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Are you "The Unexamined Trader"?Socrates famously said “The unexamined life is not worth living.” Why do we do what we do, why do we feel the way we feel about something, or what is our purpose in life? These questions brought about generation after generation of journals, diaries, and random thoughts from some of our greatest thinkers from Socrates himself, to Jonathan Edwards in early America, and maybe even yourself. If we look at the information, meditate on it, we *should* take future actions that will be purposeful and not live day-to-day mundane lives. We want lives of purpose, of meaning, and of growth and satisfaction. The same thing goes for our trades. So many of us trade willy-nilly, never looking back as to WHY we took a trade, what was the PURPOSE of the trade, what did we LEARN from that trade, and what are we NEVER going to do again or what will I CONTINUE to do in my future trades? Just as an unexamined life is not worth living, the unexamined trader should not be trading. “Why do I keep making the same mistakes?” “How come I let my emotions get the best of me?” “Why do I always seem to miss out on best trades with the monster returns?” Ask yourself, do you examine each and every one of your trades? At the end of each trading day, do you look for patterns of profit and signs of “The Suck” that draws your account down day after red-candle day? Can you look at the psychology, feel the emotion of why you planned a trade, why you got in a trade, how were you feeling during a trade, and why did you get out of a trade when you did? After that, did you ask “What did I learn?” “What will I continue to do?” and “What mistake will I eradicate from my mindset and NEVER do again?” There are three kinds of people: Those who make things happen, those who watch things happen, and those who ask “What happened?” The same goes for trading. If you never look back at the trades you took, especially the ones that were losers, you will consistently ask “What happened? Why am I always a loser?” If you watch things happen *plus* examine all the factors that went on during the process, your trading ability will grow inch by inch, yard by yard, which will turn you into one of those top traders who MAKE things happen. You will be able to *see* the money on the chart. And once you learn to identify patterns by analyzing trade after trade after trade, you find there are *limitless* opportunities to make money. (I paraphrased that last sentence from Mark Douglas, Trading in the Zone, which I highly recommend.) All that said, DO YOU JOURNAL? The trade journal is often the most overlooked tool in the trader toolbox. There are several ways to do so, and there are a plethora of traders on YouTube who share their ideas on how to journal your trades, and I recommend that you try several methods to find what’s right for you. The method I like is to screenshot of my trade and document the fool out of it right there on the chart. Then I “tell the story” via text boxes and arrows, and I number each one of them to walk myself through the story. Yes, each trade has a *story* to tell. I include the FACTS of the trade (the levels of Supply and Demand, the RSI, the trend, whatever factual decisions that went into the trade), the PSYCHOLOGY of the trade (how did I feel when price started going sideways right when price went to 2/3 towards my target?) and the results of the trade (what did I learn, what did I do great that I will continue to do, and what did I not do well that I should remove from my plan or my psychology). The proof is in the puddin’ as they say… The Covid lockdowns of early 2020 were the "best worst thing" to happen to my trading career. I was a Covid Casualty, as my employer shut down in part as a result of the Covid lockdown requirements. I was mad, upset, depressed, that I couldn’t go out to a coffee shop, bar, or cigar lounge. My friends all hunkered down in their domestic bunkers and wouldn’t come out. After 6 weeks of feeling sorry for myself I had had enough and decided to backtest / backtest / backtest and journal / journal / journal for 8+ hours per day for 30 days. I backtested the top 2 Futures contracts by volume in each category on the 15 minute chart. (2 metals, 2 indexes, 2 meats, 2 energies, etc.). 300-some-odd trades later, I felt like Neo when he woke up out of the Matrix and saw Cypher looking at all the green gobbledygook on the screens … instead of a nonsense of symbols Cypher told Neo that now he could see “Blondes, Brunettes, and Redheads” in the patterns. After 300 trades, simulating, backtesting, and journaling, I could “see” the money on the chart… the patterns of cashflow… the areas of value traded by the big institutional traders so I could follow them in their footsteps. I went from backtesting to forward testing, testing with live data in a simulated account using everything I had learned, and three weeks in a row I had a green week. And then I went live. Do this yourself and I promise, it will be like taking the Red Pill. You will never see the Matrix, you will never see the charts, in the same way. Instead of blondes, brunettes, and redheads, you will see opportunities, traps, and the footprints left by the market makers… And we can then *follow* in their footsteps. I leave you with a screenshot of one of my trades from last week… I hope it will inspire you to do the same. If you are not yet a consistent, profitable trader, learn to “see through the noise’ by journaling. If you want to see the scene I referenced from the Matrix, click here and enjoy! (And clicking the ‘Like’ and “Share” buttons wouldn’t hurt either if this article was edifying to you!) If you like it, I’ll write some more! If you want to show off your journaling prowess, leave a comment with a picture! Trade hard, trade well...
COMEX:GCZ2020Education
by ocaptain
19
A quick look at funded trader prop firmsI hear alot about those and I see alot of ads and get e-mails for certain of those and I am stubborn and refuse to acknowledge the existance of something if they annoy me through ads but I was genuinely curious (that's what they want us to think) because to me "I'm a professional prop trader" sounds alot like "I'm a professional poop sucker". Is this prop trading really for the experience very good traders? Well from my research no it is not. You get more funds to trade cool ok, with a regular broker you also get more funds to trade it is called leverage. You can change the name all you want it's still the same thing. Either: 1- They let you put your money at risk by requiring you to have a small stake in the whole pot (drawdowns eat up your part of the pot not theirs) 2- They entirely fund the account but actually not really, I explain in the next paragraph Here is 1 example (this is one of the best reviewed ones the bottom ones are not even worth looking at or yes but just for laughing): After asking you questions like "what do you plan if you lose 10 in a row", you know this kind of things, and more, and after a demo period of a few weeks or months , they will put you on an account with certain rules. Early on you have more restrictions like smaller max position sizes until you reach a certain profit. In this example to trade a $25000 account there is a $150 monthly fee and also I think a 150 evaluation fee at the start. There is a trailing drawdown stop of $1500 (6% drawdown), so after a couple months of paying subscriptions and making profit for them their "regular" risk is gone (not the swissie one). They do provide some content, like data feed (I don't remember how much brokers charge for this it's in the same area w/e). So they are not taking all the risk, clients (? what should we call them?) pay to cover the risk. Another example is really troll. Like I don't even see why they ask traders to write up so much and go through huge courses (no matter who they are even George Soros has to take the course) and then spend months on demo to be "really sure" and then they put you on a 1k account then 10k after 2 green months, then 20k after 2 green months jesus it takes forever to get some size. And the funny part? They expect you to fund part of the account like 20% and that's your drawdown limit basically (not written in any contract I don't think but they'll just cut you off when you run out of your own money). So you take basically all the risk and they keep 30% of the profit. I don't even get why they go through all these double checks... Most of their risks are with: - new random traders (they double check these guys but there is only so much they can do) - some idiot that scalps the swiss franc for 1 point above the floor and blows the whole account - the typical trash strategy that keeps winning until it does not and then it's the road to zero (the program ends once drawdown is reached) So the major advantages are: - access to leverage you get with any broker, - rogue traders with the discipline of a meth addict get something out of it which are all sorts of restrictions (so... useful for most people actually), - sometimes access to experienced traders & people that can help you out, depending how autistic they are or not, - proprietary tools, all sorts of goodies like a chart with the calendar directly on it, - Some serious capital obviously the biggest one, without the whole risk associated, which also means less stress (still don't get a salary so...), - also I guess telling clueless people you are a "professional" to help you sell courses & EAS weeell I mean if they have traded with the firm for a few months they have made some money and didn't drawdown 3% or whatever the limit is but doesn't mean they are Jim Chanos of forex most likely they have a trash system that works until it doesn't (not that bad if you stop using it when it drawdowns too much as those firms are doing). Seeing that some profitable "investors" (over a few months or years at most imo) end up joining the ones that let you take all the risk and charge you for the priviledge really tells that yes an idiot with the rational analytical abilities of a potato can come up with a profitable strategy if he puts the hours in. But trust me, the road will be hard and the individual won't become a "big short" hero or Soros. Kweku said he knew he wasn't the smartest but he made sure if someone put 1 hour in he'd put 2. He got promoted too fast, they pushed him for more performance, he was afraid of getting deported and then he went full commando and lost billions and got deported to Ghana. Now he give seminars where he whines that bankers are really mean people