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TYPES OF MARKET ANALYSIS1) Fundamental analysis. fundamental analysis focus mainly on micro and macro event that will control market situations in the present and in the future. it includes various events in economic calendar like PPI CPI NonFarm Payroll, Interest rate decisions, and geopolitical senarios like election war climate issues etc 2) Technical analysis. Technical analysis mainly focus on indicators chart analysis volume analysis, various analysis like following candle stick pattern, trading strategies based on indicators 3) Market sentiments Market sentiments focus mainly on how the crowd anticipate wheich direction will market go, like when xauusd reached at its all time top everyone believed it will have a retracement from that zone like share and follow us for more such informative contents
Education
by realmillionairefx
EXPLAINING LIQUIDITY IN SIMPLE WORDSLiquidity plays a vital role in shaping market prices, particularly among large market players such as banks, hedge funds, and other influential entities. These entities, often referred to as market makers, manipulators, and others, are driven by their pursuit of liquidity. In fact, liquidity is the foundation upon which successful trading is built, and it's where traders should begin their journey. In the context of Smart Money Concepts (SMC), liquidity refers to the levels of asset price where multiple market participants have placed limit orders, stop orders, and liquidations. Stop orders are essentially reverse orders designed to mitigate losses by buying back positions that have gone against a trader's expectations. When a trader sets a Stop-Loss order, they're essentially trying to limit potential losses if the market moves against them. The concentration of stop orders creates a gravitational effect, making it attractive for larger players to gain an advantage. By identifying areas with high concentrations of stop orders, big players can exploit these liquidity zones to collect profits from retail traders who are unaware of these market dynamics. As a result, the movement of prices from one liquidity zone to another is driven by the actions of these powerful entities, ultimately shaping the market landscape. ❓ HOW TO IDENTIFY LIQUIDITY ON THE PRICE CHART? Before we dive into trading and trades, we must first identify obvious liquidity pools. These will be our closest target for the price to converge upon. There are several types of liquidity in the market: Equal highs and lows (EQH/EQL), which mark significant turning points Swing structural points, including notable highs and lows that can be significant drivers of market activity Boundaries in sideways price movement, such as ranges or sideways trends, where liquidity is concentrated Trend movement, where liquidity tends to accumulate below or above the trendline 📊 SIGNIFICANT PRICE HIGHS AND LOWS The SMC features six key extrema that significantly impact trading: • The previous month's high and low values • The previous week's high and low values • The previous day's high and low values • The current trading day's high and low values • Equal highs and lows, which can be particularly significant in determining market trends 📈 Equal Highs (EQH) or Equal Lows (EQL) 📉 The double bottom or double top candlestick formation is a common indicator of a potential price reversal. When the price reaches these formations, it typically signals a change in direction, with the price moving in the opposite direction. For retail traders, equal highs and lows are crucial levels of support and resistance, prompting them to place stop orders at these levels. These levels act as a gravitational force, attracting large capital flows and creating a significant amount of liquidity. When the price approaches these levels in reverse, it's not uncommon to see a cluster of stop orders forming, as traders anticipating a bounce from the level wait for the price to react. However, large players often take advantage of this expectation by executing stop-loss orders through a false breakout, ultimately triggering a price reversal. 💲 SIGNS OF A SUCCESSFUL LIQUIDITY GRAB Let's consider a buy scenario as an example. Traders identify a strong low price, and large capital players recognize an obvious accumulation of liquidity at this point. When the price returns to this low and breaks it, but without forming a full candle, the price closes above the broken low. To better understand this concept, let's examine the schematic representation of liquidity grab in buying scenario. Liquidity is a top priority for big players, known as “smart money”. A significant player is actively seeking to find it to secure their position. The reason is that if they were to open trades without sufficient liquidity, they would be exposed to price slippage, as there may not be enough buy or sell orders in the market to execute their trades efficiently. 🔎 IS IT A LIQUIDITY GRAB OR NOT? Distinguishing between a liquidity grab and a breakout of market structure is crucial, as they share similarities. In the case of a liquidity grab, the price fails to close at an important structural highs or lows, instead takes liquidity forming long tailed candles. In contrast, a breakout of the structure sees the price breaks and closes above or below new level. Notably, liquidity grab often precedes a price reversal, whereas breakout of the level typically perpetuates the underlying trend. 📍 TREND LIQUIDITY In a clear trending market, liquidity forms in both directions, at the lows and highs. Let's take a closer look at a downward trend movement. When we see the price moving downwards, we initially take liquidity at the lows, which has been building up since the price reached its maximum. Then, we take liquidity at the minimum, creating a natural flow. At the highs, we deliberately leave liquidity on purpose, allowing it to build up and eventually be taken away naturally. The liquidity at the lows acts as a price magnet, attracting a large player who begins to accumulate their position. In some cases, the price may form equal lows, known as a double bottom in technical analysis. This signals to traders that it's time to enter a trade, and they place stop losses above these levels. At this point, a major player manipulates the price, taking this liquidity and reversing the trend. The first target is then the trend highs, where liquidity is located – it was left earlier to be taken away. 📝 HOW TO WORK WITH LIQUIDITY? When working with liquidity, it can be a valuable tool for entering a trade, as well as helping to set a stop loss by avoiding arbitrary price levels. Instead, you can use liquidity to guide your trading decisions and create more informed stop-loss strategies. Moreover, take profits can also be placed on liquidity levels, as the price is constantly moving between these levels, making it essential to take profits before they're taken away. 💎 CONCLUSION The benefits of liquidity analysis extend to any time frame, whether it's weekly, daily, or even 1-minute charts. This means that liquidity can be effectively applied to analyze forex market, indices, cryptocurrencies and shares of companies for investment purposes, making it a versatile tool for traders and investors alike. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
23
All Roads Leads to RomeIf you wish to analyze the index using traditional Japanese candles and Heikin-Ashi candles, and compare that using Bollinger Bands, Elliott Waves, Fibonacci series, and Ichimoku Kinko Hyo indicators. And you want to conduct the analysis on various time frames including daily, hourly, and every five minutes to discover the confluence between these indicators, you will find what pleases you in this tutorial video. #traders4traders ***This channel is intended for educational purposes only and should not be construed as an investment proposal. Disclaimer: The content provided is for Educational purposes only. It should not be interpreted as legal, tax, investment, financial, or any other form of advice. Investing in stocks carries inherent risks and may lead to potential losses, including the loss of principal. It's important for investors to recognize that past performance does not guarantee future returns, and market fluctuations can impact investment value. Stocks discussed here are not synonymous with, nor should they be seen as a replacement for time deposits or similar saving instruments. Investing in securities of smaller companies may involve higher risks compared to larger, more established firms, possibly resulting in substantial capital losses. Decisions to buy, sell, hold or trade in securities, commodities and other investments involve risk and are best made based on the advice of qualified financial professionals. The practice of "Day Trading" involves particularly high risks and can cause you to lose substantial sums of money. Before undertaking any trading program, you should consult a qualified financial professional. Please consider carefully whether such trading is suitable for you in light of your financial condition and ability to bear financial risks. Under no circumstances shall I be liable for any loss or damage you or anyone else incurs as a result of any trading or investment activity that you or anyone else engages in based on any information or material you receive through TradingView
EGX:EGX30Education
by ICHIMOKUontheNILE
WHAT ARE REAL WORLD ASSETS (RWA)?Just 3-5 years ago, the concept of "real assets" was clear-cut - physical items that could be owned such as stocks, gold, and currency. On the other hand, "derivatives" referred to intangible assets like swaps, options, and CFDs that allowed for profit-making. However, the emergence of cryptocurrencies and blockchain technology has completely transformed this landscape. Not long ago, cryptocurrencies were seen as a separate entity, often labeled as a risky and unsecured financial scheme. But today, they are being recognized as valuable commodities and even as securities. What's even more fascinating is the rise of a new category - Real World Assets. 💡 Real World Assets are a unique category of financial instruments that are based on blockchain technology. 💹 Real World Assets is a market where real world assets are tokenized on the blockchain. These tokenized assets, which we refer to as real assets, are essentially moving traditional assets into decentralized financial applications. The goal is to leverage technology to potentially lower fees and management costs associated with these assets. 📍 REAL WORLD ASSETS EXAMPLES: ➡️ Stablecoins are a type of cryptocurrency that are centralized and backed by real assets. For instance, Tether's USDT is backed by stocks, government bonds, and fiat currencies, and undergoes some level of auditing. This process is known as tokenization, where the value of the collateral is denominated in stablecoins equivalent to fiat money. The pegging ratio is 1:1, meaning that the value of the stablecoin is directly tied to the value of the underlying assets. Any fluctuations in the value of the assets are balanced out by adding more collateral to maintain the stability of the stablecoin. 🔴 One major drawback of this model lies in the vulnerability to fluctuations in exchange rates of the real asset. In the event that stocks experience significant drawdowns of 20-30%, it is essential for the collateral to be able to mitigate this risk. Furthermore, as the stock value increases, Tether continues to issue additional USDT. Traders are already familiar with the challenges of decoupling stablecoins from their corresponding assets, particularly in the case of centralized stablecoins as opposed to algorithmic ones. ➡️ Private lending, specifically in the form of decentralized lending, has seen a significant player emerge in the form of DAO MakerDAO, the issuer of the DAI stablecoin. In a major move, this startup secured a hefty $100 million credit line with a US bank in mid-2022, backed by real assets as collateral. The startup was able to profit from this arrangement with an impressive 3% annual return. It is noteworthy that regulators did not pay attention to this deal. ➡️ Government bonds are a popular choice for investors seeking stability. Some companies have taken this a step further by issuing stablecoins that are backed by government securities. For example, Ondo Finance offers the USDY stablecoin, while Mountain Protocol offers USDM, which is based on Ethereum. These startups manage stablecoins backed by U.S. Treasury bonds, considered one of the most reliable instruments in the market. Investors can also earn passive income of 5% on top of the stability these investments offer. ➡️ Tokenized securities are on the rise, although the market has not yet reached its full potential. Bitfinex exchange is at the forefront of this trend, with their subsidiary launching the first tokenized bonds in October 2023. These bonds offer investors a tempting yield of 10% and a three-year maturity period. In essence, these tokenized securities work much like traditional bonds, where investors trade tokens for a share of the security and receive passive income in return. 