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THE ESSENCE OF WYCKOFF'S METHODRichard Demille Wyckoff is a trader whose career coincided with the famous traders of the time: Jesse Livermore, Charles Dow and JP Morgan, W. Gann and others. All of these men are widely recognized for their terrific trading books. Wyckoff became famous for his insight, his trading method. Wyckoff has been involved with the financial markets since he was a teenager, and this is what gave him an understanding of how the market works. To become a successful trader, it is not enough to have good theoretical knowledge. Experience is the key to your success. That is why Wyckoff recommended to follow the tape for weeks to intuitively understand what is happening on the market. THE ESSENCE OF THE WYCKOFF METHOD The essence of Richard Wyckoff's idea is that in order to gain a large position in the market and not to move the price with large orders, a professional market maker needs to balance supply and demand. The equilibrium is observed when the price is in a narrow range of consolidation. After a position is gained, the price is pushed out of the trading range. WYCKOFF'S THREE LAWS The trading method is based on three laws: Supply and Demand. Wyckoff believed that the price of each asset goes up or down only by an overabundance of one thing. For example, the price goes up if demand exceeds supply. Simply put, if a whole city decides to buy 10 tons of apple, and the apple is in limited supply from the suppliers, they will start to raise the price because of the high demand. Cause and Effect. When an asset starts to rise in price - this is the consequence, and the previous news or a small price range this is the cause. When the price is between support and resistance zones for the X amount of time (cause), then a trend will start in the short term (effect). Effort vs. Result. A large volume traded, for example, during one day is an effort, while a price change is a result. Example: If a large player has spent a lot of money buying up most of the sell orders, and the price is still standing, it means that the effort spent did not bring the expected results. ACCUMULATION AND DISTRIBUTION The basic principle of trading is to see the equilibrium of supply and demand in time. Consolidation (also called range, zone, rectangle, sidewall, etc.) is a trading range of prices where accumulation or distribution takes place. Wyckoff's method is the use of accumulation and distribution phases. Accumulation is the formation of a trading zone where orders for further movement (price reversal) are accumulated within a certain time. Here "smart" money keeps the price at approximately the same level, where they buy up most of the market orders in order to sell (distribute) them at a higher price. Distribution is the formation of a trading zone where orders are distributed for further movement (price reversal) within a certain time. Similarly, to accumulation, smart money sells out all its previously accumulated assets in order to benefit from it. Consolidation is the place where the previous movement with the outweighing force of demand or supply stops and relative equilibrium finally occurs. This trading zone is a great time to make money, because it is the place where preparation for an explosive bull rally or bearish fall takes place. Consolidation can be considered as a place of refueling for a car, if not refueled, there will be nothing to drive on - it is the accumulated force, the reason that creates the subsequent movement. The longer the refueling takes place, the farther one can go. Therefore, after a long trading range, we should expect an equally long upward or downward movement. On the way to move from one zone to the opposite zone, the price does not fall in one go, it always makes pullbacks and stops, which are called accumulation. After his death, Wyckoff left trading methods for such zones. The principle is quite simple: Before the formation of a sideways trading range, sales peak and the accumulation phase begins. During the whole time the price is in this range, a large player buys up most of the sell orders. The price goes beyond the support and resistance zones, then reverses and the growth phase begins. At the end of the growth phase, the buying peaks. Then it is the same for the distribution phase. ACCUMULATION In the accumulation phase, professional traders buy up sell orders from uninformed traders. Usually it happens on the news, from all channels they say that shares of some company will fall, it is waiting for almost bankruptcy, everything is bad, etc. In Forex, various negative news on unemployment and similar. At this moment people start to get rid of long positions, and traders start to short the instrument. Wyckoff supporters realize that it is worth waiting for the price drop to stop and they should get ready to look for an entry point to buy the asset. Phase A and phase E are trend price movements, the phases between them are the trading range, which is analyzed by the Wyckoff trading method. Horizontal lines are support (at the bottom) and resistance (at the top) of the trading range. Do not consider them as exact lines, they are approximate ranges, in which the big one turns the price back to sideways. DISTRIBUTION Everything is similar to buying in the accumulation phase, only now those assets bought earlier should be sold off. This is just the basis, the main rules of trading according to the Wyckoff method in trading. Richard Wyckoff himself applied it on stocks and on daily charts (although he did not use charts, only tape). But nowadays, the time of algorithms, you can trade on any timeframe and any instruments. The method works well on the minute. It should be understood that there can be many phase patterns, the trading range can be different, the culmination with large candles and small, the volume is high and not very high, tests after the exit from the zone may or may not be. It all depends on who the big player is, when the accumulation or distribution occurs, what instrument you are watching and what timeframe is on the chart. Trading will be quite successful if you strictly follow your trading strategy according to the Wyckoff method, written on paper, competently determine the level of risk and position size. Observe the chart, find consolidations, see what happened inside and where the price went. You need to analyze every step, every movement. Big money thinks everything through, every price action on the chart is not accidental. And remember that whatever the big money does, it always leaves its traces. Good luck in trading!