or something. I don't know what really happened, couldn't he put his foot down? I hate bankers too but I haven't heard bank traders complain only rogue psychopaths at least Nick Leeson or whatshisname Nikkei futures gambler that tried to manipulate the market and "averaged down" (lmao) didn't come up with all these excuses. Reminds me SocGen where I worked (not as a trader) are just so damn annoying with security now, and I read a comm from them where they invested (in hindsight, it's always in hindsight) I don't know how many millions into failsafes and risk management etc. Should have invested way less millions and way earlier than this guys 😬 They won't make you profitable (ok unless what's keeping you from making it is you are a psychopath that can't help it or as they call it "undisciplined"), but you have less risk than if you just went *100 on mex, your risk will be spread over time through the money you made for them and a part of the monthly fees. It's not that bad but it's not that great either. I didn't go into the full calculations you'd have to check risk over time and so on. The coolest part is the ease of mind (chf) but I couldn't care less I live in Europe and we got negative balance protection and guarenteed stops haha what a scam for brokers. Hey actually I already abused that with Oil a few months ago my broker ate the full losses and I got the full win on my other broker. Wups my bad I'm a retail trader no one told me Oil could go negative (really) I thought I clic then lambo. It is not crazy either for the company I don't think. All in all both sides get something out of it. It is better at the start for traders and better as time goes by for the firm in my eyes. They invest time and take most risks at the start, then month after month cash in with less and less risk. Talking about the ones that aren't complete scams obviously this does not apply to "put 10% in that's your max drawdown" these guys for real? 😆 They have some additional rules, for example you might not need to pay for the data (if you already have it via tradingview for example), oh and if you just afk for several days they fire you (you are allowed to take holidays relax but you have to warn first). I'm not sure but I think those are mostly for day traders. They can't sit with someone for 3 years before knowing if he is good or not so wouldn't make sense otherwise. This depressing grind is not soon over for me I'm afraid. Slow feedback sow growth. And without any upside. Not a day trader at all but I STILL have to check charts every day and do research all the time oh gosh why oh why I tried to write down a process and use combos of indicators to make it as easy as possible but I STILL have to scan through 40 charts all the time AND set alerts AND not overfocus one 1 strategy then miss out AND check these alerts over and over AND make a full preliminary TA I estimate on average once a day (2 charts a day so it's not that bad) then full TA set entry etc then watch my position over the day I don't just abandon them and if I look away that's when they'll move and need my attention. 10*40 = 400 alerts a year so about 2 a day (not counting the "other" alerts obviously, only the initial part that is really anoying) Little deviation here xd Why can't I just press a button and have it do every thing for me? I don't want to miss anything, I don't want to spend to much time on boring repetitive tasks, I don't want to forget doing my boring repetitive tasks, but there is no hope there is no cure there are no tricks. Grind the charts, grind the account size. Basically I can make it quite simple I don't need to go draw every level and everything. So I get 40 signals a month or what? I end up having to TA 40 times a month, mostly false signals. Opposed to this I just TA everything - 35 charts - the week end, and then not sure if I keep it like this charts get dirty or re-TA. Damn the result is almost the same. As much work. No way around it I have to TA false signals I thought of 10 other methods it always comes back to the same. With the alerts first it is better I TA useless things less, but I won't see as much, but I will because when I get an alert I do my TA regardless, and only in one direction not both so I gain something. I just want to hire a wagecuck intern to do the dumb boring part xd Found a use for these 80 IQS that society left on the side road. Wait no they'll mess it up 100%. Maybe I can put dancing squirrels shouting motivational orders on my screen to get me through it. Or give myself a reward. Help plz someone I'm desperate this bores me so much. Ok that's it not going to make a full in depth review either just wanted to throw my 2 cents in.
Education
by MrRenev
4
6 IRRATIONAL BEHAVIOR AND THINKING PATTERNS - THINKING CLEARLY !Hello everybody and welcome, I hope you'll have a pleasant time reading this. And I also hope it'll somehow be useful to you. --------------------------------------------------------------------------------------------------------------------------------- Let's face it, your biggest enemy in trading is not the market, not the hedge funds, not the banks, it's you. Thinking clearly is one of the hardest things to do when trading/investing. We've all, at least once, done something and asked ourselves afterwards, "why did I do this ?" or "how didn't I see this" ? Did you know that this is called the "Hindsight bias" ? Yes, it's a well-known phenomenon in psychology. Before we begin, let me explain the diagram. Developing clear thinking takes time. You'll find it very hard at first, but as time goes by, if you keep your focus on it, you'll notice your performance increasing exponentially (this also applies to your life in general !). --------------------------------------------------------------------------------------------------------------------------------- 1. Confirmation bias The confirmation bias, is the distortion of information to make sure that it fits our beliefs. Let's think about it that way : if you think that the world is an awful place, you'll find facts to back your belief about the world. What happens when you encounter a fact that denies your belief ? You either ignore it or distort it in order to make it fit your belief. It's about the same thing when you're trading. Sometimes, especially new traders, hold bags, meaning that they hold on to losing positions for a long time, hoping for a recovery. No matter what, the trader will find himself putting more weight on the information that confirm his belief (that he's right) and will ignore the information that refutes it (that he's wrong and should sell). In order to avoid the confirmation bias, you need to weigh every new information the same way . 2. Hindsight bias The hindsight bias, is directly correlated to the confirmation bias. We tend to understand things better in hindsight than we do in the present moment. To take the previous example of the trader that holds bags a little further : what happens when the trader decides to cut his losses ? He immediately says : "Oh, all the information I had indicated a clear downtrend, why didn't I cut my losses earlier ?". The hindsight bias. In hindsight, everything appears to make sense. In Trading, the best way to avoid this bias, is to react to the market information that's available to you, rather than trying to predict it or to hope for something to happen. In other words, when you have an edge, you trade your edge and you remain open to any information the market gives you, be it information that confirms or invalidates your initial belief. 3. Loss aversion We feel better losing nothing than winning something - say hello to loss aversion. Overall, humans are more sensitive to negative things than to positive things. Think about how much we complain. Sometimes, it's justified, but often it isn't. We complain about things we don't have, but omit to be grateful for everything we have. In trading, loss aversion, is the pattern that makes us hold on to a losing position for a long time. After all, an unrealised loss is less painful than a realised one. To avoid loss aversion, you have to work on your mindset and start thinking in probabilities. 4. Outcome bias This is another very, very important psychological trait that messes with our trading. Human beings tend to judge a decision by its outcome, rather than gauging the decision process. In the best case scenario, you have an edge and you act on that edge every single time you see it appearing on a chart. The problem is, because trading is all about probabilities, sometimes, your edge won't work. Does this have something to do with the process ? Absolutely not, it's just how trading works. But, when you aren't aware of it, you start questioning your trading strategy, even though, the outcome is not correlated with the process. Just be aware that the outcome is not a reflection of the process . 5. Action bias Whenever we do something to compensate for our inaction, we fall for the action bias. We rather do something useless than nothing at all. If you watch football, you've probably witnessed this bias a lot of times. When the opposing team shoots a penalty, the goalkeeper, either dives left or right, even if chances are that the opposing player shoots right in the middle. Why ? Well, diving looks way better than just standing still, whatever the result is. As Jesse Livermore would say, " Money is made by sitting, not trading ". Considering this bias, for us human beings, it is hard to sit and do nothing. Just think about what you do when you have to wait, be it in a waiting room or at the bus stop. This could be an explanation why most traders fail. They struggle letting their trades unfold and get caught into thinking that their inaction is harmful. Eventually, they end up overtrading, taking trades they otherwise wouldn't, to avoid inaction. "All of humanity's problems stem from man's inability to sit quietly in a room alone", Blaise Pascal. 6. Overconfidence effect Overconfidence is a very evil trait to trading. When we are overconfident, we tend to overestimate our knowledge and take bigger risks. Financial markets are unforgivable with overconfidence. Markets really are unpredictable, therefore we shouldn't even try to predict them. We need to go with the opporunities that the markets make available to us . The best traders are aware of it, therefore they try to be humble and respect the markets. As an example, we could imagine a trader that is on a 5-trade winning streak. He feels great, he feels invincible. What happens ? He takes bigger risks and one day he'll inevitably issue a huge loss.
