Get started

Tradingtips

3 Key Entry Rules to Boost Your Trading PerformanceToday I want to share with you this topic: the 3 Entry Rules to Boost Your Trading Performance. Over the 20,000 traders that we have coached over the time via conferences and talks we’ve done all over the world, we have found one of the challenges that traders have is that they find themselves locked into a trade and then being stopped out when they enter into trade. So their entries are not really optimized or they are not getting the right timing for their entries. Sometimes they come during a coaching session; they say ‘Thiru, I need some help with my entry.’ So this topic, the 3 Entry Rules, can actually help you optimize your entry and overall improve your strategy performance. This is what we’re going to be looking at today in this video. The first one is what we call “ Time Frame Correlation ,” the short form abbreviation TFC. In TFC one thing you do have to remember when you’re correlating the different time frames is that you’ve got to remember three times. Some of you may be wondering ‘What do you mean by three times?’ What I mean is that for example if you are an intra-day trader trading on a shorter time frame, like a one hour time frame, then you need to be looking at three time frames at least altogether, so the one hour and each of the time frames has to be three times the one that you are trading on, three times or four times. Now let me explain by way of an example: If you are trading on a one hour time frame, then we are looking at maybe three to four hours (1 x 4 = 4 hours) and then after that, you want four times that, approximately that is a daily time frame, 16 hours is a daily time frame. What we’re looking at is to correlate the times frames before we take the trade. We are usually looking at three time frames and each time frame is three times each other. For example, if you are an end of day trader and you want to enter your position onto a four hour time frame then you can start to look at daily time frame and then three to four times that would be a weekly time frame as well that you’re looking at. Let me explain why this is important. For example, imagine this – you would have probably experienced this – in a one hour time frame it looks like it’s going down and you are thinking it is looking like a very good short sell as the direction is going further down. You put your entry over here and let’s say you put your stop loss over here and you’re good to go. Let’s say your target is somewhere around there. In the next hour the trade then triggers you in and starts to go towards your target, everything is well and rosy. You are happy, you’re in profit and you are thinking ‘it is only a matter of time before I reach my target.’ Then what happens? You know the usual thing, you would have experienced it if you have traded or if you are trading at the moment as well, it will start to reverse and where your stop loss is – let’s say other traders have their stop loss here as well – suddenly the market reverses and shoots up and takes up all the stops. I’m sure you have experienced this. Now why does that happen? It is because, if you imagine this is the one hour time frame, if you didn’t correlate between the other time frames – the four hour and the daily time frame – and let’s say the four hour and the daily time frame are in an up-trend, if that is the case, then what happens is that the orders that are inside the daily time frame are being filled by the brokers and therefore the market is reversing to fill them up on a higher time frame. This is what is happening and this is why sometimes you get these sharp reversal moves in the market. It is very critical that you correlate the time frames before you start to take your position on the one hour time frame. In fact, in the last live trading we did where we were teaching a strategy that we called “stops to cash,” what we usually do is we take contrarian move on a one hour time frame where it looks like a perfect short, where beginners and even intermediates are getting into short position, but we are looking at a contrarian position in terms of the one hour time frame but when you align it to the higher time frames, it’s just in line with the trend. That’s all we’re doing here. What we’re saying is when everybody’s stops are being taken out, we are actually converting it to cash according to this time frame correlation. I believe that concept is well clear and nice now. Definitely do consider putting that into your entry rules. The second entry rule we’re looking at is “ Indicators .” This is quite a critical one that you can put into your entry rules also to optimize your strategy performance. In terms of indicators, the usual common ones that we are looking at are Stochastic, RSI and for example CCI as well. These are familiar names, you have all heard of them. There are thousands of indicators, but the important thing is don’t just pick an indicator and just slam it onto the screen, but ask yourself what are you looking to achieve, what is the objective of your strategy? Then pick and choose your tools. For example, let’s say you’re driving your car and it starts to break down, you can’t just choose any old hammer or spanner. You have to analyze the problem first before choosing the tool that you want to use to repair the mistake or the fault on the car. It is the same thing here, as we are looking to optimize our strategy, we have to ask ourselves what is going to be the most efficient indicator to help me optimize my strategy performance and towards what objective? That is how you actually choose the indicator that you want to have on the screen in your strategy. The last one we are looking at is “ Price Action .” Price Action is very critical because most of our strategies use price action. It is the fastest of them all. Some things the price won’t be able to tell you and that’s when we use indicators because it involves a lot of calculations. With price actions you notice some really powerful bar patterns that give you an edge in the market and then using all these three factors together that can give you a very strong edge against all the other 99% traders. For example, price action patterns can start to look like the low test bar starts to come up over here and it’s starting to show a reversal pattern. Or even things on a daily time frame where we are looking at something like a down trend and it is starting to reverse – all those critical price action patterns that can give you and edge. So these three rules that’s I’ve just gone through with you right now can be so important to improving your whole strategy and your trading performance. On a final note, what I want you to remember is that just using them by themselves is not enough as Traders. But using them in a cumulative manner strengthens your edge so strongly in the market and also optimizes and maximizes your trading performance for consistent profits. I believe this has been very useful for you all and as we always say, til the next time stay disciplined, follow your trading plan and keep Trading like a Maste r.
Education
by masterthemarkets2010
Just Don't Trade When...Just Don’t Do It Trader By now, you know what to do as a trader. I’ve pretty much drilled in your mind. You can hear my voice echo the 4 Ms. But one overlooked thing that’s also important… Are the things not to do. Let’s crack into the 5 things… #1: DON’T fear losing – It’s just the cost of trading Losing trades are an inevitable part of trading. So why fear losses if they are going to come. And it’s not just one or two losses. You’re about to take thousands of losses in your life. But don’t see them as losses. Instead, view them as the cost of doing business in the markets. Every trade carries a level of risk (hence we use stop losses in every trade). And losses are opportunities to learn and refine your strategies (if need be). So make it natural to embrace your losses as a part of the trading process. This way you’ll cut the ego, and take on each trade with a more objective and focussed point. #2: DON’T dwell on past failures – You are only as good as your last trade While it is essential to learn from past mistakes. If you dwell on them, they will excessively hinder your hard worked progress. Trading is an ever-evolving journey, and each trade presents a new opportunity. Instead of fixating on past failures, blown accounts, big drawdowns and times you just F*ed up with your trading system and mentality… Rather focus on the present and future. There is only NOW and what is to COME. So apply the past time lessons and focus on improving your decision-making performance in the next trade. You are only as good as your last trade. #3: DON’T expect fast riches – This is a slow and gradual process Trading is not a get-rich-quick scheme. If you expect to make it big in the first three years, I have news for you. Unless you already have a million rand portfolio to grow and bank from, this is going to take take. Cut out these unrealistic expectations because it’s going to be an emotional ride with excessive risk-taking. Instead, adopt a long-term perspective, set realistic goals and understand that trading success is a gradual process. Let the power of compounding work in your favour over time. #4: DON’T compare yourself to others – Your personality & risk profile shape you Each trader is unique. You are unique. Therefore, you have different risk tolerance levels, trading styles, and market perspectives. If you compare yourself to others, you’re going to feel inadequate and you’re going to enter into temptation on imitating their portfolios. It is essential to embrace your own strengths and weaknesses as a trader. Understand your personality, risk profile, and trading preferences, and align your strategies accordingly. Find what works for you and develop a personalized approach that suits your individual needs and goals. Trading is a self-learning journey that takes time and effort to master. #5: DON’T give up – You only lose when you quit! Persistence is key in trading. It is natural to face challenges and setbacks along the way. But the only time you truly lose is when you give up. Stay committed, maintain a positive mindset, and keep pushing forward. You still being in the game is what will differentiate you between failure and success. So let’s conclude what you must NOT do… #1: DON’T fear losing – It’s just the cost of trading #2: DON’T dwell on past failures – You are only as good as your last trade #3: DON’T expect fast riches – This is a slow and gradual process #4: DON’T compare yourself to others – Your personality & risk profile shape you #5: DON’T give up – You only lose when you quit! Just don’t do it, trader!