Education
by DeGRAM
2
TRADING PSYCHOLOGY: HOW TO OVERCOME YOURSELF?Hello forex traders! How much money have you lost because of emotions? How many losing trades have you closed because they went negative and it annoyed you? And how many times did the currency immediately reversed after you recorded a loss? As we all know up to 80% of success in forex trading depends on psychology. Money management is of great importance and only then strategy. Not everyone realizes it, but this is the harsh reality. How to defeat yourself? How to remain calm in any situation? How to protect yourself from negative emotions that cloud your mind? The Impact Of Emotions On Analysis When you are sitting in losses, you do not pay attention to what is happening on the chart. That is, your brain rejects the signals that indicate that the price will continue to go against you. On the contrary, your brain tries to convince you that the price is about to turn around, which, of course, does not happen. If you close the position and look at the market with a clear eye, you will realize that the situation in the market is not the same as it was in your head a moment ago. This distraction in the form of a minus on the position affects your attentiveness, and you do not notice the obvious. There is such a thing as analysis paralysis. That is, when some event literally knocks you out of the rut, after which you cannot adequately perceive the situation. This can be avoided with the help of reasonable sufficiency. That is, you stop looking for the perfect solution. Instead, you make the most correct and simple decision to close a losing position. Also, traders are often afraid of losing profit. But then again, how many times have you held a losing trade, hoping for a reversal, and it still went against you? It is the same with profitable trades. There is a constant feeling that the price is about to turn around and all the profit will be lost. As an option, in this case you can use a trailing stop. Then you will in any case know that in case of price reversal, the profit will not be lost. In principle, the cure for the influence of any emotions on the analysis is correct money management. That is, you just need to simply reduce your trading lot. The goal is to place such a lot, which would not cause you strong emotions. Until you are used to being disciplined in every situation, it is better to trade at a lot that you could forget about. For example, you could open a trade on the daily chart and forget about it (accidentally or naturally). At the very initial stages this approach is justified, as no open positions will not prevent you from analyzing the situation competently. At the same time, the very fact of a negative trade will not knock you out of your game. You Are Not Perfect Remember, you are not perfect. There is no person who, like a robot, does not get nervous about trades, who performs absolutely perfect trading and never makes mistakes anywhere and ever. All of us make mistakes, it is normal, and it should be understood. Let's say you read that you need to reduce the lot, not to be emotional, and you still make mistakes. The thought that "I am smarter" does not leave your head. But, in general, if you read the biographies of successful people in other areas, you will learn that they also made mistakes. Often, a person needs to make all possible mistakes only in order not to make them later. So, to speak, we learn from our mistakes. The average person believes that he is smarter than 80% of people. At the same time, there are always excuses for the question "why are you so smart, but so poor?" - something prevents you, you are too old, too young, your wife/husband prevents you, you were born in the wrong country and so on. Almost everyone thinks they are, so you don't have to worry, you are not the smartest. The Vicious Circle Of A Beginner Trader Searching for a system: you find a strategy that appeals to you. Trading: as a rule, this period lasts 1-2 days, at best a week if. First Losses: taking your first losses. It's usually down to the first few trades. Anger: naturally, there is a feeling of being cheated as the system did not deliver the promised profits; Blame: the system does not work; forex is a scam and the author of the system is a scammer. Someone is necessarily to blame, for example, the broker that closed the position a point later, but not the trader himself. And everything starts all over again. Exit From The Circle: Finding a system. Backtesting from the beginning to the end: the strategy should be either tested manually on the history or in a tester if the strategy is automatic. Absolute confidence in the strategy: when you have fully tested the strategy, know all the statistics, know all the pros and cons, you gain confidence in the chosen strategy. Good money management: further, you add a good money management. Now it is "your" trading strategy: the strategy should be completely yours. If you are not comfortable holding positions for 3-4 days, move to a smaller timeframe. Or, on the contrary, if you are too lazy to open trades often, choose a larger TF. That is, the strategy should suit your temperament and be customized for you. In general, all these pieces of the mosaic lead to the exit from the enchanted circle. You find a system, then trade, adequately perceiving losses. Accordingly, you further work with this system, solve problems with emotions, inputs and outputs, improve, tune-up and so on. A Little Bit About Our Brain The fact is that our brain compared to a computer has a very large hard disk, but a very small amount of RAM. Do you know the feeling when the brain is so overloaded that absolutely no information, even seemingly simple ones, can be stored in it? Of course, we cannot expand this memory, but we can control the number of simultaneously opened applications/programs. That is, we need to fight the so-called white noise. Remove social networks Facebook, messengers, YouTube, checking mail, and so on. This is all white noise that clogs your brain and prevents you from working adequately. There are many opponents and many supporters of meditation. Meditation is, in fact, nothing more than to lie/sit under calm music and go into a certain semi-trance state. Humans periodically need three states: being awake, sleep and a trance state. Usually after a certain mental effort, you start to get very dumb without doing any useful work. This is the brain signaling that you are lacking the trance state. 