🔴 Investors should be intrigued by the inquiry into how the issuer plans to allocate the funds raised and where the profit is being generated from. This question remains unanswered, as the tokenization process is still evolving. By 2024, HSBC, the British bank, is gearing up to introduce a service for managing tokenized bonds. In October 2023, JPMorgan and Barclays, along with investment firm BlackRock, unveiled a platform for transforming shares into digital assets called the Tokenized Collateral Network. ➡️ Green tokens are an emerging trend in the world of digital assets, with artificial intelligence specifically identifying them as a key player in the future. An interesting fact is that KlimaDAO, a startup backed by billionaire Mark Cuban, ultimately did not succeed in its mission to raise funds to incentivize companies to reduce their emissions. Despite this setback, the concept of green investments and tokens is likely to become a prominent tool in the future. This new form of investment may revolutionize the way companies approach sustainability and incentivize environmentally conscious behaviors. Stay tuned for more developments in the world of green tokens. ➡️ Paxos, a startup in the cryptocurrency industry, has made a connection to precious metals through the creation of gold tokens. Pax Gold has successfully replicated the value of physical gold, allowing investors to easily participate in the gold market without the need to purchase actual bullion or deal with brokers and confusing financial instruments like CFDs and swap fees. By purchasing PAXG cryptocurrency, investors can securely store it in a cold wallet, minimizing the risks associated with exchange bankruptcies or broker insolvencies. ➡️ In January 2023, the real estate startup MarketDAO facilitated a $7 million loan in cryptocurrency DAI to a French conglomerate. The loan was backed by mortgage bonds worth $40 million in US dollars. While this practice is still inconsistent, it marks the beginning of a promising trend in the real estate industry. ➡️ Paintings, sculptures, and other works of art, as well as collectibles, have long been valued for their beauty and uniqueness. The original concept behind NFTs was to revolutionize ownership by tying it to the blockchain, thereby ensuring copyright protection. In 2021-2022, we witnessed the initial steps towards digitizing and transferring paintings onto the blockchain. The future of this trend remains uncertain, but the concept has proven to be functional and shows promise for the art world. 🔴 The prospects for Real World Assets are significant and promising. However, accurately assessing these prospects is currently difficult as the tool is still in development and has not yet found its niche. Several factors are necessary for its success. 1️⃣ Firstly, there needs to be greater user engagement in cryptocurrency and digital technologies. Despite the widespread availability of the internet, not everyone has sufficient knowledge about these topics, let alone blockchain technology. 2️⃣ Secondly, there needs to be real interest and potential benefits from the tool. This can manifest in various ways, such as generating profit or simplifying certain actions. For example, the tool could speed up data transfers, protect copyrights, and make it more accessible for everyday users. Users must see the usefulness of the tool for it to be successful. 📍 CONCLUSION Currently, the reality is that the global market is valued at hundreds of trillions of dollars, a figure that the cryptocurrency market cannot compete with. For instance, as of 2020 estimates, the worldwide real estate market is valued at approximately $326 trillion in US dollars. According to RWA.xyz, the funds locked in blockchain technology total $4.5 billion, with just over $500 million in loans issued. However, the revolution of Real World Assets technology is on the horizon. In the next 1-2 years, this tool will begin gaining traction among the masses, similar to the rise of artificial intelligence in 2023. It is predicted that in 5 years, RWA technology will reach its peak of popularity. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
2
High Volume Times to Trade / Part 1 🔣Hello traders welcome back to another Concept video. In this video, we detail some of the best times to trade the Eur/Usd Currency pair. This happens to be at Session opens. We go through the 3 Session opens and walkthrough examples of increasing volume ( Large candles). Session opens can provide a great catalyst for 1) a continuation of momentum of the preceding trend or 2) a dramatic reversal. The Euro and the U.S. Dollar are not open during the Asian session and so the candles are much smaller and the average volatility is much less. However, the same concept applies regarding the former.
Education
by ShrewdCatfx
11
“DRAGON” PATTERN IN TRADINGAs we dive into studying price action, we can't help but be intrigued by the interesting names given to various patterns. Names like "Two Rivers" and "Shooting Star" not only sound captivating but also accurately describe the patterns they represent. In this post, we'll introduce you to another powerful pattern known as the Dragon. This pattern, belonging to the reversal patterns, is not only commonly found in the Forex market but is also highly effective. 💡 HOW THE DRAGON PATTERN IS FORMED? The pattern has known points, without which the formation is not possible: HEAD LEFT FOOT RIGHT FOOT HUMP TAIL Each of the points, should be placed in the specified place, without distortions and various force majeure. The Dragon pattern is a reversal pattern in the forex market. In order to successfully trade the Dragon formation, it is crucial to have a clear understanding of the important data associated with it. 📍 Firstly, in a downtrend, you must identify the last local lower high, which will serve as the head of the Dragon pattern. Subsequently, the market will continue to decline and reach a specific level that it cannot surpass, marking the left foot of the formation. 📍 The Dragon's Hump is then formed through a corrective movement from point 1 to point 2. It is essential that this correction does not exceed 38.2% to 50%. Following this correction, the market should attempt to retest the previous lows, ideally failing to do so. This failure indicates a potential shift in momentum, allowing for a buying opportunity. 📍 Drawing a trendline from the head to the hump serves as a signal line. Once this trendline is broken, the Dragon pattern is confirmed, signaling a long position entry. 📍 Setting a Stop Loss below the dragon's feet helps to manage risk, while the first target is set at the level of the hump and the second target at the head. Take Profit levels can be set at these targets to maximize profitability. Another possible scenario is when the bears successfully bring the market below the initial support level. Personally, I find this detail somewhat undermining to the pattern. In such a situation, it can be interpreted as follows: if the bears succeed in pushing the market to new lows, it indicates that they may not be as weak as they seemed at first, which encourages caution in buying. However, if the price returns above the last local low and creates a false breakout with a bullish divergence, it can be considered a strong signal. The bullish reversal pattern Dragon has its counterpart in the bearish reversal pattern known as the Inverted Dragon. Just like its bullish counterpart, the Inverted Dragon follows similar patterns and characteristics, so there is no need to describe it separately. As mentioned earlier, these patterns are named for their resemblance to real-life examples, and I have included a chart overlay in the screenshot below for reference. It is essential to have a strategy and a set of rules when considering any reversal combination in forex market. As many books suggest, patterns often form at the bottom of the market. Although the market bottom may shift quickly, it is important to stay disciplined and adhere to the rules. The concept of identifying the market bottom involves recognizing key levels where the market has previously rebounded. If a price has bounced off a certain level in the past, there is a higher probability of it happening again in the future. Therefore, it is crucial to look for potential patterns, such as the Dragon pattern, when the price nears a support level (for bullish patterns) or a resistance level (for bearish patterns). 📒 TO AVOID MISIDENTIFYING PATTERNS, IT CAN BE HELPFUL TO FOLLOW THESE GUIDELINES: 1️⃣ Start by identifying the current trend movement. In a downtrend, look for a dragon pattern, while in an uptrend, look for an inverted dragon pattern. 2️⃣ Remember that price reversals are more likely to occur at important levels. Without a significant level, there may not be a reversal. 3️⃣ Pay attention to the hump of the dragon pattern, ensuring it does not exceed 38.2% to 50% of the distance from the head to the left foot. 4️⃣ Consider the length of the right foot, which should be 5-10% of the distance from the left foot. Ideally, the right foot should be higher, but it can also be lower. 5️⃣ If there is a trendline breakout, take your time before opening a trade. Assess the potential gain and compare it to the expected loss. If everything checks out, go ahead and take the trade. 📊 USING THE DRAGON PATTERN IN TRADING As you can see, identifying the pattern is not difficult at all. Remember the key rules: The hump should be between 38.2% and 50% of the head, indicating left foot movement. The right leg should be aligned as closely as possible with the left foot. Most importantly, pay attention to the pattern at significant levels. The appearance of a pattern does not guarantee that the trend will reverse, but it is considered a strong signal. It is important to make sure that the pattern is formed on a sufficient amount of data. Take into account other factors such as fundamental analysis and the market context. ✅ BOTTOM LINE The Dragon pattern is widely recognized as a strong indicator of a trend reversal, making it a valuable tool for traders looking to capitalize on market movements. While it can be a helpful guide for entering trades in line with the anticipated trend, it is important to remember that no technical indicator is foolproof and a pragmatic approach is always advised. In addition to the suggested rules, it is essential to incorporate your own money management strategies to ensure profitable implementation of the Dragon pattern. Your feedback and any further perspectives are welcomed. Thank you for your time and input. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
1