TVC:SA40Education
by Timonrosso
1
The Dangers of Giving Up Too Soon on a Trading Strategy There are hundreds of different strategies to trade. Some of them are losing ones, some provide modest results and some strategies are very profitable. Novice traders often struggle to find the right strategy that suits their personality, financial goals and risk appetite. Unfortunately, they also tend to make some common mistakes that can undermine their performance and confidence. ❌ One of the biggest mistakes that they make in their search is that they give a strategy a very short trial period. It simply means that they are trying to assess the validity of the strategy, trading that for a very short time span (usually a day to a week). Please, realize the fact that the performance of the strategy can be measured only with extended backtesting - meaning that the strategy should be tested on multiple financial instruments and for a long period of time and applying multiple evaluation metrics. Moreover, if the strategy proves its efficiency on backtesting, it should be traded on a demo account at least 2 months before the valid performance can be calculated. ❌ Another common mistake is that many traders drop the strategy once it starts losing. And by losing, I mean just 2–3 trades in a row. Newbies are searching for the approach that never loses. They may even abandon a trading strategy once they catch JUST ONE bad trade. ✅ In contrast, a smart trader realizes that one bad trade does not define the performance of the strategy. Moreover, such a trader calmly faces the losing streaks and sticks to the strategy. Take a look at that picture. On the top, we have the traits of a newbie trader and his equity curve. He abandons the strategy after he faces the loss, not giving the strategy a chance to recover. When he changes the strategy, he starts recovering a little bit and a losing period follows. He drops a strategy again, and he keeps following this vicious cycle till his entire account is blown. On the bottom of the picture, we see the equity curve of a smart trader. Even though he faces losses occasionally, his strategy always gives him a chance to recover and with time his trading account steadily grows. Please, realize the fact that a perfect strategy does not exist. You will lose the money occasionally anyway. What distinguishes a smart trader from a dumb one is his discipline and trust to his trading system and willingness to face losses. ❤️Please, support this video with like and comment!❤️
FOREXCOM:XAUUSDEducation
by VasilyTrader
9
3 categories for Strategy RulesToday we’re going to be looking at three categories for strategy rules . This is very critical because the most important concept before we enter into a trade is to have it already pre-set in our mind where we’re going to enter and how we’re going to exit. It’s all got to be totally predetermined and you have to visualise your whole trade set-up, your trade management and your trade exit. All these three things must be very clear within you and you must already have spelled it out with clear rules so that’s its very clear in your mind. Clarity leads to conviction. Finally that gives you courage to pull through any kind of loss cluster or drawdowns. Let’s take a look at these three categories for strategy rules. The first one is about entry rules . These tie in with what your trade set-up should look like. So when should you enter a trade? The last thing you want to do Traders is to enter a trade just out of emotional impulse. Once you’ve entered a trade by emotional impulse, when you come out of it you’ll think ‘Oh no, why did I do that?’ and that hurts so many traders. Many of the over 20,000 traders that we’ve coached so far and talked to at seminars have told us that they’ve made this mistake. One of the ways to stop that and nip that mistake in the bud is by making the rules really clear and so straight forward that you know how to follow them and can repeat them again and again. The entry rules can be sub-categorised into pre-entry rules and post-entry rules. Pre-entry rules basically means before you enter the trade what are the criteria for you that must set-up for you to enter and then to trade that price or that instrument? If you do get stopped out, what are the rules for you to then re-enter back into that trade. Some tools that you can use to formulate your entry rules are: Price action – be very clear on how the price action should be before you enter into a trade. For example, if you want to buy into a position has there got to be two seller bars and one buyer bar or has there got to be some kind of momentum decline which you also need to quantify so that emotional trading doesn’t come in. That’s all to do with price action. Time frame correlation – as I have explained in other videos, if you’re an end of day trader you’ve got to correlate with a higher time frame. We usually recommend three time frames. Indicators – there are thousands of them and you’d know about them. Cycles and phases – you can incorporate rules about cycles and phases into your strategy. Support and resistance rules – where you can enter into the market based on supply and demand. News – think about how long before news comes out do you want to enter? For example, if news comes out in the next 30 minutes, do you want to enter a trade even before, say 30 or 40 minutes before news comes out? All these things you need to include in your entry rules and as good criteria you need to at least include three or four of them. We call it degrees of freedom and you need to have at least three to four of them, ideally four, minimum three in your strategy. Of course as I’ve mentioned before in other talks, you need to choose and mix and match these rules according to the concept and objective of your strategy. The second thing, after the entry rules, we’re looking at stop loss rules . Stop loss can be further sub-categorised into initial stop loss rules and trailing stop loss rules. Before you even enter the trade you should know where the stop loss is going to go which is the initial stop loss. Once you enter into the trade you need to then know how you’re going to manage your trade and then to trail that stop loss progressively. This is critical. You need to know this before you enter the trade. Finally, our target rules . Where are we going to get out, what is our target? In terms of target rules we’re looking at pre-target, that is, before we enter the trade we should already know where we’re going to get out. And the intra-target as well, for example, you might be familiar with the USD and Swiss Franc – it was crazy, a price shock as we call it, a price adverse move of 5000 pips in just one day. When price adverse shocks like that happen suddenly in the market, you must have plans to get out. That’s what we call intra-target rules. Those are the three categories that you definitely must have in your strategy rules so as to consistently execute and also to remove doubt and emotion you need to quantify those rules. That will really help towards your consistent execution. In summary, they are entry rules, stop loss rules and target rules. The objective of writing all those rules, Traders, is so that you really get clear in your mind how the trade should look. You should have predetermined everything and you should be able to visualise how everything should be before you get into the trade, while you are in the trade and how you should get out of the trade – trade entry, trade management and trade exit. I believe this has been very useful. Do some research on your strategies and you’ll clearly see how much clarity and conviction you’ll have in your strategy and how it will help you with your execution and strategy forms. Until the next time, as we always say, stay disciplined, follow your trading plan and keep Trading Like a Master.
Education
by masterthemarkets2010
Traders Help the Economy in 4 Ways!When you trade and invest, there are many elements that you will continue to help contribute to. I can think of 4 main ways including: Way #1: You help with liquidity (volume) Remember, you are the intermediary in the markets. When you exchange money and buy and sell, you’re helping provide liquidity and volume. This makes it easier for other market participants to trade and manage risk. No matter how small or big the account size is, every trade counts. (Similar to the butterfly effect). Way #2: Helping our fellow brokers and managers Yes I know most people can’t stand the fact of the fat cats making millions of rands off other portfolios. But in South Africa, I find that most brokers are very small and don’t earn a lot of money. (Some small brokers earn under R25,000 per month). So when you buy and sell trades, you will help pay the small brokerage fees, which will aid to the salaries of the brokers you are using. Way #3: When you pay brokerage and fees, it creates more jobs When you pay the brokerage and trading platform fees. You are not only helping the brokers. But also the company they work for. The more money that goes into the firms, the more jobs that are created for other employees (Facilitators, marketers, support staff, risk managers, accountants, analysts, domestic workers, etc…) Way #4: This brings growth to your broker or market maker When your broker is doing well, as they have good clients and investors – this gives them a bigger incentive to help build and grow the company further including: · Better technology. · Better innovation · Better efficiency · Better features in the business This will also improve your experience with their growth developments. And so, I’m sure you can see that even if you want to trade for yourself, you will still be helping many companies, people and the economy as a whole… Nothing to feel bad about.
TVC:SA40Education
by Timonrosso
Real Example of a TRADING PLAN Revealed Hey traders, In this post, we will discuss 6 crucial things in your trade planning and the main elements of trade results assessment. 1️⃣ - Before you open a trading position, make sure that you analyzed the chart. You should identify a market trend and spot major key levels. Here on WTI Crude Oil I have analyzed key levels and came to the conclusion that the market is trading in sideways. 2️⃣ - Once the chart is analyzed, you should identify the safest trading areas for your strategy (preferably the zones of supply and demand). You should patiently wait until one of these zones is tested. Back to our example. The support that the market is approaching is a safe area to buy from. 3️⃣ - Once the zone is reached, you should look for a confirmation. You can either look for a reversal candlestick/price action pattern, some fundamental trigger, or some indicator. The point is that you should rely on a trigger that is backtested and that proved its accuracy. In our example, the confirmation pattern - the ascending triangle is spotted on lower time frames. 4️⃣ - Getting your confirmation, you should have a precise entry strategy. Some traders prefer aggressive entries on spot while others are waiting for a retest of some major/minor level. Trading Oil, the perfect entry point will be on a retest of a broken neckline of a triangle. 5️⃣ - You must set a stop loss. Remember that your stop-loss defines the point where you become wrong in your predictions. Be extremely careful on that step and give the market some space for fluctuations. Back to our example - our safe stop loss will be below the lows. 6️⃣ - Know your exact target level(s). Know the point where you start protection of your position, where you start profit-taking. Be very strict and don't let your greed and fear intervene. Returning to our trade, the Perfect target level is based on a closes strong resistance. Only then a trading position is opened. No matter what will be the end result of your trade, you should assess it: 1️⃣- You should journal the trade outlining its end result, trading instrument, and your entry reason. 2️⃣ - Note any peculiar thing about this trade that you noticed. 3️⃣ - Record your gain/loss percentage. 4️⃣ - Identify whether any mistake was made and if so, learn from that. Here is your minimum plan to follow. Of course, as you mature in trading your trade assessment plan will be more sophisticated. Do not underestimate its importance and treat it as the main element of your trading routine. Let me know, traders, what do you want to learn in the next educational post?