30 minutes of trance a day is quite enough. Do Not Set Goals In Trading When you set yourself a specific goal, for example, to make 1% every day it doesn't work. You start looking for non-existent trades again, clouding your brain. Therefore, you should not set profit targets. On the other hand, it is possible and even necessary to set loss limits! Sometimes, there is a sudden unreasonable desire to open a trade. Although the system did not give a signal. As a way out of this situation, you can try to open two accounts, one for adequate trading, where you will open trades clearly according to the rules of the system. Another smaller one for aggressive trading, when you have an irresistible desire to open a trade. If it really "works", you will still get profit, though not so big. Bottom Line As you can see, strategy is often not the deciding factor in trading. Psychology is what ultimately makes you act in one way or another. It takes the right approach and practice to be unstoppable in trading. The rest comes with experience over time.
Education
by Lingrid
11
TILT IN TRADINGAs it is known, a trader on the market is under constant pressure, the market is a constant process, in fact it is a river, and a trader should dive in and out of it to earn money. It is difficult to stay on the shore, when there is an endless river of money flowing nearby, hence the constant desire, well and of course stress, because the market gives unlimited opportunities at the same risk. Everyone knows that the two worst emotions for a trader are fear and greed, although it is only fear, greed is one of the types of fear (fear of losing profit). Fear breeds many related behaviors that only bring financial pain and frustration in trading. Let's look at some of the groups of emotions that fear gives rise to. TILT IN TRADING What is tilt? Tilt comes to us from poker; it means the inability to perform reasonable actions while being at the mercy of emotions. Tilt is not a one-time process. First, there must be preconditions for its occurrence. Most often, it is a series of unsuccessful trades in a short period of time (scalping), after which the trader starts to lose control and, trying to recoup losses, goes all the way, forgetting both the rules of trading strategy and money management rules. The most interesting thing is that the same thing can happen during a series of profitable trades, i.e., tilt can be earned at any time; it is only necessary to let go of some emotion for some time. The worst thing (except for the loss of money, of course) is the acquisition of bad emotional habits, from which it is very difficult to get rid. Tilt can occur even on expectations, for example, the price is about to approach the level of trade open, and suddenly it turns around. Your finger froze over the buy/sell button and then it's over! And waiting for the next approach turns into a tilt. Market factors also provoke tilt in a trader, for example, increase of volatility during news, the price flies back and forth like crazy and pushes the trader to open a trade. SO HOW DO YOU AVOID TILT? The answer to this question is always right under our noses. It is discipline, and only discipline. The rules of the trading system and the rules of money management, and as few emotions as possible. Do not trade in an agitated, tired, and painful state; wait it out; the market will not run away from you. With the emergence of the crypto market, new concepts have appeared, but they already relate to the psychological manipulation of traders, and although they are based on the same fear, we will try to describe them separately. Besides, these concepts have always been there and apply to all kinds of markets, not just the cryptocurrency market. FOMO & FUD cycle FOMO (Fear of missing out) information throwing in the bright prospects of some crypto coin or crypto market as a whole, in order to provoke the purchase, often and densely along with Pump of a particular crypto coin. FUD (fear, uncertainty, and doubt) is a negative information dump to provoke sales. All the same, only sales and DUMP (sharp sale of crypto-asset), the purpose is to reset the price of the crypto asset, again, to make it attractive to the investor. No, what a concern for potential investors! Both pump and dump are reverse actions, and the goal is the same attractiveness for investing! The only difference is the timing. The topic of psychology in trading is big; we covered only a couple of psychological aspects: one is the trader's problem, and the other is the trader's provocation by the market and information space. In general, psychology accounts for 80% of all trading. You can memorize techniques, but it is very difficult to understand and change yourself in terms of psychology. To understand how the "crowd" acts, what will be the reaction of "big money"? All this is what you should strive for in your search for profit. Therefore, the trader's "holy grail" is patience, self-discipline, and as few emotions as possible. If you feel that you are about to lose it, just leave the terminal and go to your family, to the gym, or to nature. Do not sit at the terminal on an emotional tilt. Work on your emotions and you will be profitable.