BITSTAMP:BTCUSDEducation
by UnknownUnicorn6734025
4
Tutorial: Super simple buying and selling stocks in Trading ViewJust thought I would create a quick video to show how easy it is to buy and sell stocks within Trading View. I use Trade Station as the broker - Note: You need to use the US Trade Station. I dont think the International Trade Station works with Trading View. If you would like to sign up to Trading View would be great if you could use my link so we both get $30 towards our trading. www.tradingview.com
NASDAQ:CUEEducation
by zAngus
39
Growing an accountOn year 1 you were accumulating knowledge & playing around. On year 2 you were building a strategy and tweaking it and making it work. Then on year n=3 you spend the first months applying your strat correctly, making sure it keeps working. You are still looking for what works best what works less well, but there are no more major tweaks, it does not change much from here. And after a few month you can start scaling up. So after 5 years you get to the point where you can make decent money, enough to live off and put some in your account to still grow it, and you have enough history to know you are rather consistent. You can continue like this, or I think it would also be possible to find a job doing this with those 3 years, provided there is no big drawdowns say the biggest is below 10%, and the variance is not absurd. I see some people, it seems even 5 years is too long for them. They would rather work as a slave for 40 years making no progress never having even a chance as getting rich, and then maybe retire after 40 years of 9-5. Probably not because the government is broke. But 5 years is way too much, got to day trade and get poor quick. To get 5R is not impossible, and it is not even needed to try hard to catch every move. A handful of good high probability trades in a month is all it takes. If I were making on average 7R per month I would be aiming for 5, better to have an average target that is a little under what is achievable, than too high and try forcing bad setups. With the 4 hour or above chart, there is time to look at a good dozen different assets (a couple of currencies + a couple of commodities) and not just "look" but follow what is going on. This means being able to pick the very best from each. And costs are cheaper than lower timeframes, and it is easier to let them run, and it is not necessary to be as precise. So starting with only 2000 currencies (200,000 Y) it is achievable to make decent returns of about 2000 $/£ a month after 5 years. Without risking more than 2% ever. Starting with 10k, those can be reached much faster so it is a good idea to start life by getting a job and saving up a little. And not blowing up all lifesavings on trying to get rich quick. High reward compared to risk is really ez pz I think, because you just lose all the time, so you get so used to it, you'll always think "oh well here goes another loss". Wins are happy surprises, and you do not need many happy mistakes to make your month/year. Even if it starts going green "just another loser doing some noise first". Once it goes green ALOT, more than say maybe halfway target then you start thinking "oh hey it might be one of those rare winners", and until then you were not worried of it being one of those rare occasions you actually win. Of course if you are this fool that will get all excited the second it goes his way and snatch away his tiny profit then you cannot even cross one of the easiest obstacles and the machine gun just mowed you down, you are dead lay down. 10R is pretty high, and to expect a smooth consistent growth is not realistic at all. So to get to that target of making decent returns, one has to be able to go through the drawdowns, the more boring periods too. Provided the drawdowns are just bad luck streaks, then in a couple of years zooming out they'll look like nothing. This is yet another obstacle where plenty will get stopped. But one day you'll be able to look back and say "I made it". You'll sort of look dumb because you'll still be in the middle of the obstacle course (it never ends), but you'll be a happy idiot 😊.
Education
by MrRenev
3
LONG & SHORT POSITION TOOL📚An In-Depth Look at Using This ToolThis illustration explains the functionality of TradingView's Long/Short Position Tool and is intended to help new people looking for more information on this tool in a "novice friendly" format. TradingView’s position tool will aid you in pre-planning and pre-evaluating trades and as such should be an essential part of every trader's toolkit . Note: At its simplest, the position tool can quickly show you the R:R (Risk-To-Reward) of a single trade. By doing a little extra work, you’ll be able to then use this tool to properly plan for the risk of all trades you are taking compared to your total account size. Hit that 👍 button to show support for the content! Help the community grow by giving us a follow 🐣 ----- Important terms: Tick = A tick is a measure of the minimum upward or downward movement in price. Trade outcome statistics = Used to track the outcome of a trade. Example: “Current XYZ position closed +5.25% gain 10840 account balance after trade impact” P&L = A representation of current Profit & Loss. Be careful where you position the tool, as the P&L is calculated based on the position of the tool. Here are two uses for the Position Tool: 1. Only R:R = To quickly find only the R:R of a trade. This method does not bother changing account balance and such is only acceptable if you are tracking your current account balance and doing risk calculations off-platform in something such as a google spreadsheet. 2. Risk+R:R = To ensure your current trade idea meets both your R:R and max risk tolerance (risk amount; in our case, 1%). This is achieved by changing the “Account Size” option every time you are building a new position. This is the advised method to use, since like your trade journal, it’ll help keep you accurate and accountable. ----- We will now explain the options contained within the tool’s input on-chart menu: Account size = The current available balance within your account, the keyword here is available. If you are using the "Risk" option explained below then this needs to be updated upon starting to create a new trade setup. Risk = Your max tolerable risk amount (either in absolute numbers or as a % of your account size). The default option is "absolute numbers," this uses the base currency of the on chart asset (If you were on ETHBTC, then the base currency would be BTC; for SPX500USD it is USD since this asset is displayed in its USD value). As you know, we suggest you stick to %. Entry Price = The price you will be entering the position at. PROFIT LEVEL: Ticks = The tick difference from the entry price to the profit target. Price = The take profit price. STOP LEVEL: Ticks = The tick difference from the entry price to the stop loss. Price = The stop losses price. ----- We will now explain all metrics being displayed on the tool while it is plotted on the chart: Top info panel: 1. The difference in base currency (USD) from the entry price to the take profit price. 2. The difference in percentage change from the entry price to the take profit price. 3. The difference in ticks from the entry price to the take profit price. 4. The hypothetical account balance after the take profit target is achieved. Middle info panel: 1. Simulated P&L from the entry price to where the current live price is. (Displayed in the base currency of the on chart asset, USD in this example) 2. The quantity of the asset that should be purchased at the entry price. This is calculated as follows: Qty = Risk / (Entry Price – Stop Price) 3. The risk to reward ratio, this is how much you could gain compared to how much you could lose. The calculation is as follows: Risk/Reward Ratio = ((Take profit price - Entry price) / (Entry price - Stop loss price)) Bottom info panel: 1. The base currency (USD) difference from the entry price to the stop-loss price. 2. The difference in percentage change from the entry to the stop-loss price. 3. The difference in ticks from the entry price to the stop-loss price. 4. The hypothetical account balance after the stop-loss is hit. ----- Lastly, we will explain how Position Size and Account Balance are being calculated by TradingView: Long Position Variant Position Size: Qty = RiskSize / (EntryPrice - StopPrice) Account Balance when a position is closed after reaching the Take Profit level: Amount = AccountSize + (ProfitLevel – EntryPrice) * Qty Account Balance when position is closed after reaching the Stop Loss level: Amount = AccountSize – (EntryPrice – StopLevel) * Qty Short Position Variant Position Size: Qty = RiskSize / (StopPrice - EntryPrice) Account Balance when a position is closed after reaching the Take Profit level: Amount = AccountSize + (EntryPrice - ProfitLevel) * Qty Account Balance when a position is closed after reaching the Stop Loss level: Amount = AccountSize – (StopLevel – EntryPrice) * Qty AccountSize: Initial account size specified in the settings RiskSize: If the "Risk" option is set to "absolute numbers" = Risk If the "Risk" option is set to "percentage of account size" = Risk / 100 * AccountSize ----- Reference: www.tradingview.com If we made any mistakes please let us know in the comments. There was a lot of formatting we needed to do to best display all of this information for you guys! Enjoy. :)