WHAT ARE THE DIFFERENT TYPES OF STABLECOINS?👋 Hello everyone, today we will be discussing stablecoins, which currently have a market capitalization of around $160 billion. Those who are not very familiar with cryptocurrencies often use stablecoins for various purposes such as making payments, storing money in a stable currency as an alternative to the US dollar, and for international transactions as well. However, stablecoins actually have a wide range of potential uses beyond these basic functions. In this post, you will learn about the different types of stablecoins available in the market. 💎 DIFFERENT TYPES OF STABLECOINS, THEIR APPLICATIONS, AND POTENTIAL RISKS The type of stablecoin and its purpose are typically defined by the developer, who also establishes the asset to which it is pegged, and creates the system for issuing and burning coins. Stablecoins that are listed on the top 20 exchanges globally in terms of capitalization are the ones that garner the most interest. 💎 SECURED BY FIAT WITH A PEG TO A SPECIFIC CURRENCY Binding can be done in various currencies such as USD, EUR, and others. One of the most well-known coins for binding is Tether. According to its developers, the coin is fully backed by real currency, stocks, bonds, and low-risk assets. ⚠️ However, there are risks involved with backing. For instance, Tether has faced challenges with verifying its backing. The company was not forthcoming in providing all necessary information to auditors. As a result, there are doubts about whether the security can serve as a protection fund in times of unexpected events. In another example, the second largest USDC stablecoin pegged to the USD fell below 87 cents in early March 2023. This drop was widely attributed to the bankruptcy of Silicon Valley Bank, where the startup had held approximately $3.3 billion in collateral. While the situation has since been stabilized, the potential for another bank failure to affect the value of a stablecoin remains a concern. 💎 SECURED BY A SPECIFIC ASSET One example of this is the PAXG coin, which is backed by physical gold. This means that the value of the coin is directly linked to the price of gold, eliminating the need for complicated stock market investments or futures trading. By simply purchasing the coin, you can potentially earn money. ⚠️ However, there are risks involved, particularly regarding security. The price of PAXG is not determined by traditional supply and demand forces, as it is tied to the value of gold regardless of the number of tokens in circulation. The algorithm controls the number of tokens, but there is uncertainty about whether the startup behind the coin will fulfill its obligations in case of unforeseen circumstances. 💎 ALGORITHMIC STABLECOINS One of the most complex models of operation to comprehend is the concept of stablecoins. These digital currencies are built on computer code, which is essentially an algorithm that governs the creation and destruction of coins. There are primarily two types of algorithmic stablecoins 1️⃣ The first type operates without any external backing. When the price of the stablecoin rises, the algorithm mints more coins. Conversely, when the price drops, it burns existing coins. This mechanism seems logical from an economic perspective, but it becomes problematic during times of crisis when everyone rushes to convert their virtual coins into real money. ⚠️ There are inherent risks associated with algorithmic stablecoins as they lack any physical backing. When you purchase stablecoins by providing USD, the developers may use the funds as they see fit. You can only expect to retrieve your investments if someone else injects more USD into the system. The story of Do Kwon and his Luna stablecoin serves as a cautionary tale of such a pyramid scheme. 2️⃣ The second type of algorithmic stablecoins introduces a more sophisticated concept, exemplified by the workings of DAI created by the startup MakerDAO. The innovative approach involves a redundant reservation system, where the responsibility of securing the collateral lies with the user rather than the developers. Each user can mint a DAI coin, pegged to the value of 1 USD, by locking up another cryptocurrency as collateral in excess of 100%. This surplus serves as a safety net in case the value of the pledged cryptocurrency experiences a significant drop, potentially by 50% or more. If the value of the collateral falls below the 100% threshold, the investor's position is automatically liquidated. Notably, developers have no control over the issuance of DAI, with the stability of its price reliant on the collateral provided by users. ⚠️ Despite the innovative approach, there are inherent risks involved. A sudden decrease in the value of the collateral cryptocurrency can result in standard "slippages", where users not only lose their collateral asset but are left with a stablecoin experiencing a drastic devaluation from 1 USD to just a few cents. 💎 WRAPPERD STABLECOINS One popular example is Wrapped Bitcoin (WBTC). Bitcoin and Ethereum are the two largest platforms, but they are not compatible with each other. Developers who deploy startups on Ethereum find that their users also work with BTC as a reliable investment tool. WBTC was created as an intermediary to bridge this gap. The coin is deployed on the Ethereum network and is tied to WBTC in a 1:1 ratio. ⚠️ However, there are risks involved in using WBTC. As it belongs to people, there is a lack of decentralization. Only the portion of WBTC that is in demand is secured, leading to a smaller capitalization compared to bitcoin. The extent to which this network can be trusted is a complex question that requires careful consideration. ✅ CONCLUSION Stablecoins are an effective asset when utilized as a medium of exchange rather than as an investment, unlike gold-backed coins which function more as an investment tool. These coins provide protection against price fluctuations as they are linked to a stable asset. However, they still carry similar risks to altcoins such as detachment from the collateral, a decrease in the collateral's book value, and potential fraud by developers. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
1
Mastering Naked Forex Trading: Strategies, Pros, and TipsEmbarking on the journey of "Naked Forex Trading" marks a departure from conventional trading methods, as traders eschew traditional technical indicators in favor of a purer, more intuitive approach. This article delves into the operational intricacies, diverse strategies, and nuanced pros and cons of naked trading, offering practical insights and tips to navigate this distinctive trading method successfully. Understanding Naked Forex Trading: Naked forex trading represents a paradigm shift in trading philosophy, where traders base their decisions solely on price action, devoid of the clutter of technical indicators. It entails analyzing raw price movements on charts, such as identifying support and resistance levels, drawing trendlines, and interpreting candlestick patterns. By embracing the " naked " approach, traders aim to gain a clearer, unfiltered perspective on market dynamics and sentiment. Operation Of The Naked Trading Strategy: At its core, naked trading simplifies the trading process by stripping away the complexities of technical indicators and focusing solely on price action. Traders develop a keen eye for key support and resistance levels, draw trendlines to identify market trends, and meticulously analyze candlestick patterns for potential trading opportunities. This approach emphasizes disciplined adherence to entry and exit rules based on observable price movements, fostering a deeper understanding of market dynamics. Naked Trading Strategies: Naked trading encompasses a spectrum of strategies, each tailored to exploit specific aspects of price action. These strategies include: 1. Identifying Support and Resistance: Traders discern significant support and resistance levels on price charts, observing price reactions near these levels and making decisions based on historical significance and current market dynamics. 2. Drawing Trendlines: Trendlines are sketched to delineate the prevailing market direction, enabling traders to identify potential entry and exit points aligned with the trend's trajectory. 3. Analyzing Candlestick Patterns: Traders scrutinize candlestick patterns to gauge market sentiment and anticipate potential reversals or continuations. Patterns such as doji, engulfing patterns, and pin bars provide valuable insights into market psychology. 4. Recognizing Price Action Patterns: Common price action patterns, including double tops, double bottoms, and head and shoulders formations, are identified to anticipate future price movements and inform trading decisions. 5. Executing Breakout Trading: Traders identify consolidation zones or chart patterns signaling potential breakouts, entering positions when prices breach resistance or support levels, anticipating significant price movements. 6. Observing Engulfing Patterns: Bullish or bearish engulfing patterns, where one candle fully encompasses the preceding one, serve as signals for potential reversals or continuations, guiding traders in their decision-making process. 7. Naked Trading with Moving Averages: While purists adhere to pure price action analysis, some traders integrate moving averages to complement their naked trading strategy, providing additional confirmation of trends. 8. Monitoring Round Numbers and Psychological Levels: Round numbers and psychological levels on price charts act as additional support or resistance levels, influencing trader behavior and serving as strategic decision-making points. 9. Pattern Recognition: Traders develop proficiency in recognizing various chart patterns, such as triangles, wedges, and rectangles, leveraging breakouts or breakdowns from these patterns as potential trading opportunities. 10. Implementing Multiple Time Frame Analysis: Combining naked trading strategies with multiple time frame analysis enriches traders' understanding of market conditions, providing insights into both short-term fluctuations and long-term trends. Achieving success in naked trading demands a comprehensive understanding of market dynamics, disciplined pattern recognition, and the ability to interpret raw price charts effectively. Patience and effective risk management are essential to capitalize on high-probability trading setups and mitigate potential losses. Pros And Cons Of Naked Trading Strategy: The naked trading strategy offers several advantages: 1. Simplicity: Naked trading simplifies the trading process by eliminating the clutter of technical indicators, making it accessible for traders of all levels of experience. 2. Focus on Market Dynamics: By focusing solely on price action, naked traders develop a deeper understanding of market dynamics and trends. 3. Adaptability: Naked trading strategies can be applied across various financial markets and timeframes, providing flexibility and adaptability to changing market conditions. 4. Emphasis on Trader Psychology: Naked trading places a significant emphasis on understanding trader psychology and market sentiment, leading to more informed trading decisions. 5. Versatility in Strategies: Naked trading allows traders to customize their strategies based on their preferences and trading styles, incorporating a wide range of price action techniques. However, naked trading also presents some challenges: 1. Subjectivity: Naked trading often involves subjective analysis, as traders interpret price action based on their individual perspectives, leading to potential variations in trading decisions. 2. Lack of Confirmation: Without the aid of technical indicators, naked traders may lack confirmation of signals, increasing the risk of false signals and trading errors. 3. Limited Predictive Power: Naked trading primarily focuses on historical price movements, which may limit its ability to predict future market conditions accurately. 4. Vulnerability to Whipsaws: In volatile or low-liquidity markets, naked trading strategies may be more susceptible to whipsaws, resulting in unexpected losses or missed opportunities. 5. Learning Curve: Mastering naked trading requires a solid understanding of price action analysis and market psychology, posing a steep learning curve for novice traders. Tips For Trading Naked Without Indicators: To optimize naked trading strategies, traders can employ the following tips: 1. Practice on a Demo Account: Open a demo account to practice naked trading and refine your skills without risking real capital. 2. Incorporate Order Flow Analysis: Use order flow analysis to gain insights into market dynamics and identify potential trading opportunities. 3. Develop Trading Psychology: Cultivate a disciplined mindset and emotional resilience to navigate the ups and downs of trading without the aid of indicators. 4. Utilize Forex Correlation and Currency Strength Meter: Leverage forex correlation and currency strength meter tools to identify correlations between currency pairs and gauge market sentiment. 5. Explore Other Price Action Trading Strategies: Expand your repertoire of price action trading strategies, such as supply and demand trading or range trading, to enhance your trading toolkit. In conclusion Naked forex trading epitomizes the power of simplicity and reliance on price action analysis, offering traders a clear and unfiltered view of market dynamics. While it presents challenges such as subjectivity and a steep learning curve, traders can overcome these obstacles through diligent practice, analysis, and a deeper understanding of market psychology. By integrating diverse strategies, adhering to sound risk management principles, and honing their analytical skills, traders can harness the full potential of naked trading and navigate the forex markets with confidence and precision.
