from LPs and provide them to retail clients.
• Features:
• Typically, brokers add a markup to the quotes as a source of profit.
• As liquidity consumers, they do not directly provide liquidity themselves.
(2) Hedge Funds and Large Trading Institutions
• Role:
These institutions trade directly with LPs, often executing large transactions or arbitrage strategies.
• Features:
• Their trading activities can significantly impact market prices.
• To reduce transaction costs, they may source quotes from multiple LPs.
(3) End Traders (e.g., Corporations or Retail Traders)
• Role:
These traders access LP quotes indirectly through brokers to fulfill personal or business trading needs (e.g., currency settlement for international trade or hedging currency risks).
• Features:
• Trade sizes are usually small.
• They have a limited impact on market prices.
3. Functions of LC
LCs perform the following functions in the forex market:
(1) Trade Execution
• LCs obtain quotes from LPs and choose to buy or sell based on their needs, completing the transaction.
Examples:
• Brokers execute buy/sell orders for their clients.
• Hedge funds complete large-scale trades based on strategic goals.
(2) Liquidity Consumption
• Every trade executed by an LC reduces the liquidity provided by LPs, driving price discovery.
Examples:
• A large institution executing significant trades may deplete liquidity, causing market volatility.
(3) Market Price Movement
• LC behavior influences market supply and demand, driving price fluctuations.
Examples:
• Large buy orders can push exchange rates higher, while sell orders can drive rates lower.
4. How LC Operates
The operation of an LC involves several key steps:
(1) Obtaining Quotes
• LCs receive two-way quotes (bid and ask prices) from LPs.
• These quotes are typically updated in real-time.
• Large LCs may aggregate quotes from multiple LPs to secure the best pricing.
(2) Trade Execution
• LCs decide which quote to accept based on their needs or strategies.
• Retail clients execute trades via brokers.
• Institutional clients may execute trades directly through electronic trading platforms.
(3) Risk Management
• Large LCs (e.g., hedge funds) often manage risk using hedging strategies.
Example:
• Buying EUR/USD from one LP and selling EUR/USD to another to lock in profits.
5. Characteristics of LC
Advantages
• Access to Liquidity:
LCs can access competitive quotes from multiple LPs to secure the best pricing.
• Flexibility:
LCs have the freedom to choose when and how to execute trades based on their specific needs or market conditions.
Challenges
• Transaction Costs:
Every trade incurs costs, such as spreads and commissions.
• Price Slippage:
Large trades may move the market, leading to worse execution prices than expected.
• Dependence on LPs:
LCs rely entirely on LPs for liquidity. During periods of reduced liquidity, trades may face delays or fail altogether.
6. Importance of LC in the Market
LCs are fundamental to forex market transactions and contribute to the following:
• Price Discovery:
The trading behavior of LCs drives price changes, ensuring that market prices reflect real supply and demand conditions.
• Liquidity Consumption:
LC behavior prompts LPs to adjust quotes, maintaining a balance of market liquidity.
• Meeting Trading Demand:
By executing trades, LCs provide opportunities for end users (e.g., retail traders or corporations) to participate in the market.
Conclusion
LCs are critical participants in the forex market. By accepting quotes and executing trades, they drive liquidity flows and price dynamics while forming a key operational link with LPs and brokers.
From Gambling to Investing: A ShiftInvesting vs. Gambling: Differentiating Between Strategic Trading and Risky Behavior
Many traders believe they have a foolproof strategy, yet they may be engaging in gambling rather than true investing without even realizing it. The distinction between investing and gambling can often appear ambiguous, particularly for newcomers in the financial markets. Understanding these critical differences is essential for achieving long-term financial success. If your trading approach lacks structure and discipline, you may be risking the integrity of your portfolio and ultimately compromising your wealth-building efforts. So, is your strategy geared toward creating wealth, or are you merely playing a high-stakes game of chance?
