Risk
Eurostoxx Ultimate Pivot PointsReading charts is just one part of trading a bear market, another highly significant part is a solid understanding of market psychology, heuristics and biases. Having spent 14 years in a QE fuelled bull market where there were few inexplicable events and certainly no major forced liquidation events, it is easy to understand why so many participants get so excited about two days of asset flows out of commodities and into tech names. Yes, the market can go higher from here, yes it can go lower, but calling a major bottom and repeatedly getting attached to these short squeezes is all part of the psychological conditioning that has been happening to many over the last 14 years. Therefore we would suggest waiting for extremes where there is nobody else left to buy or sell, this is where the odds are stacked firmly in one's favour. Patience. Discipline. And more patience.
How close SPY bottom? Are we close to the equity bottom or it just started its way down? in the last financial crisis/bubble Spy pulled back from the heights over 50%, at the moment we are still siting at around -23% . So if we will repeat history movies then we should find a bottom at around 233 right where 2018-2019 bottom was. worth to mention that each time when SPY dropped over -30% from top we had a recession. Let's hope that this time history will not repeat it self and SPY will find support at 200EMA. Trade safe and cut loses short.
AMEX:SPY
Solana ranks low on the DeFiSafety technical risk score
Solana network has had at least five complete or partial outages or service disruptions
The $100 million funds are intended to support gaming and DeFi startups
Solana’s study has been released by a firm that provides Process Quality Reviews (PQRs) for crypto and decentralized finance (DeFi) platforms, which was highly critical. “Due to repeated downtime, Solana has the second-worst final technical risk score among the 15 series ever reviewed,” it said.
Rather than auditing code or reviewing security, DeFiSafety focuses on the process behind the code and the quality of documentation. On-chain scores based on various criteria such as smart contracts and teams, documentation, testing, security, admin controls, and oracles are provided by the Canadian firm.
SOL has been labeled an “Ethereum killer” numerous times, but it has failed to deliver. Since January, the network has had at least five complete or partial outages or service disruptions in 2021.
The previous widespread outage occurred on June 1, when a bug prevented block production due to a consensus failure. DeFiSafety noted: “Solana’s base score is low. Despite a public software repository and some good documentation, their infrastructure relating to nodes is subpar.”
When you should use leverage in your trades?When you should use leverage in your trades? I’m going to answer this question, but first, we have to mention two other questions to be answered.
Q1: What is a reasonable trade?
An order in which the entry point, stop loss, and take profit are already pre-defined based on a good return strategy or rules.
Q2: What is money management?
Money management is to determine the percentage of risk on the total balance in each order and to know what your position size will be and how much your potential loss will be.
We need to do some calculations to answer the first question.
Let’s suppose your account balance is $100 and the maximum risk on your balance for each trade is 5%. This means that on a reasonable trade, your loss will be $5 at most. Besides that, you have a good trading opportunity with an entry point at $10, stop loss at $9, and profit point at $12, i.e. 10% potential risk and 20% potential reward for the position.
Since we cannot lose more than $5 of our balance, we need a position size where the potential loss will not exceed $5. Which we can calculate with this formula: (Max risk on balance / position risk * 100). Which would be $50 in our case.
This means that we are only allowed to include $50 out of $100 in this trade; this would be $5 after a 10% loss.
Everything is normal and we can afford it, so we will do the trade.
Now, let’s increase the max risk on balance to 20%. It means our potential loss would be at most $20. By doing the same calculations considering the same reasonable trade with 10% risk, our position size will be $200 while we do not have more than $100, so where do we get $200 from?!
Yep! Leverage would help you in this case. So benevolent, isn’t it?
In this case, your leverage would be 2 and you can open a $200 position, but don’t forget you increased your account risk from 5% to 20% already.
Note that the risk will be applied to your real asset. If your balance is $100 and the leverage is 10, the exchange will give you about $1000 to buy or sell. While the 5% of $100 is $5, the 5% of $1000 would be $50, which is 50% of your real asset. So calculating the risk on leverage balance is practically meaningless!
