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Risk Management

How to analyze the market from scratch (Impulse & Correction)Hello everyone: Many have asked me about demonstrating how to analyze the chart from complete scratch. When looking at my chart and educational video, it all seems very simple, but many are telling me they are struggling to identify the market. Today I will go over how I analyze the chart, from the Higher time frame down to lower time frame by using multi-time frame analysis, top down approach. Specifically by identifying price action, impulse and correction phases of the market. 1. Start from the Higher Time Frame (HTF): HTF can be any time frame higher than the daily chart, such as monthly, weekly, daily. Personally I like to use daily as a go to time frame as it is widely used by traders. 2. Identify the impulse phase of the market. Understand the impulse phase is a period of fast momentum, price is either pushing up or down very aggressively, and not much consolidation visible on the HTF. 3. Identify a period of consolidations. Using trendlines, connect the swing highs and lows of the price. This is to identify the correction/consolidation phase of the market. Which is the most important aspect in price action analysis. You will need to be very knowledgeable on the type of continuation, reversal correction patterns/structures the market usually will form. (I will share many price action patterns/structures that I identify and use in the market below) 4. Once you identify the HTF phase of the market, you will then go down to the Lower time frames (LTF). LTF can be anything under 2/1 HR, 30/15 Min charts. It's not a specific time frame, rather “Multi time frame analysis”. You will also identify the impulse phases & Correction phases on the LTF and use trendlines to connect the swing highs and lows of the correction/consolidation phase, just like what we did on the HTF. 5. Now that you have both the HTF and LTF charts drawn out, the key here is to have both the HTF and LTF tell you the same direction/bias. They should align up and have the same bullish/bearish bias. This will strengthen your probability of success. I always make sure when I am about to enter any trades, I want the multi-time frames all telling me the same story. Same bias, same direction. 6. Now all that comes down to is forecasting the possible entries, which I have made many videos on this topic and I will share some below. Understand you would always want to make sure you are either entering during the impulse phase on the LTF, or the price is about to start the impulse phase to gain the upper hands in the market. You do not want to enter when the price is in a consolidation which is why many traders end up losing money, stuck in the correction and price isn't moving too much, rather just sideways. 7. Continue to work on analyzing the chart from scratch, get comfortable at identifying the impulse phase in the market, and do backtesting continuously so you identify the corrections in the market. This will make you see the chart and the market completely different than before, and you will have a much better probability of entering trades that work out in your favour. Any questions, comments or feedback welcome to let me know. Jojo Below I will share many educational videos that will help you to understand more on price action analysis, impulse/correction phase, entry, forecasting, backtesting and more. Continuation and Reversal Correction Identify a correction for the next impulse move in price action analysis Multi-time frame analysis Continuation Bull/Bear Flag Parallel Channel (Horizontal, Ascending, Descending) Reversal Ascending/Descending Channel Reversal Rising/Falling Wedge Reversal Double Top/Bottom Reversal Head & Shoulder Pattern Reversal “M” and “W” style pattern Reversal Impulse Price Action Continuation/Reversal Expanding Structure/Pattern Risk Management: 3 different entries on how to enter the impulsive phrase of price action Risk Management: How to Enter and set SL and TP for an impulse move in the market Risk Management: When/How to move SL to BE and to profit in a running trade ? How forecasting can benefit your trading journey Backtesting & Chartwork on Forex Market Backtesting & Chartwork on Indices Market Backtesting & Chartwork on Crypto Market How & Why I backtest:
OANDA:XAUUSDEducation
by jojofang0901
40
Are you revenge trading 😖🤔Revenge trading! It all catches us all out at some point in our trading journey's. The markets don't care about your loss and neither should you! Losses are a part of trading and have to be accepted. No one can be right 100% of the time regardless of method used. Revenge trading will add to those losses and compound that account draw down even more. Irrational emotions have no place in trading and they are what lead to revenge trading. The way to eradicate this issue is by going about your trading a logical manner. First off is build or use a strategy with a known proven edge. Second is follow that strategy to the letter and only enter trades when all your parameters/confluences are met. The markets take from the impatient and give to the patient ones. The example I am using on chart is using a trend following strategy of our own. This strategy is a good win percentage and I know that as the built in strategy tester shows me all the stats. As always the report box is at the bottom of the idea showing those very stats. A 61% win rate means losers still happen and as you will see on the chart the buy trade hit stop loss before price went on an upward trend. The old trader in me would of been pouring over this chart trying to guess which way will it go? What should I do enter a long again? That would of paid of in this instance but not the logical thing to have done it would of been luck and luck only. Who knows with emotions at play would I of had a thought the price was going to head down? Then place a sell order? Luckily I didn't have to make any of those choices with emotions at play. I accepted the loss on the fact I know