Investing: A Strategic Approach to Wealth Creation
Investing is a methodical approach to accumulating wealth over time, characterized by careful analysis and strategic planning. It's not merely about buying assets with the hope of making quick returns; true investing focuses on achieving sustainable, long-term financial growth. Investors ground their decisions in fundamental research, market trends, and controlled risk management strategies designed to balance potential gains with well-calculated risks.
The core tenet of investing is to cultivate wealth gradually, whether through stocks, bonds, real estate, or other financial instruments. For instance, investing in the stock market typically means acquiring shares of a company you believe will experience growth over time, enhancing the value of your investment in the process. Instead of pursuing immediate results, investors tend to hold onto assets with the expectation that they will appreciate over the long haul.
Key elements of successful investing include diversification, patience, and discipline. Diversification spreads risk across various assets, reducing dependence on any single investment or sector. Patience enables investors to endure market fluctuations without impulsive reactions. Disciplined investors adhere to their strategies, understanding that successful investing is a long-term endeavor.
Research plays a monumental role in investing. Investors scrutinize company performance, industry trends, and broader economic indicators to inform their decisions. This approach stands in stark contrast to gambling behaviors, wherein decisions are often made haphazardly and devoid of analytical backing.
In essence, investing is about taking proactive measures, preparing for the future, and assembling a portfolio that will generate wealth over time. This stands in direct opposition to gambling, which relies on chance rather than informed strategy.
Gambling in Trading: The Perils of Impulsive Decisions
In contrast to the structured foundation of investing, gambling within trading is characterized by impulsiveness, emotional responses, and a pursuit of immediate rewards. Traders who approach the markets with a gambling mindset often ignore the associated risks, opting instead for gut instincts and instinctive choices rather than data-driven analysis.
One hallmark of gambling in trading is the reliance on high-risk strategies, including excessive leverage and day trading without a coherent plan. Leverage allows one to control significant trades with a relatively small initial capital outlay, but it also magnifies potential losses. Traders who gamble often neglect to manage their risks adequately; a single misstep can lead to substantial financial losses.
Impulsive trading is another red flag. These traders leap into positions based on market hype, rumors, or fear of missing out (FOMO), making decisions without thorough analysis. This behavior resembles that of a gambler in a casino, chasing quick profits while allowing the allure of winning to cloud their judgment.
Emotions can drive decision-making in gambling approaches to trading. Rather than adhering to a consistent strategy, traders follow whims fueled by fear or greed. For instance, an investor might panic and liquidate assets after a market downturn, only to miss out on a subsequent recovery. Conversely, they might hold onto declining assets, hoping for an upswing—this behavior is known as "loss chasing."
Ultimately, gambling in trading proves to be unsustainable. Although there may be sporadic wins, these are often overshadowed by significant losses over time. Without a structured strategy and disciplined risk management, traders who engage in gambling behaviors are likely to watch their financial goals slip further from reach.
Identifying Gambling Behavior in Trading
Recognizing signs that your trading habits have veered into gambling territory is vital for safeguarding your financial future. Various indicators can signal whether your activities align more with disciplined investing or impulsive gambling.
One prominent sign is the act of chasing losses. Traders who chase losses hold onto losing positions in the hope that the market will eventually favor them. This mirrors a gambler's refusal to walk away, instead choosing to bet more in an attempt to recover previous losses. Rather than taking a step back to reassess and minimize losses, these traders continue to pour money into a futile situation—an extremely risky mindset, as the market can remain unfavorable for extended periods.
Another concerning behavior is over-leveraging, which occurs when traders utilize borrowed funds to increase the size of their positions. While leverage can amplify profits, it also heightens the risk of devastating losses. A small adverse price movement can wipe out an entire leveraged account, reflecting a reckless approach usually associated with gambling rather than strategic investing.