Education
by FOREXN1
1
SIMPLE STEPS IN CREATING A TRADING SYSTEMTrading system and strategy are often equated, but this is not quite right. Both a strategy and a trading system is a single algorithm of actions, including the process of searching for signals and opening trades. But strategy is often understood as following certain rules, while a trading system is a combination of technical, fundamental and psychological components. In other words, the creation of a trading system implies a combination of several strategies that work depending on the situation and their combination with external factors (emotions or news). 📊 CREATING A TRADING SYSTEM Creating a trading system is the basis of trading. No one prevents you from finding interesting strategies on the Internet, but a trading system is the very core that defines a trader's personality. After all, all people are different. A system is a set of rules, which takes into account the risk appetite, psychological qualities, and way of thinking. The market is influenced by hundreds of different variables, and in order not to drown in the flow of information, it is necessary to identify the basic path and the most influential factors. Building a trading system starts with choosing a narrow niche, which can/should then be gradually expanded. 📝 THE TRADING SYSTEM SHOULD ANSWER THE FOLLOWING QUESTIONS: • What is currently happening in the market? • What can happen in a fixed period of time? • How can a trader use the obtained information and forecast at the moment? There are several basic variants of price action, which most often form the basis of trading systems: 1️⃣ TREND FOLLOWING When it comes to trend following, the key is to pinpoint the start of a trend and monitor any corrections without mistaking them for a trend reversal. This strategy typically utilizes tools such as wave analysis, patterns, and support&resistance levels. Trend following strategies are commonly implemented on an intraday basis. 2️⃣ BREAKOUT OF RESISTANCE AND SUPPORT LEVELS The direction of the trend is not the key focus. What truly matters is the price breaking through significant levels. The primary challenge lies in distinguishing between a genuine breakout and a false one. 3️⃣ TRADING INSIDE THE CHANNEL This is an alternative to the second option. If the price does not break through the level, it returns to its average value. The main tools are the same levels, oscillators, channel indicators. Additionally, it is important to consider time allocation when creating a trading system. It is crucial to determine the timeframe that best suits your trading style and objectives. Different timeframes, such as intraday, mid-term, and long-term, offer various opportunities and challenges in the market. Understanding how to effectively allocate your time based on your chosen timeframe will help you make well-informed trading decisions: Intraday. Trades are opened and closed within the day with savings on swaps. They can also include scalping. But if scalping is a high-frequency exhausting trade, then intraday means strategies with the frequency of opening trades up to 3-5 per day. Mid-term. Can be held for several days, less often - several weeks. They have a strong dependence on the fundamental factor. Long-term. One of the investment options, providing for the creation of a diversified portfolio of different types of assets. ✔️ The trading system should also answer the following questions: Which asset optimally corresponds to individual preferences (level of average daily volatility, liquidity, winrate, principle of using leverage/margin percentage). What are the main parameters of the risk management system: risk level per one trade and for all open positions, lot calculation formula, etc. What timeframes and technical/fundamental analysis tools to use. What signals correspond to a successful point of opening a trade. At what moment to close trades. ✔️ All these points are obvious, but it is the lack of a clear plan that causes mistakes and panic. A trading system plan is a kind of "road map", which provides for: Different combinations of risk management system parameters. It is not necessary to stick to one risk control strategy. Sometimes an increase in risk is justified. Flexibility is important. Scenario in case of deviation of actual results of the trading system from statistical results (obtained during testing). Behavior in different emotional states. Sources of reliable information. Order of actions in case of force majeure. 📍 In conclusion , developing a trading system is essential for any trader looking to achieve success in the financial markets. A well-thought-out trading plan with a systematic approach helps traders make informed decisions, manage risks effectively, and stay disciplined in their approach. To trade without a plan is to hope for luck, and luck is not comparable with the theory of probability. Therefore, do not neglect the trading plan.
Education
by Lingrid
5
BITCOIN HALVING MYTHSIn a week, another bitcoin halving is expected to take place, which is expected by many cryptocurrency traders. Cryptocurrencies are still a dark horse for traders: sharp price fluctuations in both directions, high volatility attract traders with the supposed simplicity of making money. And although many consider the industry a bubble, there are still enthusiasts willing to take risks. What Is Halving In Simple Words? 📜 Halving is a reduction for rewarding miners for performing operations on the bitcoin blockchain network. Currently, the reward for solving equations for a block of data on the blockchain is 6.25 bitcoins. After halving, it will be cut exactly in half to 3.125 bitcoin. Basically, miners act as accountants in the blockchain network or as an equivalent of the collective Central Bank in the blockchain and serve as a guarantee of transparency and veracity of information: it is impossible to fake it in one block without other miners noticing it, but it is necessary to fake the entire chain of operations in the entire blockchain, which is practically impossible. Miners are responsible for processing all transactions: if there were no miners, there would be no new bitcoin transactions. How Bitcoin's Halving In 2024 Will Affect The Price? 📈📉 Bitcoin's halving in 2024 is one of the most expected and discussed events of the first half of this year. In most cases, analysts cannot clearly explain why the price of BTC (and subsequently other alts) changed, finding unconvincing reasons in hindsight. Therefore, the upcoming event is a reason to try to predict the future behavior of the price before it happens. Halving is a halving of miners' profits. That is, a miner bought expensive equipment, spends electricity in the hope that each block will be rewarded with 6.25 BTC. But then halving occurs and now the reward per block is 3.125 BTC. In theory, halving means that fewer coins will be mined and some miners will leave the market altogether. This will be followed by an increase in the scarcity of BTC, and therefore an increase in its price. At least, this is how optimists explain the growth of BTC price after halving. But the question is: how will the reduction in the volume of its production contribute to its price increase? 1️⃣ The Approaching Halving Is Already Priced In . This myth is taken from the fundamental analysis of stock market if investors are sure that, for example, if the Fed's interest rate is going to be exactly changed in a month, they buy or sell dollars in advance. However, this does not work in cryptocurrencies for several reasons: ✔️ Halving is embedded in the blockchain and for BTC it is done every 4 years. But that doesn't mean it is already factored into the pricing. ✔️ There are very few people involved in mining. And it is not a fact that investors are basically aware of what halving is and when it will take place. Short-term speculators may still be interested in this information. Those who bought BTC with the expectation that someday it will rise again (or did not sell it after a fall) are hardly interested in it. ✔️ The role of mining in the share of speculative circulation is not high. Market makers rule the market, which can simply squeeze miners with capital. 2️⃣ Bitcoin's Price Will Fall. The halving of bitcoin in 2024 may indeed affect the prices, but not as drastically as many investors would like. An argument in favor of a fall is the example of LTC, which got cheaper before halving profits. Compare the volumes of LTC and BTC, which occupies more than 54% of the entire cryptocurrency circulation. LTC is a speculative instrument, whereas BTC has a large share of long-term capital. 3️⃣ Halving Will Lead To The Annihilation Of The Mining Industry . Supporters of this myth argue that mining is becoming less and less profitable. In addition, more and more startups are being developed on more modern algorithms that do not involve mining. In reality, existing miners aren't going anywhere. Those who have already invested money in it will continue to "recoup" their costs. There will be no influx of new miners, so the mining industry will eventually disappear on its own. But halving will definitely not be to blame for this. ✅ Conclusion Halving bitcoin's price can affect the price significantly. The price may shift to one side or the other, but there are enough fundamental factors for growth, but not for a fall in price. Therefore, it is very likely that this event will be noticed.