Education
by VasilyTrader
8
Optimal Guide to Action Trades BetterThere are only a few decisions you need to make as a trader. When you actually need to press buttons to action trades. To enter, to adjust and to exit. It’s crucial for you to know when is the right time to do so. You need to consider certain factors and criteria to enhance the chance of profitability. And at the same time to mitigate risks. So here are four optimal actions you’ll need to take. When the Trading Signals Line Up – ACTION! This one is a given. When your trading system, strategy and signal all align. This refers to the convergence of multiple indicators or technical analysis tools, such as breakout patterns, Smart Money Concepts, moving averages, trend lines, or oscillators. When these signals confirm each other, it presents a higher probability trade setup. You need to wait for the confirmation though and the go ahead. This way, you’ll gain the competitive edge for when to enter and to avoid premature trades. Adjust the Stop Loss or Take Profit Levels – ACTION! During a trade, it is essential to monitor the market closely and be ready to adjust the stop loss or take profit levels (according to your strategy). This should NOT be guess work. This should be calculated on probabilities and in a way that you can optimise the strategy in a mechanical fashion. The stop loss is a predetermined level that limits the potential loss on a trade. While the take profit is a predefined level at which a trader intends to exit the trade with a profit. As the market evolves, price action and new information may necessitate revising these levels to protect profits or minimize losses. Which we often do as traders to increase the win rate and lock in potential and minimal profits. Traders should remain flexible and make timely adjustments to ensure their trade is aligned with the prevailing market conditions. When the Time Stop Loss Hits – ACTION! In certain trading scenarios, there may be a need to exit a trade before it becomes a long-term investment. This is particularly relevant in markets where overnight positions incur daily interest charges, such as in some derivative or forex markets. Traders must set a predetermined time stop loss i.e. 7 weeks holding a trade. You don’t want to incur too many interest charges. You don’t want to MARRY a trade. You don’t want to have capital tied up in stock during nonperforming trades. This is an opportunity cost where you can choose better trades to line up. If this time stop loss is reached, it is prudent to exit the trade (no matter what time of day it is), even if it is still within the specified stop loss or take profit levels. Either you’ll take a less than desired profit or less than expected loss. By adhering to the time stop loss, traders can avoid accumulating excessive interest charges and maintain your trading strategy’s integrity. When a Freak Anomaly Spooks the Market, like a Black Swan – ACTION! In rare instances, unforeseen events or anomalies, often referred to as Black Swan events, can greatly disrupt financial markets. These events are characterized by their unpredictability and magnitude, causing extreme market volatility. Normally when a market or index moves 10 times the standard deviation of it’s normal move. When such anomalies occur, it is crucial to act swiftly and exit the trade. Trying to ride out these events can lead to substantial losses. By recognizing the abnormality and promptly exiting the trade, traders protect their capital and avoid unnecessary risks associated with highly volatile market conditions. That’s it. A few but powerful times you need to take action to lock in, protect, manage, bank and call it quits. Master this and you’ll make better and well-timed decisions and adapt your positions to changing market conditions.
TVC:SA40Education
by Timonrosso
4
Why you DID NOT take the trade - 4 REASONSSo you never took a trade again? This could be where the problems are rising. It’s also where you are probably missing out on what could help take your portfolio out of the drawdown. And sometimes, despite favourable market conditions, you may find yourself still hesitating to enter a trade. I want to explore four common reasons why traders fail to take the trade and how to overcome them. #1: The market moved too much One of the most common reasons traders hesitate to take the trade is that… The market has already moved significantly, and they fear they have missed the opportunity. However, it’s important to remember that the market is constantly in motion. The train will move and there is always an opportune moment to get into a trade. A sound trading strategy should take into account different market conditions, including volatile ones, and provide clear entry and exit points. If the market lines up despite how high or low it’s gone. Just take the trade. #2: You’re scared to lose the trade FOLO or Fear Of Losing Out is another common reason traders hesitate to enter a trade. While it’s natural to want to avoid losses. It’s important to remember that trading involves risk, and losses are inevitable. A sound risk management strategy, including setting stop-loss orders and managing position size, can help you to minimize potential losses and build confidence in entering a trade. #3: Too much money to spend Traders may also hesitate to enter a trade if they feel they have too much money to spend. Take oil for example. Most market markets (brokers) offer you to buy Brent crude but you have to buy 100 contracts as a minimum. In this case, it MIGHT be too much money to spend. Not because of how much of your portfolio you’re using up, but also because the risk might outweigh 2% of your portfolio. Then you get other markets like the JSE ALMI 40, where you’ll need to spend around R9,000 to enter a trade. It sounds like a lot (especially if your portfolio is less than 10,000. But, that’s why one should start with a larger minimum account size. I started with R30,000 in 2003 and even then it was too little to grow into a substantial amount. Then when it grew to the first R150,000, I started feeling comfortable with the portfolio size and it opened more opportunities to trade additional markets. So, that’s why if you want to take trading seriously, you got to cough up the cash into your portfolio and trade accordingly to strict money and reward management. #4: No trust in the system yet This one is a given and the most abundant reason to NOT take a trade. You might hesitate to enter a trade if you don’t have faith or confidence in your trading strategy or system. In this case, it’s essential to go back, review and test the strategy, ensuring it aligns with personal trading goals and is backed by sound research and analysis. When you build trust in a trading system, and you take the time and patience to see the good and the bad, then your confidence will grow. And that will be an essential step towards taking more trades to help grow your portfolio. Why don’t you take trades when you should? Is it because: You don’t trust your system You’re scared to lose money You don’t trust certain markets You don’t have enough money to trade different instruments You’re not ready with your strategy You don’t have confidence with yourself, discipline and emotions yet? Find them, harness them, work on them and you might have your answer.
TVC:SA40Education
by Timonrosso
Why Every Trader Needs a Mentor: Learn from the Experts Trading can be a lucrative career, but it's not easy to navigate the markets on your own. This is where a mentor comes in - an experienced trader who can guide you through the ups and downs of the stock market, teach you strategies and provide valuable insights that will help you succeed in trading. In this article, we will explore the benefits of having a mentor in trading and provide examples of how a mentor can help you achieve your financial goals. 1. Gain a wealth of knowledge: 2. Get personalized guidance and support: 3. Build confidence: 4. Network and gain exposure: In conclusion, having a mentor in trading is a valuable asset for any trader who wants to succeed in the markets. Whether you are a new trader or an experienced professional, working with a mentor can provide you with personalized guidance, expert knowledge, network building opportunities and help you build your confidence. So don't hesitate to seek out a mentor to take your trading career to the next level. Hey traders, let me know what subject do you want to dive in in the next post?