Emotional decision-making serves as another indicator of gambling behavior. Traders driven by fear of missing out, greed, or panic often make impulsive trades without proper analysis or predetermined strategies. This sharply contrasts with disciplined investing, where decisions are based on logic and research rather than emotional reactions to market fluctuations.
Frequent changes to trading strategies, an obsession with high-risk assets, and a lack of focus on long-term objectives are additional signs that one may be gambling instead of investing. If you're consistently bouncing between speculative opportunities and short-lived get-rich-quick schemes, reassessing your approach is crucial.
Key Differences Between Investing and Gambling
At first glance, investing and gambling may seem similar—both involve placing money with the expectation of profit. However, the fundamental differences between them are significant. Investing is a deliberate, research-informed strategy aimed at accumulating wealth over time, while gambling heavily relies on chance, immediate returns, and emotional decision-making.
One primary distinction is the reliance on analysis-based decision-making versus luck-driven outcomes. In investing, decisions arise from thorough research, including in-depth analysis of a company's financial health, market trends, and economic conditions. Investors leverage this information to make informed choices that align with their long-term financial aspirations. In contrast, gambling is largely speculative, making decisions with little analytical support and leaving outcomes to chance.
Another critical difference lies in risk management practices. Investors strategize for various scenarios through portfolio diversification and loss mitigation approaches. For example, diversification involves distributing investments across different assets to minimize exposure to any single risk. Conversely, gamblers tend to place their bets on specific trades or assets, embracing excessive risk without contemplating long-term repercussions.
Finally, long-term planning is integral to investing. Successful investors concentrate on wealth growth over extended periods, allowing their investments to benefit from compound growth steadily. On the other hand, gambling typically pursues immediate gratification without looking toward sustainable growth or the larger financial picture.
Consequences of Gambling versus Benefits of Investing
The consequences of gambling in financial markets are severe and frequently result in financial ruin. Traders who gamble regularly engage in high-risk behaviors like impulsive trades and over-leveraging, leading to extreme volatility and significant losses. The initial pursuit of quick profits can swiftly transform into devastating financial outcomes, draining portfolios and endangering long-term financial stability. The psychological impact of these losses often leads to further poor decision-making, perpetuating a cycle of impulsivity and high-risk behavior.
Conversely, long-term investing paves the way for steady, sustainable growth. Investors who adhere to disciplined, research-oriented strategies are much more likely to accumulate wealth over time. Investing emphasizes patience, comprehensive analysis, and diversification, allowing investors to shield themselves from volatility while enjoying the benefits of compound growth. Although it may not offer the adrenaline high of speculative trading, disciplined investing fosters security and stability, setting the stage for consistent returns.
The compounding effect is a notable advantage of long-term investment strategies, where returns build on one another, resulting in exponential growth over time. Although the process may seem slow initially, compounding accelerates as the years progress, transforming modest gains into substantial wealth. This gradual and predictable method significantly lowers the risk of catastrophic loss compared to gambling.
Ultimately, the choice lies between the thrill of gambling, often culminating in significant losses, and the sustained financial stability and growth afforded by disciplined investing. Opting for long-term investment sets the foundation for a prosperous financial future, steering clear of the emotional traps and reckless behaviors associated with gambling.
Cultivating an Investment Mindset
Transitioning from a gambling mentality to a disciplined investment mindset requires deliberate changes in how you interpret and execute trades. Developing an investment mindset involves creating a strategy, adhering to it, and prioritizing long-term gains over immediate rewards.
The first step is crafting a trading strategy that aligns with your financial objectives and risk tolerance. A well-formulated trading plan specifies clear guidelines for entering and exiting positions, outlines risk management strategies, and identifies the types of assets you intend to trade. Establishing a plan minimizes impulsive decisions based on fleeting emotions or market distractions. Whether you trade stocks, forex, or commodities, a research-backed blueprint equips you to approach the market calmly and strategically.