Education
by DeGRAM
1
BROADENING PATTERNSBroadening patterns are very unstable from a technical point of view. They are usually formed after the trend has already gained strength. It looks as if the battle between buyers and sellers is out of control, as the price starts to move in a wider and wider range. The situation is exactly the opposite of triangles, where the price shrinks to an extremely balanced state before the breakout. Broadening patterns are formed when three or more price waves expand so much that their highs and lows can be connected by two expanding trend lines. Just as there are two types of triangles, there are two types of broadening patterns. They are called the conventional (classic) pattern and the rectangular pattern. The last one can also be called an expanding pattern with a flat top or flat bottom. Conventional Broadening Patterns It consists of three trends where each high is higher than the previous high. The highs are separated by two lows, where the second is lower than the first. These patterns are more likely to indicate the completion of a rising market, rather than a breakout higher. The conventional broadening top is sometimes called an inverse triangle, because that is exactly what they are. In general, some patterns are just perfect for trading, as they mark by default the places where to place stops with low risks. A rectangular triangle broken close to the top is just a good example. But conventional broadening tops, however, alas, do not have this feature. Such patterns are extremely difficult to detect before the final top is formed. Besides, there is no obvious support line, the breakdown of which would serve as a convenient tool for us. The furious, emotional reaction of price and volumes reflects chaos and complicates the work with such patterns. Of course, it is not easy to determine the breakout in such conditions, but if the pattern is more or less symmetrical, there are options. It is a decisive movement under the descending trend line, which connects both lows or even a movement below the second low, which will serve as a warning of a future decline. Targets are not easy to determine either, however, the volatile price reaction during the extension indicates that the distribution phase is almost complete. Successful completion of such a pattern is usually followed by a proportional fall in price. But the rectangular expanding patterns, which we will talk about next, are another example.   Rectangular Broadening Patterns Most simply defined broadening patterns with a flat top or bottom are the easiest to identify. This is called a rectangular broadening pattern. Since the very concept of wild price movements implies an extreme degree of emotional involvement, it is difficult to add volume here. At market tops, though, volume is usually quite significant.These patterns also resemble a head and shoulders pattern, except that the "head" in an broadening pattern is the last element of the pattern. In this case, the bearish signal is activated with a decisive downward breakdown of the pattern. A broadening pattern with a flat top is an accumulation pattern, and it is important that the volumes grow on the breakdown. They are essentially head and shoulders in a situation so bearish (or bullish) that price simply does not have time to form a right shoulder. Psychological Perspective Of The Broadening Patterns From a psychological perspective, expanding patterns can be seen as a reflection of the changing attitudes and beliefs of market participants. As the pattern widens, it suggests that there is increasing disagreement among traders about the direction of the market. This can lead to greater volatility and larger price swings as different groups of traders try to push the market in their preferred direction. At the same time, broadening patterns can also be seen as a sign of indecision and uncertainty. Traders may be hesitant to commit to a particular direction, leading to a widening range of prices as buyers and sellers struggle to gain control. This can create a sense of tension and anxiety among traders as they try to navigate an increasingly complex and unpredictable market. Target Points To determine where the price can reach, you need to take the distance from the maximum (minimum) of the pattern and its horizontal line. Then the same distance is set aside in the direction of the breakout. Rectangular expanding patterns often show pullbacks like any other patterns. Since these patterns are very emotional and unstable, these pullbacks can be sharp and volatile. Fortunately, they don't live very long. In this case, the downside price target was reached on a downside breakout. Generally, a subsequent sharp reversal is a rare thing, as the price usually goes much farther than the price target. Failed Broadening Patterns Occasionally, such patterns fail to produce the expected result. Unfortunately, there is no super-reliable way to recognize that the pattern has failed. This will only become obvious when a small bottom or price top is formed after the breakout. However, we can protect ourselves from such situations by using the 50% rule, in which we measure half of the final price reaction in a pattern for a rise or fall. Which is shown by the dotted line, once reached, the pattern is considered a failure. Of course, sometimes there are patterns that work even after breaking through the 50% zone with a subsequent pullback. However, breaking such a line with a strong trend in most cases indicates that the pattern has failed. In any case, carefully use the patterns that predict the price movement in the direction of the trend that was previously the main one. In Summary Broadening patterns are a trading range after a trend, between two extended trend lines. At least two touches are needed. It will take imagination to draw, as the touches are not always accurate. However, this is true for many other patterns as well. The maximum depth of the pattern is put off in the direction of the breakout. Since these are very dynamic and volatile patterns, pullbacks are usually short but very fast. False breakout is difficult to detect: the signal can be a price rise above the previous low/maximum or a pullback of more than 50% against the breakout. Overall, broadening patterns can be a useful tool for traders looking to understand the psychology of the market. By analyzing these patterns and the underlying factors that are driving them, we can gain valuable insights into the attitudes and beliefs of other market participants. This can help to make more informed trading decisions and better manage their risk in a rapidly changing market environment. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