What if we had 10 orders simultaneously? It means $100 will be split between 10 orders. For ease of calculation, we consider every 10 trades to be the same as what we had above, while each trade would have 10% of $100. In these conditions, each trade would again have a $50 position, but leverage will be 5!
Having said that, we can conclude that leverage alone is meaningless and finds meaning alongside reasonable trade opportunities and money management.
In the above explanations, for the ease of calculation and context understanding, I used rand but not necessarily correct values. For example, a risk ratio of 5% on balance is a really high risk or in the example of 10 trades at once, it is wrong to consider your balance as $100 at the start of each trade. In the worst-case scenario, you should deduct the loss of the previous trade from your balance for the next trade.
From the link below, you can access the tool I prepared to calculate the position details.
bit.ly
Feel free to give your constructive feedback.
Risk-Off Rotation Crypto/Tech -> UtilitiesFundamentals:
+ Exposure to "Risk-Off" Utilities.
+ Biggest E.U nuclear power operator. (52% of E.U Nuclear power comes from plants run or used by EDF)
+ Need for upsizing given the Russia-Ukraine commodity constraints.
Opinion:
EDF is undervalued at its current price. As the situation with Russia deteriorates, as an energy partner; a "Risk-Off" idea, presents it-self. During times of recession, stagflation, cost of living crisis compounded by government's inability to further print to ease pressures due to the mishandling of the Covid crisis. The idea of hierarchy of needs is paramount. In difficult times, one may not pay rent, but he will pay for energy. Given there is no industry without energy, the idea behind green/clean at the cost of longer time frames; becomes prohibitive.(Main reason why E.U decided to consider Nuclear "Sustainable". www.dw.com) Instead, one can expect France; decades of expertise in Nuclear power generation to be highly in demand. It be by consulting on building of Nuclear power facilities across the E.U block or simply due to the sharing of market rated energy production via the EEX across the block.
As the FED continues tightening, sovereign debt figures keep rising. Taiwan and Ukraine are now hotspots for defense contractors. Within the Risk-Off context and taking into account the military sovereign debt money printer is reaching new highs; exposure to military contractors may be a good risk-off idea.
This is not intended or made to constitute any financial advice.
Notes on how I personally use my charts/NFA:
Each level L1-L3 and TP1-TP3 has a deployment percentage. The idea is to flag these levels so I can buy 11% at L1 , 28% at L2 and if L3 deploy 61% of assigned dry powder. The same in reverse goes for TP. TP1: 61%, TP2:28% and TP3:11%. If chart pivots between TP's, in-between or in Between Sell levels these percentages are still respected. I like to use the trading range to accumulate by using this tactic.
Just my personal way of using this. This is not intended or made to constitute any financial advice.
This is not intended or made to constitute any financial advice.
FED Macro Situation Consideration:
All TP's are drawn within the context of a return to FED neutral policy. I do not expect these levels to be reached before tightening is over.
NOT INVESTMENT ADVICE
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Risk/Reward Tutorial - The Holy GrailThe traders who learn to view and think about trade setups in terms of risk/reward are the ones who end up making consistent (albeit massive) amounts of money.
My personal strategy looks something like this:
Using the 4-minute chart as the earth rotates 1 degree every 4 minutes.
𓃭 0.50% stop-loss measurement
𓃭 1/2 profits at 1.30% level and move stop to break even.
𓃭 2/2 profits at 1.50% :: (or 1.70%)
𓃭 Wait to enter trade at the previous 2nd candle base break up/down and skip trades that are in consolidation where the direction is not 100% clear.
Keep in mind that my signals are so precise (indicating near exact future pivots) that I am able to use such a tight stop-loss, but this wont necessary work for the average trader. This video is merely meant to serve as an example of how to work out ratios for yourself.
Knowing when not to take a trade is just as important as when to take a trade. Don't enter a trade if you are not confident, as it will only damage your equanimity. Don't let greed or fear destroy a good thing. Those emotions + impatience and lack of self-discipline are obstacles that prevent 97% of novice traders from ever succeeding in maintaining a long-term professional career.
You should be operating as any casino or business would, do not gamble with your business.
At the same time, allow yourself to make endless mistakes with ease and grace, knowing that if you want to succeed baldy enough and you never give up, you will find a way to realize your dreams!