Education
by Lingrid
4
MFI INDICATOR - STRATEGY FOR TRADINGIndicator MFI — model Incorporating technical indicators into your trading system requires a clear understanding of their fundamental principles. An innovative solution developed by Gene Cuong and Avrum Sudak allows the use of volumetric data in metric analysis. The Cash Flow Index serves as a graphical representation of the "cash ratio", requiring a preliminary derivation of the "cash ratio" and subsequent calculations, including the determination of typical price and cash flow. Similar to the relative strength index, the cash flow index is based on the concept of a “typical price,” calculated as the average of the high, low, and closing prices over a specified period of time. For example, if the daily time frame has a high of 70,000, a low of 65,000, and a closing price of 68,000, the typical daily price is calculated as follows: Typical daily price = (70000 + 65000 + 68000)/3 = 67666 Cash flow is then determined by multiplying typical price by volume: Cash Flow = Typical Daily Price * Volume. Comparing the resulting cash flow with the previous day's cash flow makes it easier to identify positive or negative trends. Positive cash flow indicates an increase, while a negative cash flow indicates a decrease. Cases of equivalent cash flow values are not taken into account. When positive and negative cash flows can be distinguished, the cash ratio is calculated by dividing the former by the latter: Cash Ratio = (Positive Cash Flow / Negative Cash Flow). Using this data, the cash flow index (MFI) can be calculated using the formula: MFI = 100 - (100/(1 + Money Factor)). Gene Cuong and Avrum Sudak have delineated three primary signals employed by the Cash Flow Index: Overbought or Oversold Levels: Traders strategically monitor for overbought or oversold conditions as indicators of unsustainable price extremes, signaling potential market corrections. Bullish and Bearish Divergences: Analysis of bullish and bearish divergences serves as a predictive tool for identifying potential trend reversals. Discrepancies between the direction of price movements and corresponding Cash Flow Index trends can offer valuable insights into shifting market dynamics. Fluctuations at 80 or 20 Levels: Observing fluctuations in the indicator readings around the 80 or 20 thresholds enables traders to discern potential market reversals. These pivotal levels serve as crucial points of reference, guiding traders in assessing market sentiment and making informed trading decisions. Determining overbought and oversold zones using the cash flow index While the relative strength index (RSI) and other oscillator-type technical indicators are capable of identifying overbought and oversold market conditions, the money flow index (MFI) stands out for its effectiveness in this area. Including additional volume information allows the MFI indicator to filter out false signals from overbought and oversold conditions, increasing its reliability, especially for traders looking to counter prevailing trends. Like most momentum indicators, the Money Flow Index ranges from 0 to 100. A Money Flow Index reading below 20 indicates an oversold signal. Conversely, a Cash Flow Index reading greater than 80 suggests an overbought scenario. One limitation of trading based solely on overbought and oversold signals is the inability to counter the current trend merely due to signals generated by the Money Flow Index (MFI). Optimal trading strategy involves exercising patience and waiting for a price action pattern to validate a shift in the prevailing trend before taking a position. By employing this approach, traders can make more informed decisions and reduce the risk of entering positions prematurely based solely on MFI signals. The MFI Indicator and Divergence Beyond its function in pinpointing overbought and oversold conditions, the Money Flow Index (MFI) indicator serves as a valuable tool for detecting divergence within the market. In essence, divergence manifests when the price moves in one direction while the indicator readings depict a contrary trend. Traders regard this occurrence as a strong indication that the price is poised to reverse in alignment with the technical indicator's trajectory. Utilizing the MFI indicator enables traders to readily recognize such signals, whether they manifest as bullish or bearish divergence. Bullish Divergence: Bearish divergence: What Should You Consider? By integrating volume into its mathematical framework, the Money Flow Index is adept at generating highly precise trading signals concerning overbought and oversold market conditions. Additionally, it demonstrates a notable ability to pinpoint emerging divergences within the market. However, like any technical indicator, it possesses inherent limitations. A primary constraint of the Money Flow Index is its propensity to persist in overbought or oversold states for extended durations, potentially leading to false signals. Yet, by crafting a trading strategy that incorporates price action signals, traders can harness the MFI indicator to identify potential reversal zones. Armed with this insight, traders can anticipate shifts in directional price movement with ease and strategize their trades accordingly. Summing It Up: The Money Flow Index stands out as a unique indicator amalgamating momentum and volume within the RSI formula. Its strength lies in its adeptness at identifying potential reversals through overbought or oversold levels, as well as bullish or bearish divergences. Nonetheless, prudent utilization of the Cash Flow Index entails supplementing its readings with additional technical indicators rather than relying solely on its signals.
Education
by truepersonal
8
What I mean when I say "Activate an algorithm" - Quick TutorialThis should be helpful for anyone looking to understand further what I define as an activation of an algorithm. This candle on the hourly is a beautiful example after my video this market where I said we want to see yellow "activated". It is basically proof that price is now respecting and following that algorithm/channel and this is so important to understand for my analysis and trading style. Always here to answer further questions for those who are interested in learning more! Happy Trading :)
NYSE:KSSEducation
by ReigningTrades
DEMO KING SYNDROME: DISADVANTAGES OF A DEMO ACCOUNTThis post is directed towards novice traders who harbor the belief that honing trading skills and mastering profit-making strategies is achievable solely through practice on a demo account. However, the unforgiving reality of statistics paints a stark picture: approximately 65-80% of novice traders find themselves facing financial losses within the initial months of transitioning to a real trading account. Surprisingly, the extent of practice on a demo account beforehand appears inconsequential in mitigating these losses. If your aim is to cultivate profitable trading abilities while safeguarding your account from losses, relying solely on a demo account will inevitably fall short of achieving this goal. DISADVANTAGES OF A DEMO ACCOUNT 🚫 A demo account works like a simulator, allowing you to do everything you would on a real account, but with virtual money instead of real funds. In essence, it's designed to help you get comfortable with the trading platform. PSYCHOLOGY 🧠 Trading on a demo account provides a risk-free environment, shielding traders from the consequences of losing real money and thus alleviating mental strain. Consequently, traders might exhibit a tendency towards more aggressive decision-making compared to their approach on a live account. In the absence of mental pressure and the fear of missing out (FOMO), errors are less likely to surface. IT IS IMPOSSIBLE TO STUDY THE PSYCHOLOGY OF TRADING 📝 One of the pivotal aspects of successful trading lies in the adept management of emotions. Yet, it's widely acknowledged that the emotions experienced on a demo account pale in comparison to those felt on a live one, making it challenging for traders to grasp how these emotions influence their decision-making. When a trader initiates a trade, it's akin to embodying a different persona altogether. A demo account falls short in providing a crucial element: it fails to address the fear associated with taking the first step into live trading; instead, it perpetuates hesitation. Every time a trader deliberates on transitioning to a real account, excuses surface: "I'm not quite prepared yet," or "I need to further refine my strategies," and so on. Despite spending an indefinite amount of time on a demo account, the leap to real trading remains elusive. NO NEED TO CAREFULLY OBSERVE RISK MANAGEMENT 📊 There's often a tendency to overlook the importance of diligent risk management. Why bother calculating the risk percentage for each trade or determining the stop loss length when there's no fear of losing money from a demo account? After all, it's easy to replenish virtual funds at any time. Consequently, even if a trader sets out to learn about risk calculation, they may approach it with less seriousness at a subconscious level. Consider this: A trader may achieve impressive gains, perhaps even exceeding 20%, in a single trade on a demo account. But can they replicate the same success on a real account? SLIPPAGES 🔢 Slippage is a critical consideration in trading dynamics. On a live account, brokers source quotes from providers, and ensuring that traders receive these quotes with millisecond precision is technically advantageous for the broker. This precision becomes paramount in algorithmic trading, where even a split-second delay can translate into a significant price shift of several pips. Conversely, in the controlled environment of a demo account, trades are executed seamlessly. However, it's essential to note that slippages, especially those spanning several points, can markedly impact outcomes, particularly in high-frequency trading strategies like scalping. The primary distinction lies in the timeliness of quote delivery: traders on live accounts benefit from real-time, accurate quotes, whereas those on demo accounts may encounter delays. COMMISSIONS $ On a demo account, commissions are often not fully accounted for. ALL FUNCTIONS OF THE TRADING PLATFORM ARE NOT ALWAYS AVAILABLE 🖥️ It's worth noting that not all features of the trading platform are consistently available on demo accounts. Certain brokers might opt to limit access to specific functions on these trial platforms, perhaps as a means of encouraging traders to transition to a live account. However, it's important to recognize that a demo account holds intrinsic value. It serves as a practical tool for grasping the fundamental concepts of trading. Particularly for those who are new to the platform, a demo account offers a risk-free avenue for gaining familiarity. Moreover, viewing demo trading as a game of chance is not uncommon. Just as some individuals enjoy racing or strategy games, others find satisfaction in virtual trading simulations. Over time, engaging in this activity can gradually pique interest in trying one's hand in the real market. CONCLUSION 💡 Novice traders often perceive a demo account solely as a simulator for mastering the art of profitable trading, which is a misconception that frequently results in losses when transitioning to a real account. However, the true purpose of a demo account is twofold: first, to acquaint oneself with the functionalities of the platform, such as executing trades, calculating trade volumes, and utilizing indicators; and second, to test trading strategies. If a strategy proves to be unprofitable on a demo account, it's highly likely to yield losses on a real account as well. Conversely, even if a strategy yields positive results during demo testing, there's no guarantee of success on a real account. The true mastery of trading with financial assets can only be attained through experience on a real account. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