13
Altseason Indicator. Capitalization excluding BTC ETH USDT USDCLogarithm. Time Frame 1 week. Understanding the capitalization and growth potential of altcoins without BTC ETH and top steiblcoins USDT, USDC and DAI gives a brighter and more accurate picture of the timing of the start and development of that long-awaited altcoin season of more pronounced scale than now on 16 10 2023 - at the time of publication 8 12 2023. 1) The capitalization of these assets has long been in a squeeze - consolidation, this is a direct correlation with the accumulation zones. We are conventionally in the final phase of accumulation (almost). 2) Please note that there has been no real capitulation (perhaps there will not be, and if there is, it will be V figuratively, but that is not the point). Very much emphasize your attention to the timing of the length of this phase and past late 2018 and 2020. 3) Also note to your eye that at that time 2018-2020 there was not such a big capitalization outperformance from the rest of the BTC and ETH market. Compare that to the situation now, how much other altcoins are "undervalued" speculatively. You also need to realize that there is a correlation with stablecoins and their huge portion of the overall market compared to the time before. How to enter these parameters on tradingview? . In order to capitalize alts from TOTAL3 (initially without capitalization of BTC and ETH) and exclude all large-capitalization stablecoins from it, you need to do the following: In the ticker entry line in tradingview write: CRYPTOCAP:TOTAL3-CRYPTOCAP:USDT-CRYPTOCAP:USDC-CRYPTOCAP:DAI . Accordingly, a chart is created that subtracts the capitalization of the designated stablecoins (USDT, USDC, DAI) from TOTAL 3.
CRYPTOCAP:TOTAL3Education
by SpartaBTC
TIMING IS EVERYTHINGWhat is timing in simple words? Timing is the time when you SHOULD trade the market. It is very desirable to trade on the market when the market is active, i.e. there is increased volatility, which in turn is associated with any time factors affecting the activity of traders. Timing must be taken into account by almost any trading system, starting from scalping and ending with positional trading, meaning that timing is not the main period of displaying your chart, but the most effective for trading time that you spend in front of the screen. Even if you trade on a weekly chart, your timing will be Friday evening which is the closing time of the weekly candle. 🕕 TYPES OF TIMINGS So, the basic timings: • Intraday • By type of trading instrument • News • On days of the week • Periods (month / quarter / season) 📊 INTRADAY TIMINGS Intraday timings on Forex are related to the inclusion of the work of exchanges (sessions) in different parts of the world due to time zones. So-called European session, American and Asian, so in the language of traders denotes trading during the work of exchanges located in different time zones. European: from 07:00 - 16:00 (GMT). American: from 13:00 - 21:00 (GMT). Pacific: from 20:00 - 05:00(GMT). Asian: 00:00 -09:00(GMT). Although there are 4 sessions, but only 3 of them are taken into account, as the Pacific Exchange has a very small influence on the market due to small volumes. The most active are Europe and America, often going in opposition to each other, so intraday traders should take into account the time of inclusion of America, as it can confuse all the cards and turn intraday trends. Well, at night the harsh Japanese samurai come and make their own contribution and confusion. A lot of intraday systems are built precisely on turning on or off this or that stock exchange in the work, picking up the nuances of their influence. Intraday timings are also present on stock markets, the calmest time is the so-called evening session. But the mass introduction of trading bots even here can try to shake up the market and lure many traders into it. 📊 BY TYPE OF TRADING INSTRUMENT There are timings by type of trading instruments. For example, gold and oil are better to trade on the American session, and the main volatile pairs EURUSD and GBPUSD are better to trade in the European session. Of course, it is all rather conditional, but nevertheless, it is necessary to take into account. 📰 NEWS TIMINGS Everything is simple here. If it is scalping or intraday trading, then hands off the keyboard because the market shakes during the release of important news. But if you like to trade specifically on the news, then it's time, the most timing. 📅 TIMING BY DAYS OF THE WEEK It has long been noted that the market is volatile differently on different days of the week: Monday is sluggish and unclear, often markets open with gaps. Tuesday all are awake, pumped up and the market goes and runs. Wednesday and Thursday are active too, but on Thursday there are bank reports and, you can say, the banks, having made money, start to aim somewhere. Friday is the day of losing trades. Very often unpredictable in terms of the previous week's movement, on Friday short-term traders close their positions, which also brings its own turmoil. 📆 TIMING THAT OCCURS DURING A SPECIFIC PERIOD OF THE MONTH For example, this overlaps with news timing, non-farm peyrols (NFP), the economic news released every first Friday of the month. It is the second most important news after GDP. Be sure to watch the economic news release calendar. The impact of this news may well be spread out over the long term. 💼 QUARTERLY TIMINGS Directly related to the quarterly closings of futures contracts in stock markets such as the CME. Futures and currency pairs with the same name are considered to influence each other. This can also include the release of quarterly reports of various companies that have their shares on stock exchanges. 🍂 SEASONAL TIMINGS This is, for example, the New Year and Christmas. Also, the financial new year in Japan, which for some reason occurs in March, and in the U.S. in October. And futures on the same coffee, cotton and sugar should be considered taking into account the time of the year. In general, timing is one of the most important factors that must be taken into account in your trading system, starting from the stage of its development. When tracking trading statistics, be sure to look at what time your trading system is most effective and whether it is possible, for example, to increase risk at that time or not to trade at other ineffective times at all.