Mistakes are a right of passages. Excruciating lows and euphoric highs are what everyone experiences on the road to success.
The 97% will give up along the way or never even attempt to begin with.
Do you have a Reward to Risk ratioIn the world of trading, do you know what a Rw/Rs (Reward to Risk) ratio is? if you dont this article will be beyond your understanding. I suggest you read up on Reward to Risk ratio & come back to read this. If you do know what a Rw/Rs ratio & assume most of you do, we can continue our merry trade discussion ;D
My Rw/Rs ratio for Swing trades that i take on a Weekly (W) chart is factor of 4 to 6, am happy to see more. with my Day trading strategy; am a little more aggressive & will settle for a Rw/Rs factor of 3-4 to take on a day trade.
Once a while, a trade opportunity arises that offer such a large room for Reward to run, as in this (W) chart of WMT WalMart Corp. if the trades goes my way, look at this room for profit to run, with no resistance of supplyzone in sight this can go up.....sweet mama, she got my attention.
First; (Disclaimer) I will never take a trade solely based on a sweet Rw/Rs the odds are not in my favour. Back to the trade. So i have a sweet Rw/Rs ratio what else is going on? Price is crashing into a DZ from the (M) & this DZ happens to be the HL of the month (M) uptrend. This is good, The week (W) price chart is into the long-term chart DZ (Demand zone). This qualifies only if the (M) is still in a technically defined in uptrend. This is a Classic trade set-up I love.
Like a Snipper I set my LNG (long) entry at 117 level slightly above the lower band of the DZ, my entry was so low that my risk was less than a dollar before my STP triggers. I took the Long position, the market rallied & so did WMT, & I closed 1/2 my position once price reached 128, I took a good 10 Rw (Reward) pressure if off. already the trade made its money. & I let the 1/2 of the position run. Lets see how it goes when the market is open on Monday. This was a swing trade using the (W) chart to identify the setup. Long-term would be the (M) chart & I used the (D) daily chart to enter & set my STP.
Bull? Bear? Swan?
The chart:
Shows an index average for SPX, NAS and DOW using rescaled CFD and futures prices.
Indicator is a momentum oscillator (midline) with an envelope much like a Bollinger band.
The paradox:
The consensus is the chart is a picture of 'doom' (as bearish as it gets).
At the same time, every trader in the chat room was bullish on the upcoming 12 hours. Not a single bear.
The assumption that recent outcomes will be repeated is also called "The Hot Hand" .
Both chart and traders refer to the same asset class. The chart accurately describes what traders experienced. Same information, but divergent conclusions and sentiment.
Why the gap?
One contributing factor is likely the qualitative difference between looking at a chart, and trading that same market in real time.
Research shows that when we "experience" outcomes ourselves we pay more attention to the most recent, frequent and impactful outcomes. This does not happen if we get the same information on a chart, from a discussion, or the news.)
In his book "The Black Swan", Nassim Taleb attributes peoples 'black swan blindness' (pp.77) to never *experiencing* an event, even if the information is available in some descriptive format (like a chart). There is a similar discussion in the chapter on rare events (ch.30) in Kahneman's book "Thinking fast. and slow" .
Lastly, lab studies from economics, finance and psychology provide data for both predictive and descriptive models. These models can be used to predict how personal experience with risk will result in different sentiment that a simple description of the same information. Some of this research is summarized in a Psych-Science paper at: pure.mpg.de
Notes:
This way they can share the same USD scale and
are weighted so that a 1 point change will imply the same change in $ terms. (For weights see: www.barchart.com ).
In basketball there is a belief that a player can be on a hot-streak and more likely to score. Despite the compelling belief, statistical studies show it to be false. The same can be said for consecutive sessions in the equity markets. On a whole the market is largely efficient thanks to our relentless effort to remove every last inefficiency.
GBPJPY H1 - Long SignalGBPJPY H1
Nice break so far on the hourly and M30 charts, haven't quite confirmed the H4 break and close, but we still have time left on the clock.
Longs from as close to this 160.000 handle as possible, 160.000 is the area of play for shorts/longs depending on whether we are trading north of south of this zone.