Discipline constitutes the foundation of a successful investment mindset. Even amid tumultuous market movements, disciplined traders remain committed to their strategy. Although it may be tempting to deviate from your plan during moments of uncertainty, long-term success relies on maintaining consistency. Whether experiencing a bull market or confronting sudden downturns, the key is to avoid emotional reactions and instead adhere to your established guidelines.
Effective risk management is another essential aspect of fostering an investment mindset. Rather than risking your entire capital on a single trade or relying on excessive leverage, consciously manage your exposure. Implement Stop Loss orders to limit downside risk, and never invest more than you can afford to lose. This approach helps keep potential losses manageable, preventing the reckless betting that frequently results in financial calamity.
Keeping emotions under control is equally vital. Successful traders recognize the markets' unpredictable nature, and fixating on short-term fluctuations can cloud judgment. Concentrating on long-term objectives and periodically reviewing performance can promote objectivity. Focus on data, analysis, and logical reasoning rather than emotional reactions to market volatility.
Lastly, committing to ongoing education is crucial. Learning about market dynamics, financial trends, and trading methodologies will bolster your confidence and discipline. Adopting an investment mindset is a continuous journey, but its benefits—long-term growth, stability, and reduced stress—are undoubtedly worth the effort.
Conclusion
Grasping the difference between investing and gambling is essential for anyone seeking success in the financial markets. While the allure of quick profits through gambling may be tempting, it frequently leads to financial disaster. In contrast, investing demands patience, strategy, and discipline, yielding consistent, long-term growth.
By identifying gambling tendencies within your trading behavior, you can transition toward a more structured, investment-focused mindset. Taking control of your trading methodology means meticulously planning your trades, managing risk, and concentrating on long-term results. The key to forging lasting wealth in financial markets lies in disciplined investing, not reckless gambling.
Read also:
SETUP VS STRATEGY, explain?A setup is what you see and it is made from basic principles such as highs and lows.
A strategy comes from understanding inner working principles of market structure, mainly the TREND of any given asset class and the overall determining factor is how profitable one is in any given month.
GARTLEY Harmonic Pattern: How does it work?!GARTLEY Harmonic Pattern: How does it work?!
The "Gartley", as its name suggests, was introduced by Henry Mackinley Gartley.
All other harmonic patterns are modifications of the Gartley.
Its construction consists of 5 waves:
XA: This could be any violent movement on the chart and there are no specific requirements for this movement in order to be a Gartley start
AB: This is opposite to the XA movement and it should be about 61.8% of the XA movement.
BC: This price movement should be opposite to the AB movement and it should be 38.2% or 88.6% of the AB movement.
CD: The last price movement is opposite to BC and it should be 127.2% (extension) of CD if BC is 38.2% of BC. If BC is 88.6% of BC, then CD should be 161.8% (extension) of BC.
AD: The overall price movement between A and D should be 78.6% of XA
How to use it
Point D is where you come in, man! It's your entry signal.
-If it's an M pattern, you buy.
-If it's a W, you sell2.
Where to put your STOP LOSS??
-Below or "X" if you are a BUYER.
-Above "X" if you are a SELLER.
These percentages are based on the famous Fibonacci ratios, as mysterious as the pyramids of Egypt!
Ultimately, the Gartley pattern is like a good Cuban cigar: it requires patience and experience to be appreciated at its true value. But once you master it, it can become a powerful tool in your trading arsenal, as effective as a punch from Rocky Balboa!
How To Trade Natural Gas: Tools and Approaches How To Trade Natural Gas: Tools and Approaches
Natural gas trading presents unique opportunities due to its critical role in the global energy market and its inherent volatility. This article delves into the various strategies and tools traders can use to navigate natural gas CFDs, from fundamental and technical analysis to understanding market dynamics.
Overview of the Natural Gas Market
Made up of primarily methane, natural gas is a key fossil fuel that’s grown in use over the past two decades. It forms deep beneath the Earth's surface from the remains of plants and animals buried under layers of sediment and subjected to intense heat and pressure over millions of years. It’s typically found near oil reserves and must be extracted and processed before it can be used.