OANDA:XAUUSDEducation
by TopTradingSignals
9
Mastering CFD Trading: A Comprehensive Beginner's GuideContracts for Difference (CFDs) have garnered significant attention as derivative products that offer traders the ability to speculate on the price movements of various assets without the need to own them physically. These financial instruments emerged in the latter part of the 20th century, propelled by the advent of the internet revolution, which revolutionized trading by facilitating swift and convenient short-term transactions. CFDs have since become an integral part of the repertoire offered by prominent brokers, providing traders with enhanced leverage and access to an extensive range of markets that encompass stocks, indices, currencies, and commodities. This broad market coverage has contributed to the popularity and widespread adoption of CFDs among traders seeking diverse investment opportunities. The historical roots of CFDs can be traced back to the late 1980s and early 1990s. It was during this period that derivative trading witnessed significant advancements, driven by technological progress and regulatory changes. The introduction of electronic trading platforms and the availability of real-time market data allowed traders to execute trades swiftly and efficiently, leading to the development of CFDs as a viable financial instrument. The operational mechanics of CFDs are relatively straightforward. When trading a CFD, the trader enters into a contract with a broker, mirroring the price movements of the underlying asset. This contract stipulates that the trader will pay or receive the difference in price between the opening and closing positions of the CFD. If the price of the underlying asset moves in the trader's favor, they stand to make a profit. Conversely, if the price moves against their position, they may incur a loss. One of the key advantages of trading CFDs is the ability to utilize leverage. Leverage allows traders to control a larger position in the market with a smaller initial investment. This amplifies potential gains, but it is important to note that it also magnifies potential losses. Traders should exercise caution and employ risk management strategies when using leverage in CFD trading. Furthermore, CFDs offer traders the flexibility to profit from both rising and falling markets. Through a process known as short-selling, traders can speculate on price declines and potentially profit from downward market movements. This ability to take both long and short positions provides traders with opportunities to capitalize on market trends and volatility. However, it is crucial to acknowledge that CFD trading carries inherent risks. Due to the leverage involved, losses can exceed the initial investment, potentially resulting in significant financial losses. Moreover, CFD trading is subject to market volatility, and sudden price movements can lead to rapid and substantial losses. Throughout this comprehensive article , we shall delve into the historical backdrop of CFDs, elucidate their operational mechanics, and present an evaluation of the advantages and disadvantages associated with trading these financial instruments. History Of CFD: Towards the conclusion of the 20th century, the landscape of exchange trading underwent a profound transformation, thanks to the advent of the Internet. This revolutionary technology empowered traders to engage in rapid short-term trades with unparalleled ease. Consequently, intraday trading emerged as a prominent trend, and astute brokers swiftly recognized the burgeoning demand for this segment among individual traders. However, a significant predicament persisted within the trading realm - exchanges were highly specialized and compartmentalized. Currency exchanges, stock exchanges, and futures exchanges operated as distinct entities, precluding traders from capitalizing on opportunities across multiple asset classes. For instance, a trader operating with a currency broker lacked the means to profit from futures or stocks. While opening multiple accounts with different companies was a possible solution, it was far from optimal. Furthermore, another obstacle loomed large: high leverage was imperative for generating profits through short-term transactions, yet traditional stock exchanges were averse to the risks associated with margin trading. In response to these challenges, visionaries at UBS Investment Bank conceptualized a new trading instrument known as the contract for difference (CFD). This innovative derivative allowed traders to profit from the price fluctuations of various assets without the need to physically own them or conduct transactions on the underlying exchanges. Traders could now conveniently engage in trading shares, oil, and other commodities using a single broker. Additionally, CFDs provided the desired leverage for short-term trading, overcoming the limitations imposed by traditional stock exchanges. Over time, CFDs became widely available, offered by popular brokers operating in diverse markets, including the forex market. Presently, this versatile financial instrument is successfully utilized by both short-term traders and long-term investors, catering to a broad spectrum of trading styles and planning horizons. The flexibility and accessibility of CFDs have made them an indispensable tool in the arsenal of market participants seeking to capitalize on price movements and maximize their trading potential. CFD Leverage Explained: One of the notable features of CFD trading is the availability of margin trading, which enables traders to borrow funds from their brokers. This concept is closely tied to the notion of leverage, which has a significant impact on the trading process. Leverage allows traders to control larger positions in the market with a smaller amount of their own capital. To illustrate the concept, let's consider an example. Suppose a trader utilizes a 1:50 leverage. This means that with just $1,000 of their own funds, they can open a position equivalent to $50,000. In this scenario, the borrowed funds provided by the broker amplify the trader's purchasing power, enabling them to access larger market positions. The level of leverage available in CFD trading varies depending on the underlying asset being traded. For instance, when trading shares, the leverage typically ranges up to 1:20. On the other hand, for commodities like oil, leverage can often reach as high as 1:100. It is important to note that when comparing leverage in CFD trading to leverage in forex currency pairs, the ratios may appear different. A 1:20 leverage in CFDs might seem relatively lower when contrasted with the leverage commonly available in forex trading. However, it is crucial to consider these ratios within the context of their respective markets. In traditional stock markets, equity leverage is typically limited and rarely exceeds 1:2. This means that traders in those markets have less flexibility in terms of controlling larger positions with a smaller amount of capital. In contrast, CFDs provide traders with significantly higher leverage, allowing them to amplify their potential gains and losses. It is important to approach leverage in CFD trading with caution and exercise risk management strategies. While leverage can magnify profits, it also amplifies potential losses. Traders should be mindful of the increased risk associated with higher leverage levels and consider their risk tolerance and trading strategies accordingly. Comparing leverage ratios across different markets provides insights into the varying degrees of flexibility and risk exposure available to traders. Understanding and utilizing leverage effectively is an essential aspect of CFD trading, enabling traders to optimize their trading strategies and potentially enhance their profitability, while remaining cognizant of the associated risks. How CFDs Work: Let's break down the scenario provided to understand the implications of trading CFDs compared to traditional stock ownership. Assuming the Ask price per share is $171.23, a trader purchasing 100 shares would need to consider additional costs such as commissions and fees. In a traditional brokerage account with a 50% credit on margin, this transaction would require a minimum of $1,263 in available funds. However, with CFD brokers, the margin requirements are typically much lower. In the past, a 5% margin was common, which would amount to $126.30 for this trade. When opening a CFD position, the trader will immediately experience a loss equal to the size of the spread at the time of the trade. For example, if the spread is 5 cents, the stock price must rise by 5 cents for the position to reach the breakeven level. If the trader owned the stock directly, they would make a 5 cents profit. However, it's important to consider that owning the stock directly would entail paying a commission, resulting in higher overall costs. Now, let's consider the scenario where the offer price of the stock reaches $25.76. In a traditional brokerage account, positions could be closed at a profit of $50, resulting in a 3.95% return on the initial investment of $1,263. However, in the case of CFDs, when the price reaches the same level on the national exchange, the bid price on the CFD may be slightly lower, let's say $25.74. Consequently, the profit from trading CFDs would be lower since the trader must exit the trade at the bid price. Additionally, the spread in CFD trading is typically wider compared to regular markets. In this example, the CFD trader would earn approximately $48, resulting in a 38% return on the initial investment of $126.30. It's worth noting that these figures are specific to the example provided and may vary depending on various factors, including the specific brokerage, market conditions, and the pricing dynamics of the underlying asset. Why Trade CFDs / Pros And Cons Of Trading CFDs Indeed, one of the significant advantages of trading CFDs is the expanded range of tradable instruments compared to the classical forex market. While the forex market primarily deals with currencies, CFDs provide traders with the opportunity to trade a wide array of assets. Most brokers now offer CFDs on various instruments such as gold, stocks, and stock indices, greatly diversifying the available trading opportunities. However, it is important to note that CFDs are not a direct replacement for the underlying assets. Although the price of a CFD contract reflects the price movements of the underlying instrument, there may be differences in the actual returns. These differences can be attributed to factors such as spreads, commissions, and other costs associated with CFD trading. Speaking of commissions, it is crucial to consider that CFD commissions may differ from those applied to the underlying asset. This distinction becomes particularly relevant in longer-term trading scenarios. Traders need to carefully evaluate the commission structure and any associated fees when assessing the overall costs of trading CFDs. Now let's delve into the main advantages and disadvantages of trading CFDs: Pros of CFD Trading: 1 ) Expanded Market Access: CFDs provide access to a wide range of markets, including stocks, commodities, indices, and more, allowing traders to diversify their portfolios and capitalize on various asset classes. 2 ) Leverage and Margin Trading: CFDs offer the potential for higher leverage, allowing traders to control larger positions with a smaller initial investment. This amplifies potential profits (as well as losses) and can enhance trading opportunities. 3 ) Ability to Profit from Both Rising and Falling Markets: CFDs enable traders to take advantage of both upward and downward price movements. Through short-selling, traders can speculate on price declines and potentially profit from falling markets. Cons of CFD Trading: 1 ) Counterparty Risk: When trading CFDs, traders are exposed to counterparty risk, as they enter into contracts with the broker rather than owning the underlying assets. If the broker encounters financial difficulties or fails, it can impact the trader's positions and funds. 2 ) Potential for Higher Costs: CFD trading may involve additional costs such as spreads, commissions, and overnight financing charges. These costs can impact overall profitability, especially for longer-term trades. 3 ) Market Volatility and Risk: CFDs are subject to market volatility, and sudden price movements can result in rapid and substantial losses. The use of leverage in CFD trading can amplify both gains and losses, making risk management crucial. It is essential for traders to consider these pros and cons when deciding to engage in CFD trading. Adequate risk management strategies and a thorough understanding of the underlying markets and associated costs are essential for successful and informed trading decisions. Risks Of Trading CFDs: Trading CFDs (Contracts for Difference) involves inherent risks that traders should be aware of before engaging in such activities. Understanding these risks is essential for making informed decisions and implementing appropriate risk management strategies. Here are some of the key risks associated with CFD trading: Leverage Risk: CFDs allow traders to access larger market positions with a smaller initial investment. While leverage can amplify potential profits, it also magnifies losses. Traders need to be cautious and manage leverage effectively to avoid significant financial setbacks. Market Risk: CFDs are directly linked to the price movements of underlying assets, which can be influenced by various factors, including economic indicators, news events, and market sentiment. Rapid price fluctuations can lead to substantial losses, especially if positions are not managed appropriately. Counterparty Risk: When trading CFDs, traders enter into a contractual agreement with the CFD provider. This exposes them to counterparty risk, which refers to the possibility of the provider failing to fulfill its obligations. It is crucial to choose a reputable and regulated CFD provider to minimize this risk. Operational Risk: CFD trading platforms can experience technical issues, such as system outages or errors, which may prevent traders from executing trades or managing positions effectively. Traders should be prepared for such operational risks and have contingency plans in place. Liquidity Risk: In certain cases, CFD markets may lack sufficient liquidity, meaning there is a limited number of buyers and sellers. This can make it challenging to enter or exit positions at desired prices, particularly during volatile market conditions. Traders should be cautious when trading illiquid CFD markets. Hidden Costs: Some CFD brokers may impose additional fees and charges, such as overnight financing fees or spread mark-ups. These hidden costs can reduce profitability over time, and traders should carefully review the fee structure of their chosen CFD provider. To mitigate these risks, traders are advised to implement risk management techniques, including setting stop-loss orders to limit potential losses, conducting thorough market analysis, and continuously monitoring positions. It is also crucial to conduct due diligence when selecting a CFD provider, ensuring they are regulated and offer transparent pricing structures and reliable customer support. By understanding and effectively managing these risks, traders can enhance their chances of success and navigate the complexities of CFD trading more confidently. Choosing A Broker For CFD Trading: When selecting a broker for CFD trading, certain parameters take precedence. These include: 1 ) Reliability and Reputation: When it comes to CFD trading, the importance of a broker's reliability and reputation cannot be overstated. Given the instrument's relative lack of popularity, there may be instances of limited liquidity, which increases the temptation for unethical practices such as manipulating charts or altering quotes. It is crucial to choose a broker known for their trustworthiness and positive reputation. 2 ) Variety of CFDs for Trading: It is advisable to thoroughly examine the broker's website and review the comprehensive list of available contracts. Ensure that the list includes the specific CFDs you intend to trade. Having access to a wide range of CFD options allows you to diversify your portfolio and pursue various trading opportunities. 3 ) Contract Specifications: Identify the CFDs in the broker's list that you plan to trade frequently. Pay attention to the contract specifications, including spreads, commissions, and swaps, as they should align with your trading style and objectives. If you require high leverage, verify the leverage availability for each CFD category. By carefully considering these parameters, you can make an informed decision when choosing a broker for CFD trading. This will contribute to a more satisfactory trading experience and help you align your trading strategy with your goals. Conclusion: Contracts for Difference (CFDs) provide traders with a gateway to a diverse range of popular exchange-traded assets. Through a single CFD broker, traders can engage in trading activities involving stocks, indices, and even cryptocurrencies. The key to achieving success in CFD trading lies in the trader's level of proficiency in understanding the intricacies of specific instruments. The most favorable outcomes are typically attained by individuals who concentrate their efforts on a particular asset class or even a specific instrument within that class. By acquiring comprehensive knowledge and a deep understanding of the various factors that influence prices, traders can surpass market performance and reap the rewards they rightfully deserve. This focused approach enhances their ability to make informed decisions, seize profitable opportunities, and maximize their potential gains in the CFD market.