6
Liquidity as the Key to understanding the MarketLiquidity in the market is a key factor in price movement especially in the cryptocurrency market. Understanding how and where liquidity appears is fundamental to being able to determine the future price movement of an asset. Liquidity: I would like to start by showing what liquidity is and how it can be detected. In our case, liquidity is the accumulation of buy or sell orders, and the more of them there are, the greater the opportunity to turn a currency into an asset and vice versa. According to technical analysis, an asset has so-called price levels from which further downward or upward movement occurs. Exactly from these levels on the chart, which are seen by all traders without exception, trades are opened, and stop-losses are set for the nearest minimum or maximum. Thus, liquidity is accumulated behind the levels, which acts as a magnet for the price as it is of great interest for big players to fill their orders. 90 percent of traders' stop losses are very close to each other, therefore, with a significant force of price movement in one direction and subsequent interaction with the level of support or resistance, positions are liquidated and a sharp purchase or sale of an asset at stop losses occurs. Please pay attention to the main point. Liquidity is a tool for price movement used by big players. Always keep this in mind. Gap: A gap is a result of low liquidity in the market and a high trading volume of the stock. Gaps are important for technical analysis because they signal shifts in the supply and demand equilibrium. Major gaps indicate a substantial imbalance between buyers and sellers, causing a swift repricing. It is always important to remember that gaps are visible to every market participant and many people when a gap appears start opening trades directed towards its filling thus provoking the emergence of liquidity. In turn, this can lead the price in the opposite direction to the one where the gap is located in order to liquidate recently opened positions of cunning traders. But as a rule, the price eventually comes to the gap and fills it partially or completely removing inefficient pricing. You can think of it as a magnet for price. Fair Volume Gap: FVG (Fair Volume Gap) has the same meaning as a gap (i.e. a magnet for price) but not all traders are focused on this kind of inefficient pricing. In this case it is also significant that according to the common technical analysis the level of 0.5 major candles is used as a strong level of support and resistance and therefore liquidity will be near these levels. Thus FVG filling is achieved also at the expense of ordinary traders buying or selling from these levels. Luquidity pools: It is also worth mentioning the so-called liquidity pools. These are often staggered liquidity clasters combined with zones of inefficient pricing, which together lead to very significant and rapid price movements. Let's look at the essence of this by the example of how a sharp upward growth occurs. Gradually, a major player moves the price down, leaving liquidity on top and not touching it at all, since we will still need it. When long positions are sufficiently liquidated, we can start collecting liquidity from above. And since this liquidity has not been affected at all, sharp liquidation of short positions level by level occurs. It is worth noting the significant impact of inefficient pricing zones through which the asset, as if accelerating faster, reaches clusters of liquidations and, accordingly, a very rapid growth of the asset occurs. These are the basics that I hope will help you improve your trading. I plan to continue developing the topics of liquidity, pricing and the principles of determining price movements. What do you think about it?
Education
by glazirovaniysirok
101
Level breakdown. The most effective setupsWhat is a level breakout? A breakout is the price's consolidation above a certain level followed by further movement in the direction of the breakout. But the immediate question that should arise in your mind is about the consolidation of price, as it might be difficult for inexperienced individuals to understand. However, there is nothing overly complex about it either; consolidation refers to the candle closing above the level A breakdown can occur at a horizontal or inclined level. Bullish breakout: We observe a trending market encountering resistance at a horizontal level. After two unsuccessful attempts, the price breaks through the level. Bearish breakout: Why do level breakouts work? Imagine a scenario: a strong resistance level on the chart is heavily defended by bears, preventing the price from breaking through. Despite several attempts, the bears hold their ground until the bulls come to the rescue. They overpower the bears, but their strategy doesn't end there. Instead of retreating, they press forward, driving the opposition towards the next resistance level, where the cycle repeats. Breakouts occur when the price breaches a significant level. Observing price movements on a chart reveals that prices often consolidate and encounter specific levels. When the price reaches a level and swiftly reverses, it indicates the strength of that level. Upon a price retest of this level, careful monitoring is essential to anticipate a potential breakout. Repeated tests of the same level signify its strength, yet eventually, the price will break through any level. This is when traders should be prepared to initiate a breakout trade. Breakouts offer lucrative trading opportunities because they often mark the inception of new price movements and trends. By entering trades at the onset of emerging trends, traders position themselves for potential profits. Moreover, reliable breakouts typically occur during periods of robust price momentum when traders seek to capitalize on rapid price fluctuations. Breakouts occur at important price levels. It can be: Support or resistance levels. Patterns Market highs or lows. Trend lines. Price channels. Moving averages. Fibonacci levels. One reason breakouts can lead to rapid price movements is due to the attention they attract from market participants monitoring key levels. When one group of traders capitalizes on a breakout, another group is compelled to swiftly exit their losing positions, resulting in sharp price fluctuations post-breakout. There exist various types of breakouts, and as traders, our objective is to identify high-probability breakout opportunities and initiate trades. However, this task is not always straightforward. Consequently, levels marked at potential breakout points should be regarded as zones rather than rigid lines. Identifying Psychologically Important Levels: Repeated testing of a specific zone by the price often signifies its significance. Having reached a certain level, the price enters a sideways movement, forming a consolidation. Using a rectangle, we outline the area encompassing the lower wicks of the candles, delineating our support/resistance area. When trading breakouts, it is wise to wait until the candle closes outside the support or resistance area to confirm the breakout. Triangles are chart patterns indicating price compression, often culminating in a breakout. The direction of the breakout is typically uncertain. Within the circle, you can observe the precise location of a potential breakout. Notably, there is a robust breakout momentum evidenced by several full-bodied candles. Subsequent to breaching the upper level of the triangle, the price retraces to test the previously breached resistance, now acting as a support area. This pullback serves as a crucial confirmation signal. Breakouts and false breakouts: Typically, candlestick shadow breakouts are not considered true breakouts. A true breakout occurs only when the price finally closes outside the level. This approach provides a more secure entry point, making it easier to open positions in the appropriate direction. The upper rectangle constantly holds down the price, with the exception of some candles, characterized as a pin bar. This represents an initial false breakout as only one candle breaks the resistance area but fails to close, leaving its body above that area. Therefore, we classify this signal as false. However, the subsequent pin bar pushes the price higher, causing the candle to close above the resistance area. This is a genuine breakout signal, especially enhanced by the presence of a strong, saturated breakout candle. Trading Breakouts: Trading market breakouts carries inherent risks due to the prevalence of false breakouts, which are statistically more common. Therefore, it is extremely important to understand the market structure and monitor the movement of prices to the appropriate level. Markets operate in cycles, moving between trending phases and periods of consolidation. The duration of market consolidation correlates with the strength of subsequent breakouts and subsequent trends. Prolonged consolidation periods are not only observed by you, but by traders worldwide. Among them, some opt for trading bounces from levels, while others prefer trading breakouts. Extended consolidation behind a resistance level can trigger stop-loss orders for many bears and prompt numerous bulls to initiate new buying positions. Consequently, after prolonged periods of flat movement, prices frequently surge explosively following a breakout, ushering in a robust trend. The breakout trading strategy offers multiple entry approaches, allowing traders to select the one that aligns best with their preferences and objectives. Entering the breakout after the price has consolidated beyond the zone: One strategy assumes that the breakout occurred when the candle closed outside the level. While this pattern can be effective, I personally find it risky due to the many nuances associated with this strategy. Instead I prefer a different approach... Breakout entry with retest: This tactic is a bit more challenging as it requires patience and discipline. What particularly appeals to me in this strategy is that I rely on additional data during a potential retest (with a 60-70% likelihood after the zone is breached). Breakout of the symmetrical triangle pattern: As the market tightens its consolidation, it eventually breaches the support of the triangle, followed by a retest of this level as new resistance. For the stop-loss placement, it's advisable to position it inside the triangle above the breakout candle. Regarding take profit, we target the nearest level, ensuring the risk-to-reward ratio remains acceptable. Best Breakout Trading Method: Accumulation of positions/liquidations - consolidation. When a tight consolidation occurs near a resistance level, it tells us that buying pressure remains high for a long period of time and sellers do not have enough strength to reverse the price from the level. When the price breaks through a resistance level, traders with short positions cut their losses. At the same time, the pressure from buying traders who will open breakout transactions is increasing. All these factors cause the price to rapidly move up without significant pullbacks. __________________________________________________________________________________ I have only covered a portion of the basics. Of course, trading involves various elements such as price action, indicators (divergences), but that would make this post too long ;) If you enjoy my educational articles, please leave comments, and I'll continue writing them.