I'm trading a proven strategy and I simply waited for the next trade alert and let probability play out. The next trade was a short that found it's intended take profit target. This process is more simpler for those who are using a mechanical trading system like the one on chart. But regardless of system or approach in use if you are following the trading plan to the letter revenge trading shouldn't occur. Find an edge, apply that edge, stick to the proven plan and revenge trading won't be your issue. Instead you'll be one of the patient ones that the market is giving to 👌👍 ------------------------------------------ I try and share as many ideas as I can as and when I have time. My trades are automated so I am not sat in front of a screen daily. Jumping on random trade ideas 'willy-nilly' on Trading View trying to find that one trade that you can retire from is not a sustainable way to trade. You might get lucky, but it will always end one way. ------------------------------------------ Please hit the 👍 LIKE button if you like my ideas🙏 Also follow my profile, then you will receive a notification whenever I post a trading idea - so you don't miss them. 🙌 No one likes missing out, do they? Also, see my 'related ideas' below to see more just like this. The stats for this pair are shown below too. Thank you. Darren
Education
by pow_removetheguesswork
Trade everything that moves. The mechanics of the position set💡 Trading on the market can be regarded as a full-fledged struggle for the right to survival, where the main enemies are two factors, infinite randomness and time. By adapting your positions to what is happening, you risk becoming that very accident and you can only fight with time. The mechanics of the position set includes a theory about the direction of the price. Directivity theory The essence lies in the continuous direction of the price when the distance from the selected zone is inevitable. It is important to highlight the level and work as soon as the price reaches these values. How is the usual set of positions made Opening a position in a certain direction, as soon as the price goes against the desired forecast, closing with a stop loss, abandoning the transaction, searching for a new entry point, and trying to predict the direction, is an extremely difficult task. An example of a set of positions taking into account the theory of price orientation and risk control R The mechanics of position recruitment are based on clear and simple principles of operation, flexible thinking, quick adaptation to market sentiment. If you start to apply these mechanics in practice, you will notice how at first glance simple things are difficult to do the practice. There will be a feeling that nothing will work, there is no logical explanation for this, eventually, everything will be lost and a big chaotic high-speed car will crush you. This is the basic principle, as long as the market is such, you have very little chance of the death of capital. While large funds, investors, and someone else is fighting among themselves for huge movements, we do not necessarily have to accept their rules of the game and play on their territory in predicting the general and long-term direction of the market. You should think with your head and look for benefits primarily for yourself, taking into account all the nuances of what is happening. But how to be flexible? Constantly turning over a position is completely unprofitable, in the final execution, losses exceed the target profit. It is not at all clear where and when to put stops, overturns, and takeaways. This is where the risk control system R will help us She kicks down the door, breaks into our strategy, and, as the most important puzzle, falls into its rightful place! From my experience, the optimal risk per trade for a beginner is $10 With a smaller volume, there will simply be no motivation to work. But it is worth remembering that the deposit should not be extremely small, as it will not withstand a series of unsuccessful transactions For example, if the deposit is $100, 1R= $10, the power reserve is 10 stops, this is extremely small But with $ 400, you can already try, since the probability of getting 40 stops in a row is extremely small Example of risk calculation for a $1000 deposit The risk is reasonably low R=$10 Power reserve 1000/10=100 100 stops I recommend having a power reserve for the 200R series, from practice I can say that for training and the first results will be enough. All calculations are carried out without taking into account the commission A few tips for improving efficiency: - Do not risk your funds in vain, TradingView provides an excellent opportunity for paper trading (demo) completely free of charge, where you can try out any of your ideas and strategies. - Search for highly volatile tools and work with them. - Analyze the broker (exchange) for conditions, commissions play a particularly important role, pay attention and look for more favorable conditions. - Before you start trading, you should have a clear action plan, the most important component of which should be a risk control system. - Your stop should be tied only to the mathematical component of the transaction. ❤️ Please, support our work with like & comment! ❤️
OANDA:XAUUSDEducation
by UnitedSignals
15
Managing Negative Emotions - Psychology of Winning TradersHi Traders. When it comes to trading, psychology is often the biggest pieces among strategy and risk management. In this workshop, I will be breaking down 3 of the most common emotional issues happening on most retail traders. To becoming a consistently profitable trader, it's never about eliminating emotions. Emotions are biological not psychological, it exists within our body system, which cannot be removed completely. But what you can do is to condition your mind to organize its performance, and reduce emotions to the least possible. If you enjoy the content, make sure you follow my profile and give me a thumbs up for daily fx forecast & educational content. Trade safe and take care.