COINBASE:BTCUSDEducation
by FOREXN1
12
Learn The Market Volatility | The Double-Edged Sword Have you ever wondered why the certain trading instruments are very rapid while some our extremely slow and boring? In this educational article, we will discuss the market volatility, how is it measured and how can it be applied for making smart trading and investing decisions. 📚 First, let's start with the definition. Market volatility is a degree of a fluctuation of the price of a financial instrument over a certain period of time. High volatility reflects quick and significant rises and falls on the market, while low volatility implies that the price moves slowly and steadily. High volatility makes it harder for the traders and investors to predict the future direction of the market, but also may bring substantial gains. On the other hand, a low volatility market is much easier to predict, but the potential returns are more modest. The chart on the left is the perfect example of a volatile market. While the chart on the right is a low volatility market. 📰 The main causes of volatility are economic and geopolitical events. Political and economic instability, wars and natural disasters can affect the behavior of the market participants, causing the chaotic, irrational market movements. On the other hand, the absence of the news and the relative stability are the main sources of a low volatility. Here is the example, how the Covid pandemic affected GBPUSD pair. The market was falling in a very rapid face in untypical manner, being driven by the panic and fear. But how the newbie trader can measure the volatility of the market? The main stream way is to apply ATR indicator, but, working with hundreds of struggling traders from different parts of the globe, I realized that for them such a method is complicated. 📏 The simplest way to assess the volatility of the market is to analyze the price action and candlesticks. The main element of the volatile market is occasional appearance of large candlestick bars - the ones that have at least 4 times bigger range than the average candles. Sudden price moves up and down are one more indicator of high volatility. They signify important shifts in the supply and demand of a particular asset. Take a look at a price action and candlesticks on Bitcoin. The market moves in zigzags, forming high momentum bullish and bearish candles. These are the indicators of high volatility. 🛑 For traders who just started their trading journey, high volatility is the red flag. Acting rapidly, such instruments require constant monitoring and attention. Moreover, such markets require a high level of experience in stop loss placement because one single high momentum candle can easily hit the stop loss and then return to entry level. Alternatively, trading a low volatility market can be extremely boring because most of the time it barely moves. The best solution is to look for the market where the volatility is average, where the market moves but on a reasonable scale. Volatility assessment plays a critical role in your success in trading. Know in advance, the degree of a volatility that you can tolerate and the one that you should avoid. ❤️Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
12
5 STUPID Trading Advice SayingsIt’s true. When it comes to financial trading, everyone has an opinion, and there is no shortage of advice floating around. However, some advice is just plain ridiculous and some tips can be downright detrimental to your trading success. I want to cover the 5 stupid trading advice points, that many traders still follow and why you should avoid them by all means. #1: Go Big or Go Home This advice suggests that you should take significant risks in trading. You should aim for massive gains. And you should adopt the casino mentality of going full port! It is true that higher risks can lead to higher rewards. But when you adopt a “go big or go home” mentality, it can result in substantial losses that are difficult to recover from. Instead, follow a disciplined approach to risk management, using appropriate position sizing and stop-loss orders to protect your capital. Risk little to make a little more. Risk 2% to make 4%. Or risk 1% to make 3%. Those small gains will eventually outweigh the losses. #2: The Next Trade Will Be Better If you believe that the next trade will magically be more successful than the previous one, you’re in for a bad time. This is nothing but a dangerous mindset to adapt to. This belief can lead to overtrading and a lack of discipline when you stick to your trading strategy. To avoid falling into this trap, focus on maintaining a consistent and well-defined trading plan, rather than trying to chase the elusive “better” trades. #3: Follow Your Heart Emotions are proven to be the trader’s worst enemy. They will often cloud judgment and lead to impulsive decisions. “Follow your heart” in trading and you’ll find you’ll ignore your strategy and you’ll take irrational risks. Instead, rely on your trading plan, technical analysis, and fundamental research to make informed decisions, and always keep your emotions in check. #4: Everything Happens for a Reason When you depend on fate, the stars and the mysterious cosmic plan, it is a surefire way to lose money in trading. The stock market doesn’t work on esoterical means. It works on simple demand, supply and volume. The financial markets are also influenced by countless factors, from economic data releases to geopolitical events, and it’s essential to understand these factors to make well-informed trading decisions. Don’t rely on fate or superstition when trading. Instead, focus on analysis, strategy, and risk management. #5: Work Harder and You’ll Win More While hard work and dedication are essential for success in any field. The belief that you need to work harder in a trading day, will guarantee more wins in trading is misguided. If the environment is not conducive. Or trades have not aligned according to your strategy, it’s pointless taking more trades for gain. Think of sideways markets. Whether you buy (go long) or short (go short), you’re more likely to fail. Trading is not just about putting in the hours; it’s about working smart, refining your strategy, and maintaining discipline. Instead of trading harder, focus and develop a comprehensive trading plan, continually educate yourself on market dynamics, and consistently reviewing and refining your strategy. And of course. JUST TAKE THE TRADE – When it lines up according to your strategy. Can you think of anymore?