Education
by truepersonal
9
WHAT IS THE BEST TRADER MINDSET?Optimism, pessimism and realism which trader's mindset is better? The answer seems obvious: optimism. Optimistic traders overestimate their strength and the situation, pessimists do not believe in their strength, so the best is common sense realism. The realistic version of the world perception implies assumption of both favorable and unfavorable variants of the event outcome. But on the other hand, realist traders miss the opportunities that optimists see and underestimate the risks. All three types of trader's thinking have their own strengths and weaknesses. WHICH TYPE OF TRADER'S MINDSET IS THE MOST PRODUCTIVE? 1. Optimism "Think positive", "Set yourself up only for success" such motivational mottos are in every trading book. An optimistic attitude has many advantages: Optimist traders are better motivated. They believe in success, so they set the bar higher. Optimist traders are better at dealing with negative emotions. Optimist traders are more confident in their abilities. Optimist traders' brains are programmed in advance for a positive outcome. All of this is good as long as it is within the bounds of common sense. And often the boundary between common sense and unhealthy thinking of a trader is not visible. And as soon as optimism crosses the boundaries of adequacy, problems begin: Ignoring danger. Imagine a person who confidently drives through a red light, thinking that nothing will happen to him. The only thing left to do is to convince other drivers of this. Overestimating possibilities. The set goals turn out to be unattainable. And trying to achieve them leads to burnout. Denial of the need to solve problems. The optimist believes in the best, but problems do not go anywhere. And someday their volume will become critical. Everything is good in moderation. An optimist is inclined to work harder, but he is also inclined to take unreasonable risks. 2. Pessimism The strength of pessimism is the ability to assess risks and minimize them. Pessimist traders are more cautious. They try to double-check everything 10 times, so they are less likely to take risky actions. However, they also earn less. A pessimist trader tries to diversify risks, thinks through several ways of retreat. Pessimism goes to the extreme, when a trader thinks that everything is bad and it will be even worse in the future. They blame others for failures, as they cannot find the strength to admit his mistakes. They have no motivation; they live in constant expectation. 3. Realism The sweet spot? Not a fact. The realist trader does have a sober assessment of the risks without going overboard. But they also have extremes: Fatalism. While optimistic traders believe in the best, realists follow the path of pessimistic traders. They accept reality, believing that this is fate. Realist traders do not fall into stress, but do not believe that the situation can be changed for the better. Pragmatism. Realist traders think that a bird in the hand is worth two in the bush. They effectively solve current problems, but trying to look at something bigger is out of the question. Rationalism. Algorithmic, schematic thinking of the trader is manifested in other aspects of life. Which type of trader's mindset is the most productive? All three types in one trader, from which the best is taken. Moderate optimism in achieving goals, moderate pessimism in assessing risks, moderate realism in building a system. And extremes are best avoided. In conclusion, each of these traits has its strengths and weaknesses, but when combined in moderation, they can create a well-rounded approach to trading. Optimism provides motivation, confidence, and a positive outlook, which can help traders set higher goals and persevere through challenges. Pessimism, on the other hand, can help traders assess and minimize risks, promoting caution and careful decision-making. Realism offers a sober assessment of situations and helps traders develop practical solutions to problems. Ultimately, the most constructive trader's mindset is one that leverages the strengths of each of these traits while avoiding their extremes. When you lose a trade, don't think too negatively. When you win, try not to get euphoric. Extreme emotional swings will push you into the abyss. Therefore, the most constructive trader's mindset is a balanced combination of optimism, pessimism, and realism. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
9
Exploring Renko Charts: Simple Trading Strategies for Success Today, I'm excited to introduce you to two effective trading strategies designed for Renko charts. Renko charts, unlike traditional Japanese candlestick charts, focus solely on price movements, offering traders a unique perspective on market trends and opportunities. Before diving into the strategies, let's first understand the basics of Renko charts and how they differ from Japanese candlestick charts. Renko charts are renowned for their: Absence of time: Renko charts disregard time intervals, concentrating solely on price movements. This feature helps filter out market noise, allowing traders to identify clear trends. Uniformity: Each brick on a Renko chart represents a fixed price movement, ensuring uniformity across the chart. This consistency aids in trend identification and reversal spotting. Trend identification: Renko charts excel at identifying trends due to their focus on price movements. Traders can swiftly discern trend reversals or continuations by analyzing brick patterns. Reduced noise: By filtering out minor price fluctuations, Renko charts offer cleaner data, making it easier for traders to identify significant price movements and trends. In contrast, Japanese candlestick charts focus on time intervals and include all price movements within the selected period. Both chart types have their advantages, but for our strategies, we'll be using Renko charts. Now, let's delve into the strategies: 1. Buy Green, Sell Red (with and without 13 EMA): This straightforward strategy involves buying when a green candle appears and selling when a red candle emerges. Option 1: Implement this strategy with a 13 EMA (Exponential Moving Average). Buy when a green candle closes above the 13 EMA line and sell when a red candle touches the 13 EMA line. Option 2: Execute the strategy without the 13 EMA. Simply buy on green and sell on red. While Option 1 may yield slightly delayed entries and exits, it provides additional confirmation, especially during volatile market conditions. Consider automating this strategy with an algorithmic trading bot for seamless execution. 2. Strategy that forecasts the market?: This strategy tells you if the market will go up or down after a important for example economic meeting! So, if you are interested in this strategy than write down in the comment and like (boost) this educational idea, if we get 100 likes (boosts) than I will make Part 2. Please note: When you have a basic plan, than you can just open Renko chart above 1 day time frame, you can also work good on 1 day, but if you want to see Renko chart on Intraday time frame than you need to have Premium plan. Upgrade now for intraday best experience using RENKO chart: Upgrade now
Education
by smarttrader012
4
WHAT PIVOT POINTS ARE IN SIMPLE TERMSLet's start with the fact that Pivot points are quite an old tool and have been used for a long time. The difference is that in the early days traders had to build Pivot points themselves, but today there are indicators that build these points. ✴️ BASIC CONCEPTS Pivot points are key points of price chart reversal, i.e. the place from which the price chart is most likely to reverse. Different pivot points have different calculation formulas. This is very similar to Fibonacci, as there are no clear criteria and several possible courses of action. The following is a list of the most popular calculation of data: 1. Traditional is the very first method of calculation, still popular in the stock exchange; 2. Classic derived from traditional, slight differences in calculations; 3. DeMark is the formula developed by the SAC Capital Advisors fund; 4. Woody the formula heavily references the previous day's closing price; 5. Camarilla derived from the classic one, slight differences in calculations; 6. Fibonacci is based on the Fibonacci formula. Of course, the points don't always work and they have false signals, but how to filter let's figure it out. There are also Pivot points like this, these are just the ones built using the traditional formula: ✴️ TRADING STRATEGIES We intentionally did not write each formula, as this information is fully available on the Internet and not everyone is interested in it. The most interesting thing is to learn how to use these indicators in practice, which we will do now. If we think logically, there can be only two strategies: Strategy for level breakout; Strategy for the level rebound. That's all, there is nothing else to think of. ✴️ LEVEL BREAKOUT STRATEGY For the breakout of any level, you need to take into account several details: 1. The quality of the breakout, i.e. the presence of an impulsive movement; 2. The trend moves in the direction in which the breakout occurred, i.e. the exclusion of a false breakout; If these factors are met, then we can say that the breakout is real and it is worth looking for an entry point. Ideally, it should be like this: Obvious consolidation above the control resistance by pivot points. Stop in this case is placed slightly below the breakout candle, take profits can be stretched by a grid between the Pivot points above. That is, if there was a trade, it would look like this: ✴️ LEVEL BREAKOUT STRATEGY The strategy for level breakout should also be accompanied by some additional model. For example, it can be a pinbar, RSI divergence and so on. That is, you can choose many variants, the main thing is the presence of a reversal level nearby. In the simplest form, it should look like this: As you might expect, there are 3 factors to enter the trade and not to buy here would be a much bigger risk than to stay on the sidelines. There is RSI divergence, there is double bottom by candlestick analysis, there is Pivot level, risk/profit ratio is very good. It looks like this: ✴️ CONCLUSION The pivot point indicator is a great way to find trend reversal points and corrections, for example, you can combine it with Fibonacci levels and find out the end of a correction more precisely. Try it, trade, the indicator is very easy to use and understand. Successful trading and good luck in the markets!
Education
by DeGRAM
1
The Hidden Key --> Multi-Timeframe Analysis 🪀I begin by explaining the Video Idea--> Using Multi-Timeframe analysis to put together a trade idea. MTF analysis is absolutely crucial for running a profitable trading business... It's something that takes some experience but once you understand the way in which all timeframes move together it's like an Aha moment. We look at 3 timeframes.. the 1Hr, 4hr and the Daily timeframes. We observe an example from just a few days ago that outlines how it was very possible to catch a 20 pips after the Monday(3/25/24) daily candle closed bullish.. Give and rocket and leave a comment for similar content in the future!