KRAKEN:BTCUSDEducation
by TraderNeoh
2
Diversify your strategyThe holy grail of diversification is to find several uncorrelated asset classes all with positive returns. One problem, though, is that diversified passive investing has caused all asset classes to become more and more correlated over time. Increasingly, you see stocks, bonds, commodities, and cryptocurrencies all move together. One approach to diversification that's increasingly popular with quants is to diversify your strategies rather than your asset classes . Long-short strategies are a popular example. Almost by definition, your short strategies will make money when your long strategies lose money, and vice versa. The challenge of making this work is that it's really hard to design short strategies with positive expected return. Since the market tends to go up over time, playing the market short is a bit like betting against the house at a casino. If you find a short strategy that actually works, that's gold right there. Fortunately, there are some relatively uncorrelated strategies that work for long-only traders. This chart shows the Invesco "Momentum" and "Pure Value" ETFs. As you can see from the red and green arrows, the two ETFs often move in opposite directions. When one is producing positive returns, the other often isn't. Owning both can help smooth out your drawdowns and returns. The same can be said for "mean-reversion" and "trend-following" strategies. Mean-reversion strategies involve buying assets that have made a big move downward. If you bought China stocks after their recent huge-selloff, that was a mean-reversion trade. Trend-following strategies, by contrast, involve buying assets that have made a big move upward. If you've bought oil and gas stocks in recent weeks, that was a trend-following trade. Both strategies tend to "work," but again, they're somewhat uncorrelated. These strategies can further be broken down into short-term and long-term versions. Oil and gas is in a short-term uptrend, while the Nasdaq index is in a long-term uptrend. Facebook and Bristol-Myers Squibb are a short-term mean-reversion candidates after their recent sell-offs, while Calavo Growers and Regis Corporation are long-term mean-reversion candidates. The nice thing about using a mixture of short-term and long-term signals is that they allow you both to profit from stable market conditions and to quickly pivot at least some of your capital when market conditions change.
MEducation
by ChristopherCarrollSmith
Engulfing (Outside Bar) & Harami (Inside Bar) PatternsFor your homework: find all engulfing, harami and pin bar setups on different Forex pairs on hourly time frames or higher. Where did these patterns happen- Price and Time? How could you have traded them? entry, stop loss and targets What risk management would you use or lot size? What is a pip move worth with keeping trades 1% to 2% of your account. These two patterns are very powerful, on all time frames- as usual higher time frames are more reliable. You would need to adjust your risk management the higher time frames you trade to generally- lower lot sizes and larger stop losses. On example daily GBPJPY chart- these moves from both engulfing and Harami two candlestick pattern do not look like much movement, but yellow noted lines are 100 pips each. How you set up entry, stop losses and targets is all up to you= but remember do not let emotions control you and let greed ruin profitable trades.
Education
by Anbat
The Power Of Outside Bar Or Outside Day (Engulfing)Outside Bar/Outside Day (Engulfing): Rules (chart example is a bullish setup) 1) This bullish outside bar/outside day or engulfing candle means new buy or bullish money is coming into Forex pair 2) Price action encompassed the high and lower of previous days price action (chart: Fridays) 3) This candle happened on a Monday- mostly lowest liquidity and volume of the week 4) Next three days (Tues, Weds and Thurs) - gave you possible entries into this future bullish move 5) This Engulfing or outside bar/outside day pattern would have gave you 350 pips (profit/target) with a 100 pip stop loss or 1: 3.5 risk/reward setup. 6) This engulfing or outside bar/outside day pattern broke the price action (critical price level) of 120.000 on chart This pattern is more reliable on hour, 4 hour or daily- but can be used on lower time frames of lower then hourly IF you see this at resistance and support, price action level of a round number, fib ret of 50% to 61.8%, etc... more confluences at one price and time would put the probability of profit on your side of trade. Adjust risk management related to time frame you are trading on and ATR of the pair, this will keep 1% to 2% risk per trade the same.
Education
by Anbat
What Is A Buy & Sell Stop Order?Both Buy and Sell Stop Orders are trade order set before current price hits those orders and gets you into a new trade. Buy Stop Order: An order that is executed at a specific predetermined price that is above the current price. Sell Stop Order: An order that is executed at a specific predetermined price that is below the current price. NEVER chases price when making a Forex trade, let price action come to your entry by setting either a Buy or Sell stop order. Then make sure you set your stop loss and targets at that time too. A.C.E. Strategy is: 1) Alert candle 2) Confirm candle 3) Enter candle
Education
by Anbat
What Are 10 Things You See On Daily September Chart? Add YoursExamples: Do this on daily charts- understanding candlestick language will assist you in trading and risk management. 1) Supply Zone/Resistance area 2) Demand Zone/Support area 3) Trends- bearish or bullish 4) Price Action? Top to bottom how many pips? 5) Any Engulfing Candlestick patterns? 6) Any Harami Candlestick patterns? 7) Any Pinbar Candlestick patterns? 8) And Doji's (undecided) candlesticks? 9) From 1st day to last day of September- was it bearish? was it bullish? or doji (monthly candlestick?) 10) Where are critical price line levels (round numbers or psychological numbers) 11) ADD YOURS... PLEASE ADD IN COMMENTS: What do you see on attached naked or price action only chart of AUDJPY- thanks!!! Where and How could you have entered into a trade on this chart, with enter, stops and targets set up and make a profit?