Education
by DeGRAM
1
Forex: The Impact of (Geo)Political Factors.In the vast expanse of the currency market, where fortunes are made and lost in the blink of an eye, understanding the multifaceted risks is crucial. Beyond the charts and technical indicators lies a force often underestimated — geopolitical risk. In this exploration, we unravel the intricacies of geopolitical risks and delve into the political factors that cast a profound shadow over the forex market. I. Decoding Geopolitics: To comprehend the significance of geopolitical risk, one must first grasp the term "geopolitical." It involves the intricate study of how geography, political systems, and international relations intersect to mold global politics. Geopolitics explores the strategic importance of geographic spaces, resource distribution, and the influence of political power on a global scale. In essence, it is the lens through which we examine the interplay between geography and political dynamics to fathom how nations behave on the world stage. II. The Unseen Forces: Geopolitical Risks in Forex Geopolitical risks are potent influencers in the currency market, steering exchange rates and market sentiment. Several factors contribute to this influence: Political Instability and Unrest: Civil unrest and regime changes breed uncertainty, impacting investor confidence and currency values. Trade Tensions: Disputes between major economies create market uncertainty, affecting trade flows and currency values. Military Conflicts: Armed conflicts or geopolitical tensions can prompt currency depreciation as investors perceive heightened risk. Terrorism: Acts of terrorism introduce fear, potentially leading to currency depreciation in affected countries. Economic Sanctions: Imposing sanctions disrupts trade and financial transactions, influencing a country's currency value. Political Leadership and Policy Changes: Shifts in political leadership or policy direction induce currency volatility by impacting investor confidence. Natural Disasters: While not strictly geopolitical, natural disasters can disrupt economies and influence currency values. Global Health Crises: Pandemics impact global trade and currencies through measures like lockdowns and travel restrictions. Brexit-Like Events: Instances where countries contemplate leaving unions create uncertainty with repercussions for currency markets. III. The Forex Symphony: How Geopolitical Risks Conduct the Orchestra Geopolitical risks impact the forex market through a complex interplay of economic and political factors. Heightened geopolitical risk injects uncertainty, prompting investors to seek safe-haven assets. Currencies such as the US dollar, Japanese yen, and Swiss franc often benefit as investors flock to stability during times of crisis. Political dynamics play a pivotal role in shaping the forex market: Government Stability and Policies: Political stability and policy implementation influence investor confidence and currency values. Economic Policies and Reforms: Political decisions on economic policies impact a country's economic outlook and currency values. Political Events and Elections: Elections inject uncertainty, affecting market sentiment as traders anticipate political changes. Trade Policies and Agreements: Political decisions on trade policies influence currency values, introducing volatility to the forex market. Central Bank Actions: Central banks' decisions, influenced by politics, impact currency values as traders monitor monetary policy shifts. Government Debt and Budget Deficits: Political decisions on fiscal policies influence a country's debt levels and fiscal health, impacting the currency. Corruption and Governance Issues: High levels of corruption erode investor confidence, influencing currency values. Social and Political Stability: Broader stability in social and political realms influences the forex market and investor perceptions. Public Perception and Confidence: Political factors shape public confidence, impacting economic activities and currency values. In the sea of the forex market, geopolitical risks and political factors are the unseen currents shaping its course. Traders and investors must master the art of navigating these turbulent waters, understanding that beyond charts and algorithms, the geopolitical landscape and political dynamics are the true captains of the ship. In this