JSE:J200Education
by Timonrosso
Learn THE BEST Breakout Trading Strategy Hey traders, Breakout trading is one of the most popular trading strategies. Being quite simple in theory, it remains quite complex and complicated in practice. In this post, we will discuss 7 steps every breakout trader must follow. 💬And just in brief about a breakout trading itself: this method aims to spot a key level (it might be horizontal support/resistance or a trend line) and then to trade its occasional breakout, assuming that it will trigger an impulsive move. 1️⃣No surprise, the first task of a breakout trader is the identification of key levels. Preferably, these levels should be spotted on weekly/daily time frames. Here on US100, I executed structure analysis and identified key levels. 2️⃣Once key levels are spotted, a breakout trader should patiently wait for the test of one of those. His goal is to wait for a breakout. In that step, many traders fail. The problem is that in order to confirm the breakout, one should have strict & reliable rules to follow. The rules that describe a confirmed breakout. *I apply the following rule: the breakout of a level will be considered to be confirmed once the candle closes above/below the structure on the highest time frame where the structure is recognizable. In the picture above, we see a confirmed key level breakout. 3️⃣Once the breakout is confirmed, the next step is to wait for a retest of a broken level. Why retest? Simply because a retest gives a better risk to reward ratio for the trade. And even though there is no guarantee that the price will retest the broken level and because of that some trading opportunities will be missed, in the long run, retest trading produces higher gains. Following our example, the price has retested the broken level. 4️⃣Opening a trade on a retest, one should know the exact target levels. The levels where the profits will be taken. Again, newbies traders make a lot of mistakes on that step. Remember that your targets must be realistic, they must be based on closest strong structure levels, not on your desired returns. 5️⃣Also, a breakout trader should set a stop loss. And again, a stop-loss level must be safe, it must be set at least below/above a previous minor structure to protect you from stop-hunting. Stop-loss reflects the point where the trader becomes wrong in his predictions and where the trading setup becomes invalid. In our example, the safest stop loss will be below a local low. Take profit - next key resistance. 6️⃣Once the trading position is opened and stop-loss & take-profit are set, one should patiently wait. There is no guarantee that the price will start falling/growing sharply after the breakout. The market may start coiling for quite a long period of time before it starts acting. Breakout trader must be patient, not allowing his emotions to intervene. Returning to our example, after some time, the market easily reached the TP level and went much higher. 7️⃣Lastly, one should remember that his exit points are stop-loss/take-profit levels. Stop-loss adjustment in case of a position drawdown, preliminary profit-taking, and target extension are your worst enemies. Be disciplined, don't be greedy, and keep your emotions in check. Here is the example of a breakout trade that I took following the strategy: I spotted a confirmed breakout of a key resistance. The price formed a high momentum bullish candle and closed above the structure. Long position was opened on a retest. Target was based on the closest horizontal resistance. Stop loss was placed below the closest horizontal support. The market quickly reached the target. Of course, this 7-steps trading plan is not sufficient enough for profitable breakout trading. There are so many nuances on each step of the plan to consider. However, let this plan be your initial guideline: learn & follow that and with time, keep elaborating its rules until you become a consistently profitable trader. Are you a breakout trader? Let me know, traders, what do you want to learn in the next educational post?
Education
by VasilyTrader
12
5 QUESTIONS Before you Take your TradeWith each trade you take… There are these 5 standard questions you’ll need to ask an answer. Jot these down and have them ready… Do I Have a Trade Lined Up? When you go through your watchlist. You need to see any opportunities in the market that align with your trading strategy. These should stick out like a sore thumb. If it’s not, then it’s probably not a high probability trade. It’s important to analyze the market trends and indicators to identify potential trades. This will help you to make informed decisions and avoid taking unnecessary risks. Do I Have a Trading Strategy? Once you have identified a potential trade, it’s important to have a solid trading strategy in place. Your strategy should outline the rules for entering and exiting trades, as well as risk management guidelines. Follow your strategy and avoid making impulsive decisions based on emotions or market rumors. Where Should I Place My Trading Levels? You got the strategy so now you have to set up your trading levels. (Entry, Stop loss, Ghost level, Take profit levels) Are you using Order Blocks, key support and resistance levels, patterns, indicators or trend lines? Whatever you use, keep consistent to determine where to place your trading levels. This will help you to choose your trading levels based on the R:R for each trade. How Much Am I Trading? Trade size is crucial. You need your calculator to work out your risk per trade. This will help you to manage your risk effectively and avoid making emotional decisions. Your risk management plan should outline the maximum amount you are willing to lose on any given trade, as well as the maximum percentage of your trading account you are willing to risk. What Is My Exit Strategy? exit strategy should outline the conditions under which you will exit a trade. So you’ll know where to cut your small losses, ride your winners, lock in profits, or even adjust your take profit levels when the markets move well in your favour. Also, make sure you stick to your exit strategy and avoid making emotional decisions based on market fluctuations. THEN YOU’RE READY TO EXECUTE! Once you have gone through the five questions… It’s time to ask yourself whether you are truly ready to take the trade. Focus your mind, clear the distractions, confirm everything is ready to go… That takes emotional discipline. You got the questions, now go start asking and answering them with your trading…
JSE:J200Education
by Timonrosso
Emotions It is impossible to have a prejudice every day. However, it is possible to designate rules, models and criteria in order to exclude decision-making on an emotional basis. Notice, research and record everything that happens before, after and during each of your trades. Pay attention to the time period when errors occur and analyze all the details: triggers, thoughts, emotions, behavior, actions, changes in decision making, changes in the perception of the market, opportunities or current positions, trading failures. Before opening the next trade, remember your previous experience. This will help you avoid repeating old mistakes. The moments after the completion of transactions provide an excellent opportunity to track exactly how you came to this and what thoughts, emotions manifested in the moment. The recording process itself can also help to defuse the emotional state. Your first goal is to reach a level of complete detail in your trading strategy. Continue to map out your behavior pattern in as much detail as possible until you identify the initial trigger and analyze it as part of your trading preparation. During a trading session, try to write down new details. After, combine and analyze your notes to better prepare for the next session. Once you have identified the details associated with your trades, look for the early triggers that come before each one. You may be able to spot smaller errors or notice subtle changes in market perception. For example: you spend too much time on informational noise or make a trade that does not meet all the criteria of your trading plan. Create a working day schedule taking into account the instrument sessions. Set up a timer so that it fires at regular intervals during your scheduled break and doesn't disrupt your work. During this time, take a few minutes to become aware of your thought process and understand how you feel. If there are signs of a problem, write them down. Understand the intensity of the emotions. You may think that anger and frustration are two different emotions, but anger is just heightened frustration. Understanding how an emotion intensifies will help you recognize the details of your behavior pattern, including the original trigger. .... Have you ever faced a situation where, despite having a well-designed trading plan and a carefully crafted trading strategy, your actual trading day turned out to be completely unpredictable? In such instances, your actions deviate from the original plan, and momentary weakness casts doubt on the effectiveness of the entire trading session. These unexpected emotions can catch you off guard. One of the reasons for this is a lack of recognition of what is happening. Emotions often arise as immediate reactions or reflexes triggered by certain events, which traders often misinterpret as problems. Let's consider the example of a loss from a trade. Many traders may become furious and enter positions without following proper trading patterns. However, this doesn't happen to everyone. Instead of expressing anger, some traders easily cope with failures, instinctively understanding the situation and turning it into opportunities. Therefore, a crucial aspect of developing a trading plan is identifying and addressing your own internal struggles, which serve as the underlying cause of the problem. It's important to note that in many cases, the initial trigger for these emotions is subtle and barely perceptible consciously, yet it already impacts your mental stability and your habitual interaction with the market. Even if the trading day starts off on the wrong foot, by regaining composure at the right moment and avoiding impulsive reactions, you can prevent basic mistakes and maintain control over your psychological state, ultimately improving your performance. The secondary arousal occurs when a trader becomes aware of or reacts to the impulses, thoughts, and actions that occurred initially. In simple terms, the mind and thoughts amplify the emotions that have already emerged. In everyday life, people often don't differentiate between these experiences. However, if the source of the reflex is not identified, along with the secondary causes, finding a solution to the situation becomes challenging. Triggers will continue to generate more and more emotions that need to be managed. Awareness of the initial impulse and the subsequent reaction are the two starting points that enable progress. After all, stressful situations can accumulate and overlap, creating a precedent for a cumulative effect. Trading is a business, not a game of chance. This is where it is important to keep a professional mindset while following the trading plan. Hope you enjoyed the content I created, You can support with your likes and comments this idea so more people can watch! ✅Disclaimer: Please be aware of the risks involved in trading. This idea was made for educational purposes only not for financial Investment Purposes. --- • Look at my ideas about interesting altcoins in the related section down below ↓ • For more ideas please hit "Like" and "Follow"!