Education
by Anbat
1
Break & Retest Strategy (Should Be A Favorite)Break and Retest Strategy: Bullish example on chart: 1) Quick price action move or continuation phase on chart 2) Price action protected the critical line, structure and future stop loss of 119.000, during exhaustion phase. Could use a fib ret 50%-61.8% for entry. 3) Showed a great two day Engulfing pattern on chart for entry for buy market trade at close of that candlestick. (I use harmi, engulfing and pin bar candle stick patterns to entry all trades, especially on this break and retest strategy) 4) Stop loss would have been at 119.00 (yes, that is 88 pips from entry) 5) Targets 1st target 88 pips from entry, 2nd target 176, 3rd target 264 and 4th target is 352. Related to daily chart, adjust your risk management appropriately just like all trades you do- is at beginning of trade set stops, entry, targets.
Education
by Anbat
6
Picking Out The Strongest 123 Forex SetupsHow To Pick Out The Strongest 123 Forex Setup: The Most Powerful Trading Setup In Forex!!! 1) The 1 needs to be at the extreme high or low of chart (on chart example a bearish 123 setup). 2) The 2 needs to be lower then 1 on chart and turn around to the 3 3) The 3, but 3 can not be higher then 1 on chart 4) From 3 to 4, you can (if aggressive entry) enter bearish trade at 50% to 61.8% area (see chart) or conservative entry at horizontal break of 2 on chart. Then enter the trade. This trade depending on your entry to trade would have been 1:1 to 1:2 risk reward setup. 5) This happened in between the high liquidity and volume areas between Tokyo end to London end, which is where most scalping or day trading should happen, when big banks and hedges are trading most of the Forex daily rollover of $6 trillion dollars. Just get a piece of pip pie, do not be greedy.
Education
by Anbat
3 Bar Reversal Pattern A.C.E. StrategyChart is example of a 3 bar reversal pattern A.C.E. Strategy. 1) Alert Candle - Large red candle ( wick to wick or bottom to top of candle) 2) Confirm Candle- Smaller red candle ( doji is a very good sign and candlestick) 3) Enter Candle- Larger blue (green usual) that is larger then Alert candle When 3rd candle of this three bar reversal pattern hits the open of 1st candle of this pattern- ENTER buy signal for bullish trade. Place stop loss below this 3 bar reversal pattern, I place them at quarter levels: example (.xx000, xx125, xx250, xx375, xx500, xx625, xx750 & xx877), on Eur pairs and or chart example of EurCad (see chart). The setup would be 1:2 or 18 pip stop vs 39 target. Noted chart stop loss is 1.43125. Use always right risk management and lot sizes etc... for time frame of chart used and ATR for setting stop losses and targets too.
Education
by Anbat
1
Why Do Traders Fail?Most of the novice traders believe that trading FOREX is a gamble! Why do traders fail? 1) They trade with the aim of getting luck to make money. 2) Their greed exceeds their need. 3) They think trading is a game of chance and luck and do not get the proper education to succeed. 4) They do not favor to invest enough time and amount for education and mentor-ship to get basic knowledge. 5) They have poor focus. 6) They are more emotional than intellectual. 7) After failing, they want to make up their loss; therefore they may further incur loss.
Education
by Anbat
2
The biggest “MYTH vs REALITY” in tradingDear traders, happy Friday and welcome on our Educational Post for this week. Today we will be talking about the most popular myths in the trading world and compare it to the reality. “99.99% win rate”, “50 trades winning streak”, “100% monthly return”. Do these phrases sound familiar? All of us have come across people and companies promising that they accomplish the above stated proclamations GUARANTEED. These individuals tend to deceive the beginners and sell them a fake dream. However, trading does not work like that. If we take a look at the chart, we can see the 4H timeframe graphic of GOLD. We decided to use this graph to illustrate the idea. On the left hand side of the chart, we can see an example of the strategy that the above stated type of individuals use to deceive a huge mass of people. Fake and unrealistic risk-to-reward ratios, impractical percentage returns and other tricks appeal the newcomers and lead them to the mousetrap set by the so-called “gurus”. On the other hand, on the right side of the screen, we can see the reality of trading. Not every trade will be a winning one. The most important thing is to follow the principles of risk management, have patience and discipline! We hope you enjoyed this educational post! If you have any proposals on what should our next educational post be about, please feel free to write down the topics of your interest in the comment section below. Investroy team is wishing you all a great upcoming weekend!