ever-evolving arena, adaptability, foresight, and a keen understanding of geopolitics are the compasses guiding traders to success in the unpredictable world of currency trading. The geopolitical events stand as formidable forces capable of reshaping exchange rates and creating market volatility. From Brexit to trade wars and geopolitical tensions, understanding the historical impact of these events on currency markets is crucial for traders seeking to navigate the tumultuous seas of forex. This article explores notable geopolitical events that have left an indelible mark on exchange rates and provides strategic insights on mitigating the associated risks. Geopolitical Events and Their Impact: Brexit (2016): The UK's decision to exit the EU led to a sharp decline in the British pound, reflecting uncertainty about the economic consequences of the separation. GBP/USD sharp drop in 2016 US-China Trade War (2018-2019): Trade tensions between the US and China influenced exchange rates, with the Chinese yuan being particularly sensitive to developments in the trade dispute. European Debt Crisis (2010-2012): The sovereign debt crisis in the Eurozone led to fluctuations in the euro as concerns about the stability of the currency and the future of the EU affected exchange rates. EUR/USD fluctuations throughout 2010-2012 Russian Annexation of Crimea (2014): Geopolitical tensions and sanctions imposed by Western countries led to a significant depreciation of the Russian ruble. Arab Spring (2010-2012): Political uprisings across Arab countries caused volatility in currencies like the Egyptian pound and the Tunisian dinar. North Korean Nuclear Tests (2017): Geopolitical tensions resulting from North Korea's nuclear tests impacted currencies in the Asia-Pacific region, including the Japanese yen and the South Korean won. 9/11 Attacks (2001): The terrorist attacks had far-reaching consequences on global financial markets, influencing the US dollar over the longer term. Dollar Index after 9/11 US Invasion of Iraq (2003): Geopolitical events surrounding the invasion led to increased uncertainty and affected currencies in the Middle East, notably the Iraqi dinar. Mitigating Geopolitical Risks: Strategies for Forex Traders Stay Informed: Regularly follow reputable news sources to stay informed about political events, economic indicators, and policy decisions that could impact the forex market. Diversify Your Portfolio: Avoid overconcentration in a single currency or region. Diversification spreads risk and minimizes the impact of adverse geopolitical events on specific positions. Use Risk Management Tools: Implement tools such as Stop Loss and Take Profit orders to limit potential losses and secure gains. Setting appropriate risk-reward ratios enhances effective trade management. Monitor Economic Indicators: Keep an eye on economic indicators affected by geopolitical events. Understanding the economic fundamentals of traded currencies helps anticipate market reactions. Understand Correlations: Be aware of correlations between currencies and other assets, helping gauge potential spillover effects from other markets during times of geopolitical uncertainty. Utilize Safe-Haven Currencies: Allocate a portion of your portfolio to safe-haven currencies, such as the US dollar, Japanese yen, or Swiss franc, during heightened geopolitical uncertainty. Stay Flexible: Be prepared to adapt your trading strategy based on changing geopolitical conditions. Flexibility is key to adjusting your approach in response to evolving circumstances. Regularly Review and Reassess: Periodically review and reassess your trading strategy in light of changing geopolitical conditions. Markets can shift, and adjusting your strategy is crucial to remain relevant. Conclusion: In the dynamic world of forex trading, geopolitical risks are inherent, and their impact on exchange rates is undeniable. Traders armed with historical insights and proactive risk management strategies can navigate these uncertainties with confidence. While eliminating all risks is impossible, staying informed, diversifying portfolios, and employing risk management tools empower traders to weather the storms and emerge resilient in the face of geopolitical challenges. Embracing these approaches not only limits potential losses but also positions traders to seize opportunities in the ever-changing forex landscape.