Natural gas is a relatively clean-burning energy source, at least compared to coal or oil. It plays a crucial role in the global energy sector, accounting for about 23% of energy consumption worldwide in 2023, according to Statista, and 33% of US energy consumption in 2022, according to the EIA.
It’s also highly versatile, used across various sectors. For instance, in 2022, natural gas provided approximately 38% of the energy consumed by the US electric power sector (EIA), making it a primary source for electricity generation. The industrial sector also accounted for around 32% of natural gas consumption, using it as both a fuel and a raw material for producing chemicals, fertilisers, and hydrogen.
Natural gas is also essential for residential and commercial heating, particularly in colder regions. Moreover, the transportation sector adopts natural gas, particularly in the form of compressed natural gas (CNG) and liquefied natural gas (LNG), to reduce emissions and costs.
Market Structure and Participants
The natural gas market consists of various key players, including producers, consumers, and traders. Major producing countries include the United States, Russia, and Qatar. According to the EIA, the US led the world in LNG exports in 2023, averaging 11.9 billion cubic feet per day. Natural gas production involves extraction, processing, and transportation to end-users via extensive pipeline networks and LNG shipping routes.
The supply chain for natural gas begins with extraction from reservoirs, followed by processing to remove impurities and liquids. The processed gas is then transported through pipelines or converted into LNG for shipping to international markets. Once delivered, it is distributed to consumers for the various applications described.
Key participants in the natural gas market include multinational energy companies (e.g., ExxonMobil, Gazprom), regional producers, and numerous traders who facilitate the buying and selling of natural gas on commodity exchanges. These players operate within a complex regulatory framework that varies by country, influencing production levels, prices, and market dynamics.
Key Factors Influencing Natural Gas Prices
Let’s now take a closer look at the factors driving natural gas prices.
Supply and Demand Dynamics
The balance of supply and demand is a fundamental driver of natural gas prices. On the supply side, production levels play a crucial role. As with many commodities, higher production, in this case driven by advancements in extraction technologies like hydraulic fracturing, typically leads to lower prices.
Storage levels also impact prices; high storage volumes, or inventories, can cushion against supply disruptions, keeping prices relatively stable. Conversely, low storage levels can lead to price spikes.
Consumption patterns are equally important; industrial usage, residential heating, and electricity generation are primary demand drivers. Additionally, the cost of extraction, including technological and labour costs, feeds into the overall pricing of natural gas.
Geopolitical Events and Policies
Geopolitical stability and regulatory policies significantly affect natural gas prices. For example, the substantial 2022 reduction of Russian gas exports to Europe caused record price increases due to severe supply constraints.
Trade policies, such as tariffs and export restrictions, also impact prices. The US has seen a notable rise in LNG exports in recent years and become a major supplier of natural gas to Europe. Recent policy decisions aimed at energy security and diversification, especially in Europe and Asia, have led to increased demand for non-Russian natural gas, affecting global prices.
Weather Patterns and Seasonal Variations
Weather significantly affects natural gas demand and supply. Cold winters increase demand for heating, often leading to higher prices, while mild winters can reduce demand and depress prices. Similarly, hot summers boost demand for electricity to power air conditioning, influencing prices. Natural disasters like hurricanes can disrupt production and transportation infrastructure, causing supply shortages and price spikes.
Natural Gas Trading Instruments
When it comes to actually trading gas, there are a few instruments traders use.
Contracts for Difference (CFDs)
CFDs are a popular instrument for trading natural gas due to their flexibility and leverage. A CFD is a derivative that allows traders to speculate on the price movements of natural gas without owning the physical commodity. Traders can go long (buy) if they anticipate price increases or short (sell) if they expect prices to fall. They are the most popular choice for anyone looking to be a natural gas trader. The CFD natural gas symbol is XNGUSD. You can trade US natural gas CFDs in FXOpen’s TickTrader trading platform.