OANDA:XAUUSDEducation
by Investroy
6
What Is Capital Partitioning ? How will it help you as a trader?Hi everyone: Let's talk about capital partitioning, which is a risk management approach for consistent traders to utilize to allow them to leverage their capital. You may ask what exactly is capital partitioning ? well to simply put it in words, it is basically divide up your trading $ in the current trading account into 2 or more sub accounts. So what's the point of doing that you may ask ? Well, with leverage, a consistent trader does not require to have their entire money deposit into one trading account. They can allocate the asset into different trading accounts to reduce risk as well as trading different markets available Let's take a look here: Say I have a $100,000 trading capital. I understand risk management, trading psychology, and will not over trade, over risk and revenge trade. Hence, it's in my best interest to divide the $ in this account into a different accounts, or simply in a liquid-able account such as a savings account, stocks, bond..etc Here are a few scenarios that you can implement into your trading accounts. Understand that the % to allocate, what other trading accounts to deposit $ into, and how to move around the $ is totally up to you as a trader. The most important is to make sure you are a consistent trader before you approach this type of method. As more accounts you divide your capital into, the more % you will need to risk per account as you need to open bigger position sizes now. Any questions, comments, or feedback welcome to let me know. Thank you I will share other risk management educational videos that can be helpful for you. Risk Management: When/How to move SL to BE and to profit in a running trade ? Risk Management: How to filter trading opportunities if multiple setups are presenting entries: Risk Management: 3 different entries on how to enter the impulsive phrase of price action Risk Management 101 Risk Management: How to set a Take Profit (TP) for your trades Risk Management: How to Enter and set SL and TP for an impulse move in the market Risk Management: How to scale in the impulsive phrase of the market condition? Risk Management: Combine everything you learn to prevent blowing a trading account
BITSTAMP:BTCUSDEducation
by jojofang0901
27
The Importance Of Back-Testing Part 1When it comes to trading the financial markets (any market), back-testing your strategies is an absolute must. Although past performance does not guarantee future results, back-testing your strategy cannot be skipped or rushed if you wish to be a consistently profitable trader. Back-testing can be done many different ways today. There are many good software’s & trading platforms with available back-testing tools however, I personally prefer to use a spreadsheet as they are fully customizable & require you to fully understand the operation and function of the data you compile and your strategies performance. In my personal experience, I have found that traders who use software’s as opposed to manually back-testing each trade one by one, have a much more difficult time remaining consistently profitable. One of the effective benefits of manually back-testing your strategies is that you will be training your eyes to spot your specific Conditions & Criteria’s for entry along with getting a feel for the characteristics & movements of the market you are trading. You can manually back-test your strategies by going to your chart and scrolling as far to the left as you would like. Next you will slowly scroll one candle at a time to the right, until you see your setup. Once you see your setup, you should stop and enter the details of the trade into your back-testing tool. After you have entered the details of the trade into your spreadsheet, you should continue scrolling to see the results of the trade. Enter the results of the trade and continue scrolling right until you see your next setup. Your trading timeframe will determine how far back in time you can go for your back-testing. For example if you are using the 60 min chart as your trading timeframe, you should be able to test several years of trades whereas if you are using the 5 min chart as your trading timeframe, you may only be able to test several months of trades. I mainly trade using the 4hr and 60 min charts therefore I personally start my back-testing process by testing 1 years worth of trades. If I am happy with the results of the 1 years worth of tested trades, then I will typically restart the process of back-testing that strategy- going as far back In time as possible. I like to have 3+ years of back-tested trades before I will begin forward testing the strategy & then ultimately trading the strategy live. If you are unsure about the amount of time that you should back-test for your strategy, you can safely make this decision using the amount of trades instead- For example, I recommend back-testing AT LEAST 100 trades. I personally will not begin forward testing a strategy with any less. If the strategy proves profitable after 100 trades, I like to back-test as many as possible. There is no such thing as to much back-testing.  