BITSTAMP:BTCUSDEducation
by Crypto4light
Discover Price Action Secrets for Successful Trading 📍Price action trading refers to the analysis of raw price movements in order to understand and predict future market trends and price movements. By focusing on price movements, traders gain a deeper understanding of market fluctuations and can make more informed trading decisions. The strategy can be applied to trading gold and forex, two of the most popular trading instruments. In a market as dynamic as gold and forex, understanding price action secrets is crucial for successful trading. ✔️One of the secrets is to interpret price patterns that indicate potential market movements. This involves understanding key market terms such as support and resistance levels, chart patterns, and the role of market psychology. ✔️Another important price action insight for gold and forex traders is the use of price action indicators. These can offer insights into market trends and trading signals. Some of the most popular indicators include moving averages, stochastic oscillators, and the relative strength index (RSI). ✔️Following a strict risk management strategy is another key price action secret. An effective approach is to always set stop-loss orders to limit losses in a trade, and to only trade with funds that can be afforded to lose in the event of a loss. ✔️In addition, an effective trading strategy should also incorporate a sound fundamental analysis. This refers to the interpretation of market news, announcements and events that may impact gold and forex prices. Overall, price action secrets for gold and forex trading involve a combination of technical analysis, fundamental analysis and a sound risk-management strategy. Successful traders must remain alert to market trends, always adapt to new information, and be disciplined in their trading approach. By understanding these secrets and implementing them in trading, traders can improve their chances of success in the fast-paced gold and forex markets. Check the following example: USDCAD pair was trading on a key level. Price action, candlestick and indicators analysis could help you to accurately predict a bearish movement from that. The price formed a double top pattern, was rejected from a key level and BB cloud. These tiny clues are the main instrument of a pro price action trader. Example number 2: This time gold. Important key level. Again, watch the price action, candlestick patterns and indicators. The price formed a doji candle testing the BB cloud and key level, triple top pattern was formed. The coming reversal was obvious here. 🔔In conclusion, price action trading offers a powerful approach to gold and forex trading for investors who are seeking consistent returns over time. By paying close attention to price action movements, following strict risk management strategies and staying current on market trends, traders can achieve success in these exciting trading arenas. Please, like this post and subscribe to our tradingview page!👍
BITSTAMP:BTCUSDEducation
by EliteTradingSignals
10
Harsh Truth About Trading: In Books VS In Reality Most traders start their trading journey by studying theory first, reading books or taking video courses before putting these newfound skills into practice. But once they start trading on a real market, they quickly realize that things are not as straightforward as the books make them out to be. In this educational article, we will take a critical look at the difference between theoretical knowledge and practical experience. 📍And first of all, do not get me wrong. I am not trying to imply that trading books or courses are bad. Theoretical knowledge is essential for successful trading, and of course the books are the best source of that. The problem is, however, that books can be misleading. The examples in books are always tailored. When the authors are looking for the examples of the patterns, of key levels, they are looking for the ideal cases. 📍The problem becomes even worse, when one start studying the trade examples in books. And of course, the authors choose the brilliant winning trades with huge take profits and tiny stop losses. I guess you saw these pictures of "sniper" entry trades with 5/1 R/R. The inexperienced trader may start thinking that the markets are perfect and act in total accordance with the books. That all the trades that he will take will bring tremendous profits. That the identified patterns will work exactly as it was described. 📍The harsh truth is that books and courses are simply the compositions of different examples, cases and market situations. In reality, each and every trading setup is unique. The reaction of the price to the same pattern will be always different. Please, realize the fact that books are only good for acquiring the knowledge. But in order to survive on financial markets, you need the experience. And the experience will be gained only after studying thousands of real market examples in real time. 📍Here is the example of a double top pattern that we were trading with my students on AUDJPY. In books, double tops are always perfect. Once the market breaks the neckline, the price retests that and then quickly drops. So the one can set a tiny stop loss and a big take profit. However, after a retest of a broken neckline, AUDJPY bounced and the market maker was stop hunting the newbies. Our stop loss was way above the head, and we managed to survive. Even though the pattern triggered a bearish movement, the reaction of the market was far from perfect. Be prepared, that the market will much different from what you see in the books. Good luck to you!
Education
by VasilyTrader
7
22 trading rulesThe market rewards discipline and requires you to fulfill your specific role. For instance, as a tattoo artist, your responsibility is to provide quality tattoo, while as a trader, your task is to exercise discipline in decision-making. If you remain disciplined, any reasonable strategy can yield profits in the long term. However, even the most flawless strategy will fail to generate income if you lack self-control. Here are some guidelines to follow: 1.Maintain discipline consistently. Trading demands unwavering discipline at all times. Save extreme emotions, excitement, and other non-work-related feelings for your personal hours. While working, stay focused and determined, adhering to your plan and experience. 2.Always reduce the risk of failed trades. If you experience a series of unprofitable transactions, decrease the volume or percentage of risk from your deposit, rather than increasing it. Some individuals mistakenly believe that if they have had three consecutive losses, the fourth trade is bound to be profitable and will make up for the previous losses. However, the chances of profit or loss in the fourth trade remain the same. Relying on luck is unnecessary. 3.Avoid turning profitable trades into losing ones. Close positions promptly when you recognize the risk of holding them further. If there are signs of market weakness and continuing to hold the position jeopardizes your profit, either take your existing profit or exit with a small loss. In most cases, you will have the opportunity to find another entry point that is equally good or even better. 4.Ensure that your highest loss does not exceed your highest profit. Keep a record of your trades to determine the mathematical ratio of profit to loss and the ratio of profitable to losing trades. If your losses surpass your profits, you need to optimize your system; otherwise, it may become unprofitable in the long run. 5.Develop a trading system and stick to it. Avoid constantly switching from one system to another. If you decide to become a trader, select a specific approach and commit to it. Over time, you will gain a deep understanding of the system and develop your own market perspective. 6.Be true to yourself; don't try to imitate others. If you find that scalping is not suitable for you, consider intraday or swing trading instead. Just because someone excels at intraday trading while you excel at swing trading doesn't mean you should abandon your preferred style. Each individual has their own trading style, and there is a style that matches every personality. Some traders earn substantial profits by only opening ten trades per year, while others achieve the same level of success by opening ten trades per day. Moreover, someone may be comfortable opening a trade with a large lot size, while you prefer a maximum of one lot. This doesn't imply that you are a poor trader; it simply indicates that everyone has their own comfort zone. Discomfort in trading can only be detrimental. Stay true to yourself and find your own style. 7.Remember that there will always be another day to trade, so don't risk too much. Some beginners risk 20-50% or even more of their deposit, only to find themselves with nothing when a profitable entry point arises. Such risks often shatter one's psychology, and it can be difficult to recover. However, if you make a few mistakes with standard and small risks, you will always have the next day to learn from and correct your errors. 8.Earn the privilege to trade in high volumes. Even if you have tens or hundreds of thousands of dollars in your account, it doesn't mean you should immediately start trading, for example, 10 lots. Begin by trading with the minimum volume allocated for your deposit. Only when you close ten consecutive sessions in profit should you consider increasing the volume. 9.The first conscious loss you encounter is the most valuable. It is during this moment that you understand the significance of stop-loss orders as part of your system. A stop-loss serves as a mechanism to exit a position when the trade is no longer favorable. By recognizing this and reacting appropriately, you are able to protect your account from significant losses. Understand that a stop-loss order is a benefit. See point 15. 10.Avoid relying on hope or prayer. If you catch yourself hoping for a positive outcome in a trade, it likely means that the trade is no longer profitable. Avoid concealing this fact from yourself as a trader. This psychological inclination to hope shields us from emotional distress and difficult decisions. However, as a trader, you must objectively assess the situation. If you realize that you are starting to rely on hope, reevaluate the facts and conduct a thorough analysis of your trade. It may no longer be as favorable as you initially thought. 11.Don't overly concern yourself with news. While trading the news is a separate strategy that may work for some traders, most try to avoid it. If the news is already known in advance, the market will react to it beforehand. However, if the information becomes clear only during the news release, it becomes challenging to trade based on such inputs. News that is widely broadcasted on TV or the internet tends to be outdated information when it comes to the market. 12.Choose a trading style that suits your circumstances. If you have a small account and can only afford short stop-loss levels, you may need to start with scalping or intraday trading. If you possess patience and adequate capital, swing trading could be an option. Long-term trading generally requires significant capital. 13.Embrace your losses. It doesn't mean you have to enjoy losing money. However, during your trading journey, you will inevitably experience losses. If you have a negative mindset towards losses, it will hinder your overall performance. Recognize that by exiting trades promptly and accepting short-term losses, you safeguard your account from larger losses in the long run. Learn to appreciate the importance of managing losses effectively. 14.Avoid setting excessively large stop-loss levels. Doing so will erode your profits from small trades. Consequently, instead of achieving a small profit, you may end up at breakeven or a slight loss, even if your trade initially showed promise. 15.Take consistent actions each day or week. Set a goal to capture a certain number of pips or points daily if you are a scalper or weekly if you trade intraday (the specific numbers provided here are for illustrative purposes and should not be taken as objectively evaluated results). By accumulating small gains over time, you can earn a significant amount by the end of the year. 16.Don't rely on a single trade for salvation. Some traders mistakenly believe that a single trade has the potential to generate substantial profits, recover previous losses, or significantly impact their overall performance. However, trading revolves around a series of transactions. No single trade can dictate your success. Instead, your behavior across ten or twenty trades holds tremendous importance in surviving and thriving in the market. 17.Consistency breeds confidence and control. Starting each morning with the knowledge that following your rules will result in profitable trades instills a sense of assurance. Similar to other traders, begin your day by reviewing the charts you trade and gathering the necessary information—perform top-down analysis, assess points of interest, liquidity, order flow, and more. Maintain this ritual consistently, as repeated actions are essential for earning profits in trading. 18.Master the art of position management. If you find yourself in a trade that is progressing favorably, consider partially closing your position to protect your profits in case the price suddenly reverses. Being flexible in managing your positions can lead to increased profitability and emotional balance in the market. 19.Execute the same trades repeatedly. Focus on specific trade setups that have proven successful for you. Avoid trying to trade multiple patterns simultaneously. Instead, identify two or three formations that work well for you and trade them consistently. Become an expert in those setups and execute them confidently and precisely. Avoid spreading yourself too thin. 20.Avoid excessive doubt and overanalysis. During the execution of a trade, trust your analysis and decision-making process. Doubts and unnecessary analysis during a trade can lead to detrimental outcomes. Overthinking can consume you and make it challenging to differentiate between the right and wrong decisions. Leave fluctuations and excessive analysis to the market. Conduct trade analysis before or after trades, not during them. 21.In the eyes of the market, all trades are equal. At the start of each trading day, everyone is on an equal footing. You haven't made any profits or losses yet. Your earnings depend solely on your actions. If you adhere to discipline and follow your predetermined rules, you will generate profits. 22.The market is an impartial judge of your trades. The market doesn't play favorites; it remains indifferent to your presence. Respect the market's authority and refrain from attempting to defy it. Engaging in a battle against the market is akin to fighting your reflection in a mirror. Instead, focus on understanding and following the market's rules. • Look at my ideas about interesting altcoins in the related section down below ↓ • For more ideas please hit "Like" and "Follow"!