One of the main advantages of CFDs is leverage, which allows traders to control a large position with a relatively small amount of capital, potentially enhancing returns but also increasing risk. Additionally, CFDs offer access to the natural gas market with lower upfront costs and the convenience of trading on various platforms without the need for storage or delivery logistics.
Futures Contracts
Natural gas futures are standardised contracts traded on exchanges such as the New York Mercantile Exchange (NYMEX). These contracts obligate the buyer to purchase a specific amount of natural gas at a predetermined price on a future date.
Futures are widely used by producers and consumers to hedge against price volatility and by speculators seeking to take advantage of price movements. While natural gas futures are suitable for some traders, their complexity and potential obligation to take delivery may deter those simply looking to speculate on the market’s price movements.
Options Contracts
Options on natural gas futures provide the right, but not the obligation, to buy or sell futures contracts at a set price before the option's expiration. These can be used to hedge positions in the natural gas market or to speculate with limited risk. Options strategies can range from simple calls and puts to more complex combinations like spreads and straddles, but are also highly complicated and require a strong understanding of how options work.
Exchange-Traded Funds (ETFs)
ETFs allow investors to gain exposure to natural gas prices without trading futures or options directly. These funds track the price of natural gas or the performance of natural gas companies. ETFs are generally used by investors to diversify their portfolios and participate in the natural gas market with lower complexity compared to futures and options.
What to Know Before Trading Natural Gas
Before trading natural gas, it’s important to consider the following key aspects:
- Trading Units: Natural gas is typically traded in units of million British thermal units (MMBtu).
- Trading Hours: Natural gas trading hours are specific, with futures trading on the NYMEX from 6:00 PM to 5:00 PM ET, Sunday through Friday. Ensure you know the trading schedule of your platform before getting started. Both CFD US natural gas and forex pairs can be traded on FXOpen’s TickTrader platform on a 24/5 basis.
- Volatility: Natural gas prices are highly volatile, often more so than currency pairs and many other commodities. Be prepared for significant price swings.
- Spreads: The relatively wide spread of natural gas, or the difference between the bid and ask price, can lead to higher trading costs.
- Leverage and Margin: Trading natural gas, especially through CFDs, involves leverage, which can amplify both gains and losses. Ensure you understand margin requirements and risk management strategies before getting started.
Key Strategies for Trading Natural Gas CFDs
Trading natural gas CFDs can be a lucrative endeavour, but it requires a solid understanding of the market and effective natural gas trading strategies.
Fundamental Analysis
Fundamental analysis focuses on the economic factors that influence natural gas prices. Key elements include supply and demand dynamics, inventory levels, and macroeconomic indicators. For instance, the US Energy Information Administration (EIA) releases weekly reports on natural gas storage levels, which provide insights into supply and demand balance. High inventory levels generally indicate lower prices, while low inventory can signal higher prices due to anticipated supply constraints.
Economic growth and industrial demand also play significant roles; as industries expand, natural gas consumption typically rises, driving prices higher. Moreover, expectations of colder-than-normal winters increase demand for heating, driving prices up, while mild winters can suppress demand. Lastly, geopolitical events, such as conflicts in gas-producing regions, can disrupt supply chains and cause price volatility.
Technical Analysis
While fundamental analysis helps determine the market outlook, technical analysis is often used by traders to find entry and exit points.
Key principles like support and resistance levels, trend identification, and breakout strategies still apply in natural gas markets. However, price volatility may make some established technical strategies less effective. It’s key to test different indicators and patterns to find what works best.
Momentum indicators, such as the Stochastic indicator or Moving Average Convergence Divergence (MACD); trend tools, like the Average Directional Index (ADX) and moving averages; and volume-based tools, such as the VWAP and Fixed Range Volume Profile (FRVP), can all assist in analysing and trading natural gas CFDs.