It is very important that we do not cheat during this process. Do your absolute best to scroll slowly as you proceed to avoid seeing the results of the trade before you have made the decision to enter. We must be honest in our approach to testing a strategy, in order to get the most accurate data & results possible. It is easy to see what happens next by accident & convince ourselves why we would or would not have taken that specific trade anyway. Be sure to follow your detailed conditions & criteria’s for entry as this will eliminate making discretional decisions. The purpose of pre-defined conditions and criteria’s for entry is to minimize the decision making process as much as possible. Please understand that cheating during this process is ultimately skewing the results of the strategy as well as cheating yourself! Back-testing serves many purposes to a professional trader & takes up a large portion of their work week as we are always looking for ways to improve our existing strategies and/or develop new, more efficient ones. This stage is also crucial to your confidence in your strategy which ultimately leads to being disciplined and following your set guidelines for the strategy you are using. Your confidence and discipline to your strategy will come into play during periods of “Drawdown" What Is Drawdown? Drawdown is an extended period of time that a traders account experiences loss or no increase in account balance. In other words, drawdown is a losing streak OR a period of time that the account makes no gain or loss. No matter how good a strategy is, it will eventually experience a losing streak. It is extremely important that we measure the severity of these drawdowns otherwise known as "Max Drawdown". Drawdowns can vary from strategy to strategy however as an example, my strategy typically experiences 1-2 drawdowns per year and the average length of these drawdowns are around 30-40 days long. Back-testing can really help maintain emotional stability & psychological logic during these prolonged periods of drawdown. If you begin to feel doubt while these periods of time are occurring, you may go back to your back-testing results to reassure yourself that it is normal for the strategy to not achieve a profit OR even lose a certain amount of money over the course of however long your results show on average. After we have completed 3 years worth of back-testing or at least 100 trades, you will be able to go back and see periods of time (typically 1-2 months) that the account made no money at all or even lost money. As an example- the strategy shown below carries an 11% Max Drawdown over the course of 3 years worth of trading, meaning that at some point during 3 years worth of trading, my account may experience a 11% loss from its current value at that time. This period of time is normal and as long as we do not exceed this Max Drawdown by more than 1 or 2%, we should continue trading our strategy without taking a further look to evaluate whether the strategy is outdated and needs adjusting or if we made trading related errors. looking at the date in the top left (10/4/2018) & Date at bottom right (11/5/2018), we can see that the strategy produced little to no gain over the course of this 32 days. When first starting out as a trader, this can be extremely difficult to deal with. 32 days can feel like a very long time while it is occurring but DO NOT give up on your strategy if it has shown to be profitable throughout your back and forward testing period!! This is where most inexperienced traders begin making mistakes, breaking their rules or change up strategies thinking the one they are using doesn’t work when in fact, this is 100% normal for EVERY strategy. This is where discipline comes into play. If you do not remain disciplined and stick to your strategy/rules during these periods of time, your lack of discipline will lead to inconsistent results & ultimately failure. Lets look at what happened right after this drawdown was finished had you stayed discipline. (See Image Below) In the following 47 days, the strategy managed to produce nearly a 90% gain! I am not saying these are the same results you will get, the point I am trying to make is to not jump from strategy to strategy or start making irrational decisions because of these periods of time. I have seen to many new traders destroy themselves because of drawdown or throw away an amazing strategy because they were unaware and uninformed about these periods of drawdown or because they chose not to back-test a strategy before using it to trade with live money. It is crucial that you extensively test anything you wish to use in the markets before using it. Take the time to feel those losses as if they were real and they were occurring in real time. Don't take anyone's word or back-testing results as your own, simply put the time in to this process yourself & you will find that your perspective of trading changes dramatically. You will start to treat this as a business and you will be one step closer to consistently profitable trading. Note: Back-testing a strategy must be done for each market you plan to trade. For example, your strategy may be profitable on EUR/USD however that does not mean it is profitable on any other currency pair or in any market in general. Be sure to back-test the strategy for each market you wish to trade as strategy results may vary widely from market to market. As a consistently profitable trader for the better half of a decade, the best advice I can give and the one thing I want you to take away from this post is- Always be sure to extensively back-test any trading strategy you plan to use in the markets. Without this step, you are essentially trading blind & will have an extremely hard time with your trading psychology & consistency. The software's out there today have a purpose when used correctly but I highly recommend using a more manual approach. It forces you to understand your strategy while training your eyes to spot your setups. Some Data Points You May Want To Gather For Strategy Optimization- I hope this was helpful for you, please leave a comment and let us know what your back-testing process looks like, and how you go about optimizing your trading strategies.