BITSTAMP:BTCUSDEducation
by AlphaBotSystem
40
Tracking MOC vs SPY (also potential Long Signal)First off, MOC and MOC Imbalances are two things I am still in the process of learning and understanding better, so I am not claiming to be an expert on the topic. Please chime in if I have wrote anything incorrect or if you have something valuable to contribute! A Market-On-Close (or "MOC") order is an order sent to trigger near the market close. We see this pretty routinely trigger 10 minutes before the closing bell, and it often produces some fireworks with sudden, spiky moves in one direction or the other. There is often an imbalance in one direction-- Buy, or Sell-- which can sometimes seem random, but when smoothed can help show flows into the market or out. I took a little bit of time to just color the periods on SPY in the last year or so for the 4 scenarios of the 20 day moving average of MOC imbalance. They are as follows- DARK RED MOC is Below 0 and Increasing in that direction --> Sell Imbalance LIGHT RED MOC is Below 0 and Decreasing/Reversing LIGHT GREEN MOC is Above 0 and Increasing in that direction --> Buy Imbalance DARK GREEN MOC is Above 0 and Decreasing/Reversing I think you could generally say these phases of the MOC Imbalance correlate with SPY. The two phases of Light Red and Light Green (moving from a Sell Imbalance to Buy Imbalance) have generally shown to be good old fashioned bull fun. Dark green often is a profit taking phase. Dark red is usually when its too late or just the start of the descent. Here are crude measurements of the light red and light green phases, their gains and length of time- +4.39% in 44 days +7.27% in 50 days +4.22% in 30 days +4.50% in 24 days +4.55% in 45 days +25.00% in 31 days +15% in 24 days Presently, so far: +4.15% in 15 days The times I did not include, which are obviously the recent outlier, is from February to early March. If you had a good chart of the 20sma MOC in front of you like I do, you could see there were a couple times when it looked like the MOC had reached its bottom and was going to start reversing and heading towards a Buy Imbalance, only to get rejected and keep selling. The actual confirmed bottom never happened until March 20th, so you could say that was the true start of this light red colored area, but I felt it was relevant to still color those as if it was a real-time scenario. It also helps show how that crash really manifested itself, with a lot of traders/investors thinking the end of February is just a dip or buying opportunity, to manifest into a rug pull. Myself and others have been thinking this week and last that a melt-up is on its way, and the MOC turning above 0 today to a Buying Imbalance could be a great bit of data to possibly confirm this. Where do you find MOC Reports? I only started looking at them recently from Market Chameleon so unfortunately I do not have any great resources to point people towards other than Market Chameleon. I hear that its publicly disseminated information, though. Here's their -free- daily report- marketchameleon.com They also have a more aggregated report, which is what I used, but that is behind a pay wall.
AMEX:SPYEducation
by chrism665
5
Using the Strategy Tester to Evaluate a StrategyThis video idea explains how to use the strategy tester on TradingView to evaluate the performance of your strategy. We go over all of the data presented for you regarding your strategy, and if we make mistakes along the way you can always check out the TradingView help section that is specifically for the Strategy Tester. I highlight the overview of your strategy, dive into the details of the performance summary for your strategy, and show how we can review all of our trades including our commission paid. Finally, we show how changes to the strategy can alter your Strategy Tester results and how accounting for commission(fees) and selective testing windows can alter perceptions on strategies.
COINBASE:BTCUSDEducation
by BigBitsIO
23
FINDING THE BEST ROI BETWEEN SIMILAR ASSETS 📚 With Alpha's PoP💬Introduction : Today we are comparing the Dow Jones, NASDAQ, and the S&P by their annual performance to show how our open source indicator "Alpha Performance of Period" (PoP) can be used and why the results are useful. We will also look at other markets later in the writeup to see how they compare and to get a sense of which markets provide the best risk-to-reward and ROI. The idea here is to compare highly correlated markets over time to see which of these markets preforms the best overall represented by a period chosen by the user. This will help tell us which of these indexes is the best/worst to trade/invest with on average. For this article we will assume "best" equates to "best for long positions", but the indicator could be used for other purposes such as best shorting opportunities (largest drawdown amounts). Comparing these indexes shows that the NASDAQ has historically outperformed, while the DOW underperformed, and the S&P has been somewhere in the middle since the tech bubble on a year-over-year basis. You can also see this on the chart as represented by the indicator's metrics contained within its label, but we will summarize it below: NOTE: The figures below are rounded up to the nearest .01%, see charts for exact %'s. Equity Indices Total Annual performance results: (main chart) (Jan. 2000 - present) SPX = +111.79% NDX = +156.10% DJI = +117.65% Now let's look at the quarterly and monthly performance: Equity Indices Total Quarterly performance results: (Jan. 2000 - present) SPX = +104.57% NDX = +160.75% DJI = +111.65% Equity Indices Total Monthly performance results: (Jan. 2000 - present) SPX = +91.22% NDX = +125.274% DJI = +101.68% Equities Summary: While the NASDAQ has had periods of underperformance (for example the dot com bubble burst), on each of the charts you can see that not only has the NASDAQ outperformed (and the Dow underperformed) over time, the NASDAQ has also generally outperformed during each different period measurement. We won't do the math for each period here as that's the main purpose of this indicator, but you can apply the indicator on your own chart and take a look at it yourself. The main takeaways for us are this: 1. You are better off trading and/or holding the NASDAQ when compared to the 3 main indexes. 2. You are better off trading the S&P than the DJI. 3. The performance of the NASDAQ during COVID isn't an anomaly, and it doesn't necessarily indicate a tech bubble, outperformance in a specific period and overtime is the norm with this index. Now that you see how this works on the indexes, let's showcase how it can work for other markets. ----- RARE EARTH METALS~ Rare Earth Metals Total Annual performance results: (Jan. 2000 - present) GOLD = 193.87% SILVER = 186.72% PALLADIUM = 361.27% Rare Earth Metals Total Quarterly performance results: (Jan. 2000 - present) GOLD = 201.80% SILVER = 197.60% PALLADIUM = 304.04% Rare Earth Metals Total Monthly performance results: (Jan. 2000 - present) GOLD = 206.59% SILVER = 209.60% PALLADIUM = 283.25% Rare Earth Metals Summary: As you can see, despite the general public's love of Gold, Palladium vastly outperforms it. Meanwhile, we can confirm Silver underperforms. Many people wouldn't suspect Palladium was superior, but we now know from the resulting data (Hooray!). ----- FOREX~ Main Forex USD pairs Total Annual performance results: (Jan. 2000 - present) EURUSD = 19.48% GBPUSD = -9.03% AUDUSD = 23.90% Main Forex USD pairs Total Quarterly performance results: (Jan. 2000 - present) EURUSD = 20.75% GBPUSD = -16.53% AUDUSD = 20.98% Main Forex USD pairs Total Monthly performance results: (Jan. 2000 - present) EURUSD = 19.57% GBPUSD = -16.70% AUDUSD = 21.93% Forex Summary: As you can see against a USD base-pair, GBP is the worst performing from the 2000's by all periods. One might assume the more popular EUR pair preformed better than for example AUD, but the reality is AUD takes the cake and preformed better than both EUR and USD by each period over time. ----- CRYPTOCURRENCY~ Main Crypto USD(T) pairs Total Annual performance results: (Jan. 2017 - present) BLX = 1351.18% ETHUSDT = 8967.62% LTCUSD = 5012.80% Main Crypto USD(T) pairs Total Quarterly performance results: (Jan. 2017 - present) BLX = 504.60% ETHUSDT = 1124.81% LTCUSD = 824.44% Main Crypto USD(T) pairs Total Monthly performance results: (Jan. 2017 - present) BLX = 357.63% ETHUSDT = 739.39% LTCUSD = 530.67% Crypto Summary: Crypto has the largest period losses, but it also has the largest period gains (by far). Of all the crypto pairs, ETH offers the best ROI. Interestingly, ETH offers the best ROI of all markets mentioned in this article as well (although it also has the biggest losses and highest risk associated with its uptrends). Some might find it odd that Litecoin outperforms Bitcoin (although like with ETH, the drawdown is notably more intense). ----- Conclusion: Use "Alpha Performance of Period" (PoP) to compare markets for what is best suited to your portfolio depending on your individual risk appetite. It is meant to be used on highly correlated markets, but as you can see you can also compare different sets of markets together to get a sense of which offers the best risk-to-reward, ROI, etc. This tool thus has many uses related to figuring out which markets you want to trade based on historical data and offers a simple way to quickly compare past performance. Hope you guys enjoy it! :D Resources: apple.news Hit that 👍 button to show support for the content! Help the community grow by giving us a follow 🐣
TVC:SPXEducation
by AlphaBotSystem
15
KEY price action candlestick THAT ACTUALLY WORKS!Some key price action candlesticks we look for when entering a trade. Pinbars: Sign for weakness/rejection, in the correct context, it can be a powerful trend reversal candle Inside Bar: Short retracements / losing momentum, in the correct context, it can show whether a trend is continuing Engulf Candle: opposite from the inside bar, this usually shows strength in either the bears/bulls. With the correct context, it can show signs of reversal too Marubozu: 'Power' Candle, can be shown with or without a wick, Normally found in trend continuation, a big spike with a bias towards one side of the market. With proper and valid entry timing, it can be a good signal to ride the trend. Doji: Exhaustion candle, bulls & bears fought for position, can be found in high volatility market, when a doji is formed, it is not recommended to enter a trade..
OANDA:XAUUSDEducation
by bullstoyourbears
3
Bollinger Band Snaps (BBS)Bollinger Band Snaps (BBS) Timing of options trades are elusive, especially during dynamic price trends. There is one technique, however, that reliably and consistently allows you to time trades. The Bollinger Band Snap (BBS) signal occurs at very precise moments during a bullish or bearish trend, and vastly improves timing of both entry and exit. The chart of Chipotle (CMG ) is highlighted with three examples. The first occurred in late February, when price moved below the lower Bollinger band for two sessions. The move then “snapped” back into range, which is predictable. Price rarely remains outside of the Bollinger Band range for long. The second event occurred in mid-March, when price moved below the lower Bollinger band. In this case, the expected retracement (snap) happened the next market day. The final incident was the longest of the three, from mid-May into end May. Price traded above the upper band for six consecutive sessions before snapping back into range. The signal is reliable because a retracement back into the Bollinger Band’s two-standard deviation range is inevitable. It can take a longer or shorter period, but it eventually occurs. The signal provides both an entry flag (when price moves outside of the band) and an exit flag (when it moves back into range). Trading this signal is also apparent at the time it begins to develop. A move outside of the Bollinger trading range generally is going to snap back within a few sessions in each instance. In the February case, price was approximately $755 per share. With the expectation of a snap back into range, a bull credit spread could be opened with puts. Buying one 735 put and selling a 740 put would have set up a small credit. Using the weekly expirations ensures rapid time value decay. In the second example, price was approximately $465 per share. A call could be opened using 4 – 6 weeks to expiration and opening an at-the-money strike. The credit spread strategy could also be applied in mid-May when price began advancing above Bollinger’s upper band at $998 per share. Buying one 1030 call and selling a 1025 call for a credit. In all of these instances, the entry point is easy to identify. It is seen where price moves outside of the two standard deviation range marked by the upper and lower bands. The exit point then occurs when price snaps back into range.
NYSE:CMGEducation
by NewCycleTrading
3
Bollinger BandsBollinger Bands Timing for options trades relies on many price signals and confirmation. Even so, knowing when trends are likely to continue or to end is a skill of its own and many traders have timed entry and exit poorly because the trend was misread. One signal helps overcome this problem. Bollinger Bands (BB) track the trend with three bands. The middle band is a simple moving average of 20 sessions, and the upper and lower bands are each two standard deviations of that average. This sets up a great visual, forming a “probability matrix” of both price and trend. Because price is not likely to trade above the upper band or below the lower band for very long, any move outside of this matrix is likely to be followed by a retreat back into range. However, BB is not just a price-specific analytical tool. It also sets up a version of resistance and support as a dynamic factor rather than the traditional straight line. The chart of the Nasdaq 100 Index shows this relationship between the upward-moving trend and resistance. It is possible to draw straight lines to identify resistance or support as well as times of breakout. BB tends to provide a dynamic version, which is more accurate and more predictive. As the price trend is upward-moving, the upper band tends to track resistance with extreme accuracy. And as a trend moves downward, the lower band tends to track support In the NDX chart, three examples of the relationship between the upper band and the dynamic price movement are circled. The most revealing aspect of this is how accurately the band points to both entry and exit. As the price moves close to the upper band, it marks the beginning of a strong bullish move. This is seen in all three of the highlighted examples. These are highly reliable entry points for bullish trades such as long calls or short puts. The bullish trend ends as price moves away from the upper band. This is also seen clearly in all these instances on the chart. Logically, this marks an exit point, but not necessarily the start of a bearish move. Unlike most reversal signals, the move of price away from the upper band signals only the end of the price move. The next phase could be resumption of the trend, retracement, or reversal. To decide, requires a new set of signals. The interaction between the bands and identification of the trend also works when a dynamic trend ends and moves into a period of consolidation. This occurred at the beginning of December. Notice how strongly the band width narrows, going from 600 points in beginning November down to under 250 points. This shrinking band width signals a likely period of consolidation, which serves as a rest between dynamic trends, a plateau before trend resumption or reversal. This also points to the timing for a different type of option trade, which exploits a range-bound tendency in the short term. In fact, consolidation may be the most profitable trend for short-term trading because breakout is easily identified. Look for a widening of the band width to anticipate a new dynamic move. It does not matter whether that will be bullish or bearish; the issue is that a widening band width signals likely end to consolidation. Entering a consolidation-type trade like an Iron Condor (with strikes far outside the band width), a short covered straddle, are well-timed as consolidation begins, but should be closed as consolidation ends. At that point, a new trade can be opened to exploit dynamic price movement, such as synthetic stock (long or short) or simply a long option. The issue to keep in mind in all of these timing decisions is that BB provides more than a reliable tracking device for price. It also marks the nature of short-term trends, whether dynamic or sideways-moving. It is one of the most reliable predictive signals options traders can find.