BITSTAMP:BTCUSDEducation
by Crypto4light
18
The balance of thinking of modern tradersIf you have made the decision to pursue a career as a trader and are on the path to mastering this profession, it doesn't matter which trading direction you prefer—whether it's intraday crypto trading, Forex trading, or stock trading on the stock market—you will inevitably face a choice: Option 1: Freedom To be a free trader means being someone who learns from others, gains knowledge and insights from their experiences, and studies other people's trading strategies. However, based on the acquired knowledge, a free trader creates and develops their own trading methods, taking personal responsibility for their successes and failures. Option 2: Dependence To be a dependent trader means relying on others instead of learning to trade independently. This type of trader solely depends on trading signal providers or advice from various specialists. They blindly copy other people's methods and systems, hoping to discover a secret formula for success, which can take a significant amount of time to find. Why are we willing to give away our money so easily? In my opinion, choosing personal responsibility goes beyond just trading. It's a fundamental decision that extends beyond selecting a trading style and method. Embracing personal responsibility means making our own choices, taking independent action, and fully accepting the consequences of those decisions. Think honestly and ask yourself: Would you be willing to entrust your own funds to a complete stranger for investment purposes? Would you willingly hand over a substantial amount of money, hoping that they would generate profits and return your investment with decent interest? Most likely not. Perhaps even the thought of it evokes a sarcastic smile. Now, let's examine the situation from a different perspective. Isn't relying on someone else's trading signals and recommendations essentially the same? By executing trade operations based on the advice of an unknown person, you are essentially granting them control over your trading capital. Isn't that a high level of risk? Therefore, in this article, I'm addressing those individuals who are interested in trading but are unsure whether they should completely forgo learning the trade and instead rely on subscribing to other people's trading recommendations, signals, or purchasing trading robots. The choice is yours: either educate yourself, gain knowledge, and be in control of your trading decisions, taking personal responsibility for your outcomes, or rely on others and relinquish a significant degree of control. Of course, you can always choose to discontinue the services of a trading signal provider, but often it's too late when the majority of your deposit is already lost, and there is no one to hold accountable since you voluntarily used the signals. Isn't that true? Consider which thinking style resonates more with you personally. After reading about each trading thought style, ask yourself which one you lean toward. Dependent Trader A dependent trader seeks shortcuts. They desire wealth but are unwilling to put in substantial effort to achieve it. They live in a world of dreams. These individuals are often those who wish for great things in life but instead of attempting to create something on their own, they resort to buying lottery tickets, gambling, or investing in dubious projects that so-called "financial advisors" assure will yield fantastic profits. In exchange for a slice of the pie (which is unlikely to materialize), such individuals are willing to risk money that could have been invested in their own education to acquire at least basic financial literacy. A dependent trader tends to follow the crowd in the market, which often makes irrational and emotion-driven decisions. They rely on "hot signals" to make trading decisions, seek out automated trading programs, and pay attention to all the news and so-called experts. Often, they place trades blindly without a trading plan, acting recklessly without understanding the rationale behind their actions. As a result, such actions inevitably lead to losses, which cause disappointment, emotional breakdowns, and bitterness towards everyone except themselves. The trader starts blaming others for their troubles and misfortunes, whether it's the broker, the provider of trading signals, the stock analyst, or the mythical "puppet master" who supposedly manipulates the market and takes money from honest traders. This inability to accept responsibility for one's decisions and the inclination to blame others perpetuate a behavioral pattern that leads to repeated failures, making any success short-lived, if it ever occurs. Unless this pattern of behavior is consciously changed, it will continue to repeat itself. Free-Thinking Trader At the other end of the spectrum is the free-thinking trader. This type of trader seeks to control their financial future. They want to understand how markets work, explore different trading approaches, and assert their own trading decisions without relying on external advice. An independent trader recognizes that they alone can maximize their chances of success and achieve their financial and life goals. They actively seek opportunities to learn from successful traders, study and learn from their own failures and the failures of others, and gain experience. Can you perceive the difference in mindset and approach to trading? Becoming a profitable trader takes time, but an independent trader is willing to invest in learning, leverage the experiences of others, and ultimately be in control of their decisions. They don't rely on others to make trading decisions for them. While a dependent trader blindly trusts the advice and recommendations of others, an independent trader tests hypotheses, seeks to understand how a particular method works and why it works. At the beginning of their trading journey, an independent trader may utilize the services of a mentor or rely on other reliable sources of education. However, as their knowledge and experience grow, they begin to implement what they have learned independently. A dependent trader would never do this. 4 Steps to Trader Independence What can you do to develop the qualities of an independent trader? 1.Seek information. Read extensively, conduct research, and test any ideas that you believe have merit. Seek assistance, but understand that no single article, book, or forum can provide all the information you need. You must piece together the information puzzle. If you can seek the help of others, it will significantly expedite the process. 2.Clearly define what you want from the market and identify your preferred trading style and orientation. Are you a day trader, swing trader, or long-term investor? Determine what aligns best with your temperament and psychological suitability. Assess the amount of discretionary funds you have available. Once you have answers to these questions, you can begin developing a basic trading plan. 3.Start implementing your trading plan in the market. It's ideal to begin with a demo account. This allows you to evaluate how well your chosen trading strategy performs in real-time and how effectively you can adhere to the established methods and rules. The decision of when to transition to real money trading is up to you. There's no universal solution here. Some traders switch to real accounts after several months of consistent profits, while others may require at least six months or longer. This is normal since every individual is different and has their own perception of reality. The transition to real money trading is typically challenging. Only when you face the possibility of losing real money and experiencing actual profits will you truly understand the psychological stress involved. Therefore, start with a small real account so that any losses won't cause significant financial or emotional harm. Only after gaining confidence and psychological stability should you consider increasing your trading capital. Continuous improvement is crucial. You must constantly strive to enhance your trading skills, learn new concepts, and apply acquired knowledge in practice. There's much to understand and absorb. Becoming a trader is a long journey that requires time, financial resources, and emotional and psychological commitment. Consider these as tuition fees. Hope you enjoyed the content I created, You can support with your likes and comments this idea so more people can watch! ✅Disclaimer: Please be aware of the risks involved in trading. This idea was made for educational purposes only not for financial Investment Purposes.
BITSTAMP:BTCUSDEducation
by Crypto4light
3
Learn The Main Elements of The Trading Strategy There are hundreds of different trading strategies based on fundamental and technical analysis. These strategies combine different tools and trading techniques. And even though, they are so different, they all have a very similar structure. In this educational article, we will discuss 4 important elements every trading strategy should have. 1️⃣ The first compontent of a trading strategy is the list of the instruments that you trade. You should know in advance what assets should be in your watch list. For example, if you are a forex trader, your strategy should define the currency pairs that you are trading. 2️⃣ The second element of any trading strategy is the entry reasons. Entry reasons define the exact set of market conditions that you look for to execute the trade. For example, trading key levels with confirmation, you should wait for a test of a key level first and then look for some kind of confirmation like a formation of price action pattern before you open a trade. 3️⃣ The third component of a trading strategy is the position size of your trades. Your trading strategy should define in advance the rules for calculating the lot of size of your trades. For example, with my trading strategy, I risk 1% of my trading account per trade. When I am planning the trading position, I calculate a lot size accordingly. 4️⃣ The fourth element of any trading strategy is trade management rules. By trade management, I mean the exact conditions for closing the trade in a loss, taking the profit and trailing stop loss. Trade management defines your actions when the trading position becomes active. Here is the example. I took a trade on Friday, following my top-down trading strategy. I was trading Dollar Index (the instrument that is in my trading list). Entry reason was a test of a key level on a daily and a formation of a horizontal range on 1H time frame. The position was opened on a retest of its broken neckline. Position size of this trade was based on 1% of my trading deposit. Stop loss and targets were structure based. Make sure that your trading strategy includes these 4 elements. Of course, your strategy might be more sophisticated and involve more components, but these 4 elements are the core, the foundation of any strategy.
FOREXCOM:XAUUSDEducation
by VasilyTrader
5