BITSTAMP:BTCUSDEducation
by Alec40
9
Bearish Evening Three Candle (Reversal Pattern)Evening Three Candle (pattern) How To Trade: Evening Star- is a three candle pattern with the highest middle candlestick, but also the smallest body and slight shadows/wicks. The third candle goes below the bottom half (1/2) of the body of the first candle and its opening FALLS below the opening price of the middle candle. The evening star is a reflection of the morning star formation. How To Trade: 1) On 4th candle open,use a sell market order to get into trade 2) Set stop loss higher then sell market order, give around top of 3rd candle (could be large, so adjust stop loss and risk management appropriately). You can find these bearish evening candles on lower time frames, but hourly, 4 hour and daily are better and more reliable, then lower time frames. 3) Set targets at least 1:1 to 1:3, stop loss and use ATR to get daily volatility range too.
Education
by Anbat
How Do You Build A Position With Pyramiding?As a trader, it’s a general rule of thumb that we should always be looking to maximise potential returns (per unit of risk) with each transaction. We should always be looking to squeeze as much out of the market as we can. There are times when this can occur by simply letting the trade run its course. However, sometimes market conditions align perfectly for savvy traders to “press the trade” or Pyramiding into the trade. Don’t press your luck; press the trade instead! Attempting multiple entries in the direction of a trend is one strategy savvy traders use in an attempt to maximise return (otherwise known as Pyramiding). The problem with this tactic is that while it may increase the potential reward, having a larger position in the market also opens you up to more risk. As a trader, you need to find the perfect balance of pressing the trade while not pressing your luck. There are a few ways to achieve this: If the market is moving at a snail’s pace, and not much movement has been made from the initial entry, any additional entry should be minor. If, however, a decent distance has been travelled, a trailing stop will secure more profit, and any additional entry can be larger. In essence, any additional position sizes are partly dependent on the distance between the initial entry position to stop loss. Ensure you have a strong driver that pushes prices along. Simply pressing trades at random is not good risk management. Reduce risk on entry by only adding additional positions when the stop loss on the first position can be trailed. Pick your battles carefully when Pyramiding You may find that as time wears on, you’re left with a large portion (>2% of total equity) in a single trade. The tactic of adding exposure will generally make for a “short” pyramid, which typically won’t grow over 2.5% of overall equity. This Pyramiding tactic ensures you’re exposed to additional upside while minimising downside to a level with which you’re comfortable. Here are a few things to be wary of: Keep an eye out for drivers that influence market psychology: This is when momentum and volatility will be high, allowing you to pyramid into a move more easily. For the technical traders, you may prefer to avoid day-to-day shifts by taking in a broader market view. Diversify: as with any investment, don’t place all your eggs in one basket. Diversification is key to keeping overall risk low. Have strict risk limits in place: With 2.5% in one pyramid, another 2.5% in another – next thing you know, your overall portfolio heat is close to 10%. That’s a high amount of risk to carry around with you. Consider minimising position sizes of certain trades to reduce overall risk. Consistency is key with position sizes: If your initial entry is $100k and your second is $300k, you’re off to a lousy start in building your pyramid. Final Thoughts on Pyramiding Remember always to start small and slowly. There’s no need to rush in. Experiment with pyramiding until you’re comfortable with your approach. Always remember the two key elements to consider: Resist the temptation to take profit early when the opportunity arises. Sometimes it’s best to sit on an existing trade. Be wary of adding to your trade at “worse” levels. Trends will always end at a certain point, so you don’t want to be pyramiding into an extended, ongoing trend. Look for new trends to pyramid in, which will reduce your overall risk.
TVC:GOLDEducation
by BlackBull_Markets
2
Education: Three Day Trailing Stop Rule (3DTSR)ICEUS:KC1! I learned a handy tool used to manage risk under certain circumstances - the Three Day Trailing Stop Rule (3DTSR) In this example, I actually fade the 3DTSR, but being able to execute different styles of trading strategies reflects an understanding of them, while acknowledging that no system or strategy used in markets will be perfect. Three Day Trailing Stop Rule: There is one initial criteria for the 3DTSR to become active - Either Upon Pattern Breakout - to limit initial risk/add to position at lower relative risk OR Upon Reaching 70% of Target from Breakout as a Trailing Stop In an Uptrend, to exit a position using the 3DTSR Day 1 is the High Day, defined by a new price high - at this point, we are not aware of the setup Day 2 is the Setup Day, defined by a closing price (end of day) that is below the low of Day 1 - at this point, the trigger is active Day 3 is the Trigger Day, as the stop is placed below the low of Day 2 The 3DTSR can also be used as an entry strategy, as shown in the chart here. Day 1 = High Day Day 2 = Setup Day, where price closed below the low of Day 1 Instead of placing a stop below the low of day 2, here I fade the 3DTSR by ADDING to a long coffee position, and jamming the stop to below the low of Day 2 Day 3 = The low of Day 2, or the trigger, is never penetrated, and price opens a cent higher If using the Trigger as a stop, or below the low of Day 2, and using the Triangle shown to imply a measured target, this is a whopping 20 to 1 trade setup. Do you have any profitable trading systems or strategies?