TVC:NDQEducation
by NewCycleTrading
18
Trader's Guide to Options Part 3The information in this guide is intended to get you started with your understanding of options, the terminology, and their basic characteristics. In addition to this guide, it is recommended that you study all information available under the education section of your broker’s website. Most brokers who cater to options traders provide good information that will help you learn. Intrinsic Value In-the-money Call options are in-the-money if the stock price is above the strike price. Put options are in-the-money when the stock price is below the strike price. The amount by which an option is in-the-money is referred to as intrinsic value . At-the-money Options are at-the-money when the stock price is trading at or very near the strike price. Out-of-the-money Call options are out-of-the-money if the stock price is below the strike price. Put options are out-of-the-money when the stock price is above the strike price. If an option is out-of-the-money it has no intrinsic value . Time Value Options have two parts that comprise their value; Intrinsic Value and Extrinsic Value. Extrinsic value is also known as time value. When an option is in-the-money (ITM) it has intrinsic value equal to the amount it is ITM. Option price - intrinsic value = time value. XYZ stock is trading at 181.72 The 180 call strike is 1.72 points ITM so, there is $1.72 of intrinsic value. $5.85 is the ask price. $1.72 of this is intrinsic value. $4.13 of the $5.85 ask price is time value. Time value decays as expiration approaches. The closer to expiration, the faster time value decays. Sellers of options use time decay as part of their winning strategy. Time decay is a benefit for option sellers and a problem for option buyers. The Reality of Trading In the real world, investors very rarely exercise their option contracts to take profit from a trade. Instead, they simply BTC or STC the options prior to the expiration date. The advantage of doing so allows them to capture some of the time value of an option, in addition to the intrinsic value. It also allows them to use the leverage of options that do not require the larger amounts of capital required to actually buy and sell the underlying stock. Let’s analyze some examples to become familiar with common terminology: AAPL is trading at $360 and the following shows a BTO of 3 call contracts of the September $355 strike at an ask price of $27.40: The underlying Apple stock value is $360 per share. The expiration date of the call is the third Friday in September. The strike price is $355. The call is in-the-money because the stock price is above the strike price. The premium is $27.40 per share. There is $5.00 of intrinsic value (in-the-money) There is $22.40 of time value (out-of-the-money). Number of shares represented is 300 (3 contracts x 100 shares per contract). Buyer is hoping the stock rises, increasing the intrinsic value and causing the value of the option to also increase. Since the expiration is about 3 months out, on a move higher the position is not subjected to rapid time value decay. MA is trading at $294 and the following represents a STO of 2 put contracts of the July $290 strike at a bid price of $9.50: The underlying Master Card stock value is $294 per share. The expiration date of the put is the third Friday of July. The strike price is $290. The Put is out-of-the-money because the stock price is above the strike price. The premium is $9.50 per share. Number of shares represented is 200 (2 contracts X 100 shares per contract). Seller is hoping that stock remains above $290 at expiration. This will result in time value decaying thus, reducing the price of the option. Since it was STO for $9.50, when time value decays, the seller will be able to BTC for less than $9.50 and lock in a profit. Spreads Call and Put options can be bought and sold in combinations that offer other investment strategies. Some of these include credit spreads, debit spreads, and combination options spreads, to name a few. For example, when opening a spread, one option will be STO and a different option will be BTO. Spreads can be an excellent way to mitigate risk. This concludes the Trader's Guide to Options. Please let us know if you have any questions.
SP:SPXEducation
by NewCycleTrading
13
Trader's Guide to Options Part 2The information in this guide is intended to get you started with your understanding of options, the terminology, and their basic characteristics. In addition to this guide, it is recommended that you study all information available under the education section of your broker’s website. Most brokers who cater to options traders provide good information that will help you learn. Types of Options: Call Options: Call options increase in value when the underlying stock rises. Buyers of calls have the right, without any obligation, to buy the underlying stock at the strike of the options contract. They retain their right until the option no longer exists, defined by the expiration date. Call buyers anticipate the value of the underlying stock will rise. When it does, the value of the option will also increase at approximately the rate of the Delta. Buyers pay for the right to buy the stock in the future, sometime before expiration of the option. When buying the option, they pay the ask price. The premium they pay is less than buying the stock, yet they will still benefit from any appreciation in the value of the stock. Say you wanted to buy XYZ stock because you think it is going to move up from its current price of $84. Instead of buying the stock a trader could buy a call option for a fraction of the price of the stock. Remember, all the trader is doing is buying the right to buy the stock without any obligation to actually buy it. The option only costs $4.00 for the right to buy the stock at some future date. Buying 1,000 shares of the stock would require $84,000 but buying 10 options contracts would only cost $4,000. Call Options – The Sellers… Sellers of call options are selling to someone else the right to buy the underlying stock from them. When/if the buyer chooses to buy the stock from the seller, (remember, the buyer has no obligation to do so) it is referred to as an exercise…the buyer is exercising the right to buy the stock. The seller is obligated to deliver the stock to the buyer. A seller’s obligation ends when the stock is exercised, the option expires, or the option is bought to close (BTC). Call sellers receive a premium from the buyer. The buyer is paying the seller for the right to buy the stock in the future. Sellers want the price of the stock to go down. Why? If the price goes down, the buyer will have no reason to exercise since they could buy the stock for less at the current market price. In this case, the seller gets to keep the premium paid by the buyer. So, what does this mean in plain English? The concept of a call option is present in many situations. For example, you discover a painting that you would love to purchase. Unfortunately, you will not have the cash to buy it for another two months. You talk to the owner and negotiate a deal that gives you an option to buy the painting in two months for a price of $1,000. The owner agrees, and you pay the owner a premium of $50 for the right to buy the painting. Consider two possible scenarios that can impact the value of this “option”: Scenario 1: It is discovered that the back of the painting has a signature of a famous artist, which drives the value of the painting up to $10,000. Because the owner sold you an option which gives you the right but no obligation to purchase the painting at the previously agreed price, he is obligated to sell the painting to you, the buyer, for $1,000. The buyer would make a profit of $8,950 ($10,000 value – $1,000 purchase price – $50 for the cost of the option). Scenario 2: After closer review of the painting, it is discovered that the signature on the back is not of a famous artist, but is the brother of a famous artist. This actually drives the value of the painting down to $500. If the buyer exercised their option to purchase the painting it would cost $1,000. This would not make sense because the buyer could instead just buy it at “market price” for just $500. Since the buyer had no obligation to purchase based on the option contract, the agreement, or contract, would just expire and the buyer would lose the $50 premium paid. The example demonstrates two important points. When you buy an option, you have a right, but not an obligation, to do something. You can always let the expiration date pass, at which point the option becomes worthless. If this happens, you lose 100% of your investment, which is the money you paid for the option. Put Options Put options increase in value when the underlying stock decreases in value. Buyers of puts have the right, without any obligation, to “put” the underlying stock to someone else at the strike price of the options contract. They retain their right until they sell to close (STC) the option or it no longer exists, defined by the expiration date. Put buyers anticipate the value of the underlying stock will go down. When it does, the value of the option will increase at approximately the rate of the Delta. Buyers pay a premium for the right to be able to put (sell) the stock to someone else in the future, sometime before expiration of the option. When buying the option, they pay the ask price. Say you thought XYZ stock is going to move down from its current price of $84. Buying a put with a strike of $85 gives the buyer the right in the future to sell or put the stock to someone else at $85. So, if the stock declined to $75, the buyer of the option could buy the stock at $75 and immediately exercise their right to sell/put the stock at $85, making a $10 profit. Remember, all the trader is doing is buying the right but has no obligation. Put Options – The Sellers… Sellers of put options are selling to someone else the right to sell/put the underlying stock to them. When/if the buyer chooses to put their stock to the seller, this is referred to as being assigned……the buyer of the put option is assigning the stock to the seller. The seller is obligated to buy the stock based on the strike price of the contract. A seller’s obligation ends when the option expires or the option is bought to close (BTC). Put sellers receive a premium from the buyer. The buyer is paying the seller for the right to sell the stock to the seller in the future. Put sellers want the price of the stock to go up. Why? If the price goes up, the buyer will have no reason to assign the stock since they could sell the stock for more at the current market price. In this case, the seller gets to keep the premium paid by the buyer. Exercise and Assignment Most stocks and ETF’s are American style options. This means that if the buyer of an option chooses to exercise or assign their rights they may do so at any time prior to expiration. Indexes such at SPX , NDX and RUT are European style options. This means that any exercise or assignment may only occur at expiration. Who wins when the stock moves? 1. Buyers of Calls – win when the stock goes up 2. Sellers of Calls – win when the stock goes down 3. Buyers of Puts – win when the stock goes down 4. Sellers of Puts – win when the stock goes up Are you new to options trading? Stay tuned for Part 3 of Trader's Guide to Options which will include in-the-money, at-the-money, and out-of-the-money options as well as the reality of trading.