Education
by ShrewdCatfx
2
March 24' Rejection of 1.09485 --EurUsd-- Fundamental Outlook🎬Since the March 8th touch into 1.09485 Weekly level, we have depreciated 146 Pips on Eur/Usd. In Today's analysis we break down the most important News events of March 24'. These include NFP, CPI, and Interest rates. All of these news events have played a significant role in the downside movement we can observe on EurUsd across the past 2-3 weeks. Leave a rocket and share for more similar analysis in the future. Safe Trading
by ShrewdCatfx
FAKE BREAKOUTS IN CRYPTO MARKETSHello traders! 👋 How often has it happened to you that you watch a certain level and wait for its breakout, and when the price breaks this significant level, the price does not tend in the direction of the breakout? After a while, it goes back down, putting your balance at risk of heavy losses. Now let's talk about what a fake breakout is in the crypto market in particular.. Definition And Types 📝 A fake breakout is a breakout of some horizontal or sloping level, after which the price immediately or gradually moves away in the opposite direction of the breakout. The candlestick that broke the level is called a breakout candlestick. The most common fake breakouts in trading: A fake breakout of a trendline. A fake breakout of support or resistance. A fake breakout of the borders of a technical pattern. Now that we have a complete layout of possible breakouts, let's take a closer look at them. In the description of the breakout, I will immediately describe the trading principle of this pattern. Fake Trend Breakout 📊 On the chart of BINANCE:ETHUSD I managed to find a great fake trend breakout during a bull run. The point was that the price started a great growth, then a trend line was formed, from which most traders bought the asset until all the buyers were dropped off the train. But for the others, who understood the principle of fake breakouts, it was, on the contrary, a great opportunity to enter the market. We see an excellent trend breakout, a well-defined breakout candle. Here any trader has two options: 1. Enter in the direction of the trend. And since we have broken the trend line, the trend has changed to a downtrend. 2. Wait for a possible rebound and return above the trend line. Let's start with the fact that it is not profitable to enter trades immediately after the trend breakout, as there is a high chance of such confusing cases. Therefore, it is advised to wait for a strong rebound and the continuation of the movement in the direction of the breakout. And what to do if the market has a situation as shown in the picture, i.e., the price breaks through and returns back above the trend line? Everything is even simpler here: You wait for the return above the trend line. As soon as it happens, you place a limit order on the upper or lower boundary (depends on the trend direction) of the breakout candle. You wait for the market to fill up your order. You place a stop-loss under or over the trend line (depending on the trend direction). A Fake Breakout of Support or Resistance 📈📉 This type of breakout is the most popular, but it has its own interesting trick. As a rule, in such situations, the price chart hints that it wants to break some significant level and all traders freeze waiting for the breakout. The breakout happens, but there is no profit. This is a classic in the current realities, at least in the cryptocurrency markets. The principle of trade entry is exactly the same. Only the nature of the breakout differs. By the way, as you can see from the post, and if you look at the charts of coins, the largest and strongest movements are usually accompanied by fake breakouts before them. This is due to the fact that thanks to a fake breakout, most panic traders or those who have extremely short stop loses are dropped off. Fake Breakout of A Pattern 🔎 This fake breakout is the most rare, but it still occurs. Its essence is that when you see one of the technical analysis figures and, according to its own rules, understand in which direction this figure is most likely to break, it breaks in the opposite direction. On the BINANCE:SOLUSDT chart, I managed to find a good example of this algorithm. A descending triangle with a flat bottom was clearly drawn on the chart, which, according to the classic technical analysis, should break towards the flat side, but they decided to give us a "haircut". The algorithm of entering the trade is exactly the same as in the other two cases. But here you can resort to one more variant of entry, in addition to overcoming the top or bottom of the breakout candle. Also, if it is pattern from the classic technical analysis, you can simply enter the trade on the crossing of the pattern. In cryptocurrency markets, the following picture often occurs: • An important level is formed. • The price breaks it and fixes itself above or below it. • There is a pullback to the previous zone with a small continuation of the reverse movement (fake breakout). • The price returns to this zone again and starts to consolidate. • A true breakout occurs. As a result, the stops of both those who did not earn on shorting and those who did not earn on the long position were accumulated. There is only one recommendation to avoid this case, just tighten the stops and do not be greedy. Remember the main rule, the more tests of the level, the more likely it is to break through. And here is another simple truth: levels are created in order to break them. In conclusion , fake breakouts are a common phenomenon in trading, particularly in the cryptocurrency markets. They can occur in various forms, such as fake trend breakouts, fake breakouts of support or resistance, and fake breakouts of technical patterns. Understanding these scenarios and adapting appropriate trading strategies can help potentially capitalize on market opportunities. Recognizing and managing fake breakouts can contribute to more successful trading experiences. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
10
WHAT IS SMART MONEY TECHNIQUE DIVERGENCE?✴️ WHAT DOES SMART MONEY DOING: ACCUMULATING OR DISTRIBUTING? SMT (Smart Money Technique) Divergence is the divergence of prices of correlated assets or the relationship to inversely correlated assets. Analyzing the SMT Divergence allows you to determine the institutional structure of the market to determine what the smart money is doing accumulating or distributing. Currency pairs are easy to analyze using the DXY US Dollar Index. Every price fluctuation must be confirmed by market symmetry. The occurrence of price asymmetry signals the formation of an SMT Divergence and a likely trend reversal. SMT DIVERGENCE IN ACCUMULATION SMT DIVERGENCE IN DISTRIBUTION ✴️ WHICH PAIR TO CHOOSE FOR TRADING? As traders, we need activity in the markets, volatility is what makes trading easier. The news background is the driver that drives this, which is why the trading day starts with a look at the economic calendar. If GBP news is scheduled to be released, it does not mean that, for example, GBPUSD will be preferred over EURUSD. The logic is that closely correlated pairs are likely to move symmetrically. But when SMT divergences are formed, one of the pairs will show strength or weakness, which signals the approaching high volatility on such a pair. GBPUSD updated the high, while EURUSD failed (showed weakness) which results in opening short positions on EURUSD. As a result, despite the important news on the GBP, EURUSD showed a higher amplitude of movement (volatility). In the following example, EURUSD updated the high, while GBPUSD failed (showed weakness) that as a result we open short positions on GBPUSD.
Education
by DeGRAM
2
THE PSYCHOLOGY OF CHART ANALYSIS:THE ILLUSION OF CONTROLThe psychology of chart analysis is the ability to quickly find patterns and key levels on a chart. It is the ability to quickly switch timeframes and see the main trend. But traders often fall into the other side of the equation. They turn into hypnotized people who do not take their eyes off the magic of charts. The trader hypnotizes the chart and the chart hypnotizes the trader. And it is difficult to break this vicious circle, but it is necessary. Psychological Dependence On The Price Chart 📉🧠 Chart hypnosis has a major problem when it comes to graphical hypnosis constant monitoring of charts takes away time that could be used more productively. It drains the trader's energy: eyes get tired, attention gets tired. The trader takes wishful thinking for reality and makes mistakes. PSYCHOLOGICAL PITFALLS OF GRAPHICAL ANALYSIS: 📊 Constant Monitoring 👀 The chart is captivating, especially when a trade is open. You can follow the price movement for hours, enjoying inwardly when it goes in the right direction and worrying when it reverses. The brain is switched off. A person does not think, does not even analyze the meaning of the changing pictures. This is the most real hypnosis. You can watch water flow forever, fire burn forever. And you can watch price charts forever. Remember how much time you spend watching essentially useless shorts on YouTube? And how much time uselessly watching charts? The only difference is that video relaxes you, while constant price monitoring leads to stress, because your money is at stake. The Nervous Chef Phenomenon 😓 Another psychological trap of chart analysis is constant checking of price changes. It would seem that a trade has been opened within the framework of risk management, stops have been set, take profit has been set. Why do you need to look at the chart every five minutes? But a trader persistently checks every 5 minutes "is the water boiling?" or "are the potatoes boiled?". Such dependence is not only in trading. Similarly, every 5 minutes we check social networks and phone: "What if someone wrote a comment under my photo?", "What if someone sent me a new message?". It is logical that after checking the chart every minute extra money will not appear on the account. But there will be a false sense of control, not counting the loss of time. The more often you open the lid of the pot, checking the boiling of water, the longer the water takes to boil. Emotional Mistakes 📌 Statistics show that 70% of the time the price moves chaotically. Trying to constantly look for a trend or pattern on the chart, you fall into the trap of emotions. Under the emotional influence you open a trade in a bad time zone or close it prematurely, although initially there was a clear direction; to strictly follow the risk management, the established rules of the trading system. Illusion Of Control 💡 According to statistics, a person has a much higher chance of losing their life in a traffic accident than flying in an airplane. But people continue to fear airplanes more than cars. To the person behind the steering wheel, it's like: "I'm buckled up, I know the traffic regulations, I'm in control." This is called the illusion of control. There is a classic experiment in psychology. One group of participants is asked to choose a lottery ticket, the second group is given one. Then they are offered to exchange tickets. The second group goes to the exchange without questions, while the first group is less willing to exchange. The experiment shows that people who made an independent decision feel responsible for it and therefore are more confident in winning. There is a similar trap in trading. The trader thinks that she/he has mastered technical analysis, has considered all the risks, and therefore opened the trade correctly. And now she/he watches the chart every 5 minutes to make sure that she/he is right. In psychology, this is called "thirst for control". How to Overcome It? ✅ Catch yourself thinking that you've already fallen into one of these traps. And if so, force yourself to simply turn off the screen. Convince yourself that all the rules of risk management have been followed, which means you don't need to spend time on constant monitoring. Force yourself away from the monitor. Watch TV, take care of the garden, do some repairs, go for a bike ride. In other words, there is a temptation to constantly sit at the monitor - try to be as far away from it as possible. In summary, the psychology of chart analysis in trading is crucial for identifying patterns and key levels and understanding the overall trend. However, overdependence on charts can lead to psychological pitfalls like constant monitoring, causing mental fatigue and mistakes. To overcome these challenges, we should recognize when we fall into these traps, trust our risk management strategies, and engage in other activities to maintain a balanced life. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
21