ICEUS:KC1!Education
by jBTCkingaling
3
BTC.D : A quick note on bitcoin dominance and altsCRYPTOCAP:BTC.D Hello everyone 😃 Before we start to discuss, I would be glad if your share your opinion on this post and hit the like button if you enjoyed it ! It is inevitable that at some points in the cycle, Bitcoin will outperform almost everything. With a few outliers of course. However, it's important that this doesn't change your game plan. Your game plan should already be set in motion. If you track your portfolio daily, both in USD and BTC, there are always fluctuations if you are holding a mixture of BTC, Alts and USD. It would be near impossible to maintain your portfolio's equivalent BTC value round the clock, unless of course you were all in BTC. I personally hold BTC as my base asset during bull runs (switching to USD at local tops or as near as I can) as well as moving to ETH as my base asset when ETHBTC looks set to out perform. However, it is inevitable that my alt coin holdings (spot) that I have accumulated will take a hit during a strong BTC run - so you may see your 'BTC worth' drop at times; However, I think of alt holdings like a coiled spring. When under pressure BTC, they bleed - and are suppressed. If you've accumulated at support, you need not to worry about the temporary drawdown in BTC, because in general alt coins out perform BTC in the right conditions, and so when bitcoin puts in a local top, altcoins regain their dominance and begin out performing. HOWEVER It is important not to be 'alt heavy' at times when the BTC dominance is at support. It is important to rotate the ratio of BTC:ALT:USD holdings to lessen the impact of alts bleeding at certain times in the market. For example, in January of this year, it was an amazing time to load up on altcoins given that BTC dominance was at resistance. We then saw astronomical gains in alts across Feb/March when BTC.D dropped like a rock. Then, in May when BTC.D hit support, the whole market tanked but alt coins got hit the hardest. Alts will lose value when BTC is volatile, in either direction. So it's important to balance the ratio of your holdings across BTC, alts and stables at certain times in the market. I pay attention to Bitcoin dominance more so for my spot holdings. For my trading account, every asset is simply a method of making a profit on percentage gains. So whether I'm trading BTC, ETH or alts - it doesn't matter as much. But for spot holdings, I generally want to cycle my ALT:BTC or ALT:USD holdings. When BTC.D is at support, I want to hold less alts. When BTC.D is at resistance, I want to load up on alts.
CRYPTOCAP:BTC.DEducation
by Helical_Trades
17
Box Breakouts On Daily, 4 hour & HourlyYes, you should try them yourself: Why? Makes Forex trading a lot simpler to do I add boxes on daily of: DAILY BOXES: 100 pip boxes - vertical lines every Monday and horizontal lines every price action number ending in .000 (psychological #) 4 HOUR BOXES: 50 pip boxes- vertical lines every day after session opens and horizontal lines every .000 & .500 critical price action numbers. 1 HOUR BOXES: 25 pip boxes- vertical lines every 4 hours after session opens and horizontal lines every .000, .250, .500 & .000 price action numbers. If you try this, you will like it. Why? because this will give entry price, stop loss price and 1st and 2nd targets. If your win rate can hit 70% or higher on these 1:1 or 1:2 risk reward setups- then you know exactly what and what you are doing when trading Forex. Risk management is always #1. You can have confluence with support and resistance, pivot points, RSI, BB, etc... before doing this box strategy. If you can use round numbers and quarter numbers in your trading you will be more profitable. Trading Forex is about PRICE and TIME of session going on now.
Education
by Anbat
Piercing Pattern (Blended Candlesticks)Can you blend or put together many candlesticks together in your head? If you can do this your profits and win rates will improve. Blended several four hour candlesticks together to make a Bullish piercing pattern: on AUDJPY 1) Look for a sharp down move (Bearish) - two /4 hour candlesticks 2) Look for a move up (Bullish)- three/4 hour candlesticks= with price action closing above 50% of previous RED or bearish move down. 3) Then do a buy order at that time with stop below lower bullish move and take profit or targets of 1:1 to 1:2, especially if day trading. ---Chart example if a great set up to trade: Look at highlighted boxes- what do you SEE? ---Yes, this blended candlestick idea can work on any time frames, but as usual higher time frames work better then lower time frames. IF, you can blend candlesticks together (some you tube videos on this idea too) you will be able to take an astronaut view on trades and not get tunnel vision but see the bigger picture or marco picture and see what price action on chart is telling you and direction or momentum is taking pair too. If you understand price action in the highlighted rectangle boxes on chart- then try to do this on other charts- find harami, engulfing, pin bar, etc... setups.
Education
by Anbat