SP:SPXEducation
by NewCycleTrading
8
Trader's Guide to OptionsThe information in this guide is intended to get you started with your understanding of #options, the terminology, and their basic characteristics. In addition to this guide, it is recommended that you study all information available under the education section of your broker’s website. Most brokers who cater to options traders provide good information that will help you learn. What is an option? An option is a financial contract between a buyer and a seller. It is an agreement to buy or sell the underlying equity (stock or index) at a set price by a pre-determined date. Instead of buying the stock a trader could buy an option for a fraction of the price of the stock. Options have the following characteristics: Traded as contracts and each contract represents 100 shares of the underlying stock or index. Pre-set expiration dates. Standard monthly options expire the third Friday of each month. Some index options like TVC:RUT , TVC:SPX , and TVC:NDX cease trading on Thursday before the third Friday. Weekly options expire each Friday. Price points, referred to as the strike price, are the prices at which buyers and sellers trade option contracts. Options are, usually, available to trade in standard price increments of $5 and $10. Quotes to buy or sell an option are presented as the bid and ask. When selling an option, the bid price is used. When buying an option, the ask price is used. Sell the bid / Buy the ask. Delta is the change in the value of an option relative to each $1.00 change in the value of the underlying stock. If an option has a Delta value of .45, it will change in value by 45 cents for each $1.00 change in the value of the stock. - NASDAQ:GOOG is trading at 1445. -The 1445 call strike has a Delta of .50 -GOOG goes down $10 -The 1445 call will decline in value by $5.00 = ( $10 * .50) The Options Chain: All option information for any stock or index is listed on an options chain. The options chain can be found on the website of the broker you use to trade. The chain will list all available strikes and expirations, the Delta, and the bid and ask prices. It will also display both Call and Put options. Ways to trade Options: There are four actions that could possibly be taken when trading options: 1. Buy To Open (BTO) - buying an option as part of opening a new position. 2. Sell To Open (STO) - selling an option as part of opening a new position. 3. Buy To Close (BTC) - buying back an option that was originally sold to open 4. Sell To Close (STC) - selling an option that was originally bought to open When a position is Bought-To-Open, it is referred to as a long position . When a position is Sold-To-Open, it is referred to as a short position . When a position is Bought-To-Open, it is done for a debit . When a position is Sold-To-Open, it is done for a credit . Are you new to options trading? Stay tuned for Part 2 of Trader's Guide to Options which will include teaching about call and put options. <- Direct link to chart image.
NASDAQ:GOOGEducation
by NewCycleTrading
💲Holy Grail Trading System 💲Hello, my lovely friends!!!💓💓💓 Link for great view 👉🏻https://www.tradingview.com/x/VYQKhV8J/ 🔥Today I have something spesial for you today! 🔥 That's 💲Holy Grail Trading System 💲!!! By “Grail” in trading we mean a unique trading system that can continuously generate profi ts. ☝🏻 According to the legend of the Holy Grail, those who drink from this cup receive immortality. The idea of ​​this scheme is simple. Only by applying of those three conditions You'll become possible to significantly increase capital.💰 🧐Let's go briefly through all the elements.💪🏻 The first element,🎯 trend trading , I think, doesn't need unnecessary comments. Trending strategies for a trader are the best way to make money. 👊🏻 But why is this element alone not enough? Even if a trader has an ideal trend trading system, in the absence of a trend, he will lose money. The trader should be where there is volatil ity 🎯, because volatility = profit. The ship in full calm stands still, no matter what sails he had. Here, to some extent, there is an element of luck. Yes, there is room on the market for purely external circumstances - there is nothing to be done about it. Not everything is controlled by the trader. It is especially important for risk-averse traders to learn not to get into the market during periods of low volatility. At this, the last stage🎯, trader needs to find a balance between the desire to squeeze as much out of the market as possible and the ability to calmly, without nerves, sit out corrections. When the market turns against the position, the trader still doesn't know whether this is a correction or a trend reversal. While sits in position and makes a decision, this movement eats up part of the floating profit or creates a loss. If the trend doesn't resume, a late trader has to close a losing position. The risk should be approximately, that trader can make such a mistake a sufficient number of times and still be afloat 💪🏻 Guys, I try very hard for you💓💓, I carefully select the material, I want to express my thoughts as clearly as possible! 💋💋I like to teach, I get pleasure of it😘 !!! 👍🏻Support my enthusiasm with like!😘😘 ✍🏻Write me in the comments if everything is clear to you, maybe you have any questions!🧐 🌞I'm glad of your feedback !!!🌞 Always Yours Rocket Bomb🚀💣 My previous works!👇🏻👇🏻👇🏻
BITSTAMP:BTCUSDEducation
by RocketBomb
32
I think I just wrote a book. PF, RR, WR, etc.Intro, you can skip this part but I think it would be interesting for you to take a quick look: Statistics estimates and formulas? Trading is mostly about emotions, not statistics estimates and formulas. Most people do not need all of those formulas, they don't need to make plenty of stats and estimates, but just focus on discipline and emotion control. I got this quote: "The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading." I agree. Analysis of broker data has shown over and over that over a couple of years 90% or more clients lost money, and often all of their money. So no point doing stats & formulas for 90% of people that will lose anyway. What they need most is discipline, to not lose all of their money, but rather just some of their money, and emotional control, to not blow their brains out once they lose everything. I can make a few quotes too: Checking a thing quickly... Stanley Druckenmiller was 46 when he did something stupid with the dot com bubble. George Soros started at 29 and his biggest (known) mistake was Stanley Druckenmiller. Oh this one is interesting.... Alot of profitable ones that got really confident after a few years of winning and got wiped out or made huge losses or missed on much returns (Buffet says BRK cost him 200 billion, he'd be way above Jeff Besos). I see alot of late 20s to early 30s. But even older than this after decades, it's never safe, never let your guard down. But most typical is the ~30 yo guy that made lots of money for years and laughs hysterically at noobs (retail traders mostly) and was warned of dangers by people trying to scare them away but proved every one wrong, knew he was at the top, one of the best in the world, so got really arrogant, dropped his guard down, and then boom. By the way, totally unrelated, should I all in short USO? It's losing money over time and already so many idiots "invested" in it. There can't possibly be more morons that would buy this dead crap right? Lmao USO investors, what a bunch of brainlets. I refuse to lose against idiots just by being outnumbered. All in no SL. 😁 How do I start a show so I can do literal pump and dumps legally like Joseph Granville? Good. Now that we got this out of the way. 1- Winrate Pretty simple here. All this shows is what percentage of bets are winners. Doesn't really account for breakeven, doesn't differentiate between small wins big wins. Pretty useless on its own. Implicitly means that every win and loss have the same size, like putting rigid entry target SL, and never touching it. 2- Reward/Risk How big is the average or expected win, compared to the typical loss. How much are you willing to risk and how much do you expect to make? Most "educators" repeat how important the risk to reward ratio is, and it kinda is, because it is one of the best predictor of success. FXCM published some data where they show that over the 3/1/2014 to 3/31/2015 period (1 year), 53% of their clients with a RR of 1 or more were in the green, while only 17% of those without were. 47% of RR >= 1 lose money. 