In practice, a fundamental-first approach may look like a trader monitoring inventory reports, economic growth, and weather patterns to gain an idea of the market’s direction. They might then use technical analysis signals to time trades and find precise entry and exit points.
Sentiment and Positioning Analysis
Sentiment analysis involves gauging the overall market mood, which can significantly influence natural gas prices. While there is no single unified measure of natural gas trading sentiment, tools such as Investing.com’s Natural Gas Scoreboard can offer a quick look at how traders view the market. Market positioning can be identified using the Commitment of Traders (COT) report, which shows the positions of different market participants in natural gas futures contracts.
Generally speaking, bullish sentiment and positioning might drive prices up, while the opposite sentiment can push prices down. However, traders should also note that sentiment and positioning can indicate overreactions, creating opportunities for contrarian strategies.
Tools for Trading Natural Gas
There are several tools that traders can use to analyse and trade natural gas. For instance:
1. Trading Platforms
- TradingView: Offers comprehensive charting tools and real-time market data.
- MetaTrader 4/5: Provides advanced trading and analysis tools widely used by traders.
- TickTrader: FXOpen’s own TickTrader features an advanced charting platform with more than 1,200 trading tools.
You can trade at any of these platforms with FXOpen.
2. Inventory and Storage Reports
- EIA's Natural Gas Weekly Update: Offers comprehensive analysis of markets, including supply, demand, and price trends.
- EIA’s Natural Gas Weekly Storage Report: Features a snapshot of the US supply of natural gas across different regions.
3. Sentiment and Positioning
- CFTC's Commitments of Traders (COT) Report: Provides insights into market positioning by different trader categories.
- Investing.com’s Natural Gas Scoreboard: Indicates the bullish or bearish sentiment surrounding natural gas.
4. Market Reports
- American Gas Association (AGA) Reports: Provides detailed analysis and statistics on markets.
5. Weather Forecasts
- AccuWeather or Weather Underground: Accurate weather forecasts are essential as they significantly impact natural gas demand.
- National Oceanic and Atmospheric Administration (NOAA): Offers long-term climate predictions.
6. News Websites
- Bloomberg
- Reuters
- MarketWatch
- CNBC
7. News Aggregators and Economic Calendars
- Energy EXCH
- FinancialJuice
The Bottom Line
Trading natural gas can be an interesting endeavour with the right strategies and tools. By understanding market dynamics and leveraging advanced platforms, traders can navigate this volatile market effectively. Open an FXOpen account to access a robust trading platform and start trading natural gas CFDs today, maximising your trading potential with professional tools and support.
FAQs
Where Can I Trade Natural Gas?
You can trade natural gas through brokers that offer CFDs, such as FXOpen. These platforms allow you to speculate on live prices without owning the physical commodity. FXOpen provides a natural gas trading platform via TickTrader, known for its user-friendly interface and access to a wide range of trading tools and resources.
How to Trade Natural Gas?
Trading natural gas can be done through various methods, including CFDs, futures, options, and ETFs. CFDs are most popular for retail traders due to their lower capital requirements and leverage options.
How to Buy Natural Gas Futures?
To buy natural gas futures, you need to open an account with a broker that offers futures trading, such as CME Group. After funding your account, you can trade futures contracts, which are standardised agreements to buy or sell natural gas at a specific price on a future date.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Collected some tipsTrade what you see, mystic megs and fortune tellers dont do nothing, the market will humble you as we all know.
Never follow someone else's signals, especially when they claim 100% accuracy.
Every trader will be different. its just discovering your way of trading that optimises peak performance.
And dont be too hard on yourself when you go through a losing streak. its just your time to suffer, learn from it.
"Patience is bitter but its fruit is sweet"
Patience, is the name of the game, best trade setups come from patience.
Only risk 0.5% because risk management is top priority.