83% of RR < 1 lose more. Their typical win % over a quarter is 25%, and the typical global win % over a year is around 20%. I would be willing to bet that profitability goes up significantly with reward to risk. Some of it would of course be simply because people that end up with a huge win on their hands balloon the high RR stats. That said, I doubt just flipping a coin, just randomly buying with a tight stop and a far away target would work. Althought... The top myfxbook systems are almost all automated garbage systems with an average win 0.20 times the average loss, that were really lucky over a long period (3 std dev of a normal statistical distribution = 0.3% 3/1000, just pick any trash system with high WR and run a binomial probability calculator find the odds of it making profit over 100 rolls). Hey I'll do this later in this idea. And as I was saying, perfect transition, flipping a coin isn't a viable strategy, the reward to risk alone doesn't say it all, even if traders using a high reward to risk ratio greatly outperform those that don't. If you make 10 times what you lose, but you lose 99% of the time, emm how to say... And this is why we must look at the profit factor. 3- The profit factor. Oh yes Pf = (W*R)/(1-W) I have seen reports with a gross PF of almost 3, and net of barely 1.1. If you design a strategy you count spreads in it... It's obvious. Day trading sucks and every analysis of day traders data shows about 1% or less make money, and don't make much. Probably the only ones making anything are level 2 scalpers, and 'experts' selling day trading robots, or signals, or courses. First a disclaimer! The argument of day trading having terrible profit factors applies to 95% of the time. When the average move per unit of time goes way way up (spreads & commissions usually don't especially if volume goes up too), and you get in 5 hours what you usually get in 2 weeks, then obviously it's different. I focus my argument on 95% of the time, when volatility is "normal" (within 2 st dev basically, and in particular within 1 - ~70% of the time) And I have been really nice here. Getting an idea of what good profit factors are... If I participated I would take a single bet with huge leverage and hope to get lucky, easy win once every couple of events, but I doubt they allow this. Lol on the worldcupchampionship site (ran by the CME I think), there are categories, Futures traders at the top have massive returns, way above Forex. Previous year winners with futures have bigger returns than FX, but this year is just stupid. maybe they blow up soon. Top 5 FX participants as of May 14 have 40% to 97% returns. Top 5 with futures are already at 200-800%! In 2018 futures winner made 250% FX winner made 200%, sometimes futures traders make huge gains. The gap is already so big lol. Anything to do with NatGas & Oil? 😆 www.worldcupchampionships.com Looking at a "war of traders" results. 27 days... Not sure what their leaderboard is. Looks like a great way to get suckers to deposit money and pay fees asap. First place has a PF of 44%, I assume this means 1.44, second place 160% I assume it means 2.6. Followed by 1.3, 1.05, 1.13, 1.26, 6.85, 1.11.... Prob easier to get a higher PF with commodity futures where they are so much hedgers, much fewer care about hedging FX risk, plus central banks use it to manipulate everything, more people trying to make money. Sometimes the sharpe ratio is mentionned. Quick definition: The Sharpe ratio measures the performance of an investment compared to a risk-free asset, after adjusting for its risk. It is defined as the difference between the returns of the investment and the risk-free return, divided by the standard deviation of the investment. I looked at some hedge funds reports a while ago, since they diversify and hedge alot PF isn't as high. Warren Buffet has a PF of what? 100? He makes one trade every 10 years. It's basically impossible to find those numbers, unless you work at a brokerage, and apart from your own, with the exception of the few times a broker releases some data. You have to take into account how many opportunities you get also, and more but alot if implicit. I would say that a PF too low is bad, because when conditions change you will take long to notice with certainty and you will also lose way faster! If you had a PF of 1.1 you spent 5 years to grow, and that can be lost very fast AND it takes you longer to realize it is not working anyway. A high PF has a high margin for error, profits grow fast enough so drawdowns don't eliminate years of progress, and going from 2.5 to 0.75 over a period kinda is extreme. I think typically for operations that target 1 to 5 daily ATR, (days to weeks holding period), and you get more than something like 1 single bet a year, good profit factors are in the 1.5-2.5 range. Lower than this gets a little dangerous, more than this is the holy grail. A 25% winrate 5R system has a PF of 1.67. 4- Max Drawdown & risk per operation & max risk Here you use a binomial probability calculator. Plenty on the internet. Winrate 25%, Reward/Risk 5, PF 1.67 ==> After 60 bets, on average you should get 15 wins 45 losses. The odds of getting more than 15 wins (P: 16 or more out of 60) are 43%. The odds of getting less than 5 wins (55 or more losses) are 0,0956%. 1/1000. 10k account. Flat $100 risk per bet. 55 loss 5 wins = $5500 in loss, $2500 in wins, down $3000. 60 loss 0 wins = $6000 in loss, $ZERO in wins, down $6000 (rekt.) So every 1000 trades you should expect something like this right? Even with a very decently profitable strategy it will happen. You have to decide at what point you consider the odds of it just being bad luck to be too high, and you just want to drop it. Smaller drawdowns are going to happen absolutely all the time. If you are risking 1% every time and adjusting, 55L 5W would be a 27% rekt, and 60L would be a 46% rekt. The odds of losing 18 or more out of 20 are greater than 9% (9/100). Will happen ALL THE TIME. With 1% risk, drawdown of 8 to 18%. Expect it very often. Some clients use funds to diversify, to get returns with low risk. Some expect less risk and volatility than the stock market, but expect better returns. Cute. 5- Expected returns after 100 bets Say you got a system like the one I used in my example (that you backtested + used over a great number, or just used over a greater number of operations). Winrate 25%, Reward/Risk 5, PF 1.67 If you do not care about eating 20% punches in the face, and risk 1% per trade, on AVERAGE, after 100 gambles, then your results will be as such: 75 Losses, 25 wins (0.99^75)*(1.05^25) = 1.6. Up 60%. If you risk 1% of your 20 years life saving, you would get 20% drawdowns on a regular basis, meaning you worked for free 4 years. You can play around with calculators and notepad to estimate how big drawdowns you'll get, how often etc. With a 2% risk: (0.98^75)*(1.1^25) = 2.38. Up 138%. And regular drawdowns not of 8-18% but 23.3%-33.3%. And once in a while drawdowns of 60% to 70%. And a few times in a lifetime of 80% to .... What is the max drawdown before divorce + jump off a cliff? 6- Expected returns after 1 year And here we are... Traders should have a vague idea to start with but mostly look at all of this after running a strategy correctly and with some profits, over a "significant" amount of time, kek can't give a number. First of all what is the amplitude of moves you manage to catch? So the first limit is obviously the number of waves / moves. No matter what sytem you have you will not be able to join more waves than they are waves in the first place! And then... how many you can catch, is much, MUCH, lower than how many there are. Duh! Anyone with half a brain should be able to understand all of this at some point... Someone that manages to be profitable and doesn't blow up should make 5 to 40% I guess. That's that. It's exponentially harder, but also exponentially more profitable. I think I should build a new income stream writting books...
Education
by MrRenev
10