Education
by FOREXN1
1
Decoding the NFP Report: Trading Strategies.In the dynamic world of forex trading, strategies that cater to the ever-changing market conditions are invaluable. While fundamental analysis is widely embraced in stock trading, its effectiveness in the forex market is often questioned. Unlike the stock market, where financial statements can significantly impact individual stocks, the forex market is influenced by a myriad of factors, including central bank policies and political leadership. In this article, we explore the limitations of fundamental analysis in the forex market and delve into an intriguing momentum trading strategy centered around a key macroeconomic indicator—the Non-Farm Payrolls (NFP). This strategy harnesses the unpredictable yet powerful market reactions triggered by the release of NFP data, offering traders a unique opportunity to capitalize on momentum. Fundamental Analysis in Forex: Fundamental analysis, a staple in stock trading, faces challenges in the forex market due to its limited impact on currency exchange rates. Forex stability relies not only on economic indicators but also on the nuanced decisions of central banks and political leadership. Despite these challenges, successful forex trading doesn't necessitate rigid adherence to a specific scenario. Traders can leverage price momentum and increased liquidity to execute effective impulse trading strategies. Non-Farm Payrolls Trading Strategy: The Non-Farm Payrolls (NFP) trading strategy capitalizes on the release of crucial U.S. economic data—the Non-Farm Payrolls report. This multicurrency strategy is applicable to all currency pairs involving the U.S. dollar, allowing traders to explore numerous assets simultaneously. The primary objective of this strategy is to capture price momentum, making it adaptable to various time frames. Non-Farm Payrolls: Predictable Unpredictability: The NFP report, published every first Friday of the month, serves as a linchpin for speculative traders. It provides insights into the strength and growth of the U.S. economy, consequently influencing the value of the U.S. dollar. The report focuses on the non-agricultural sector, which contributes significantly to the nation's GDP. The sheer importance of the NFP report lies in its ability to reflect the health of the U.S. economy. The release of this data sparks maximum market volatility, with prices witnessing rapid fluctuations, often ranging from 100-200 points in a short period. However, interpreting the aftermath of the news poses a unique challenge due to the simultaneous release of unemployment statistics, which can sometimes contradict each other. Despite the inherent unpredictability, the NFP trading strategy capitalizes on the strong price spikes triggered by the news release. While predicting post-news price behavior may be challenging, the strategy offers a systematic approach to navigate and profit from the volatile market conditions that follow the NFP announcement. Rules of Non-Farm Payrolls (NFP) Trading Strategy: Stay Informed with an Economic Calendar: Use a reliable economic calendar to stay informed about upcoming NFP releases. The economic calendar will help you track the scheduled date and time of the NFP report. Check for News Release Postponements: Understand that postponements of data releases are common in economic calendars. Monitor the calendar regularly to stay updated on any changes to the scheduled release time of the NFP report. Utilize a Trusted Economic Calendar: Choose a reputable economic calendar platform to ensure accurate and timely information. The provided link www.tradingview.com can be a valuable resource for tracking economic events. Prepare for High Volatility: Recognize that the release of the NFP report triggers significant market volatility. Prepare for rapid price movements and be cautious about entering trades during the initial moments following the release. Focus on the Non-Agricultural Sector Employment Data: Prioritize the non-agricultural sector employment data within the NFP report. This indicator is crucial for gauging the strength of the U.S. economy and can have a substantial impact on currency pairs involving the U.S. dollar. Monitor Unemployment Statistics: Simultaneously track unemployment statistics released alongside the NFP report. While the primary focus is on non-agricultural employment, an understanding of unemployment trends can provide additional context for market reactions. Be Cautious of Contradictory Data: Acknowledge that data within the NFP report, especially non-agricultural employment and unemployment figures, may occasionally present contradictory signals. Exercise caution during such instances, as market predictability diminishes. Wait for Initial Volatility to Subside: Post NFP release, wait for the initial surge in volatility to subside before considering trade entries. Initial reactions can be impulsive, and waiting allows for a more informed decision-making process. Consider Multiple Currency Pairs: Since the NFP report influences the U.S. dollar, the strategy can be applied to various currency pairs involving the dollar. Explore multiple pairs simultaneously to identify the most favorable trading opportunities. Implement Risk Management: Prioritize risk management strategies to protect your trading capital. Set stop-loss orders and determine the appropriate position size based on your risk tolerance and account size. Practice on Demo Accounts: Before implementing the NFP trading strategy in live markets, practice on demo accounts to familiarize yourself with the dynamics of the strategy and refine your execution. Continuous Learning and Adaptation: Stay informed about changes in market conditions and continuously adapt your strategy. The forex market evolves, and traders need to adjust their approaches based on ongoing developments. By adhering to these rules, traders can enhance their effectiveness when employing the Non-Farm Payrolls trading strategy and navigate the unique challenges posed by this high-impact economic event. Traders often seek strategies to capitalize on this volatility, and one popular approach is the Pending Orders strategy. In this article, we'll explore the intricacies of the Pending Orders strategy , shedding light on its advanced nature and its application by both novice and experienced traders. 1 ) Pending Orders Strategy: Set Buy Stop and Sell Stop Orders: Minutes before the NFP publication, set two pending orders: Buy Stop and Sell Stop. These orders are strategically placed 25-30 points away from the current price to avoid simultaneous triggering due to heightened volatility. Manage Triggered Orders: When the price reacts to the news release, triggering one of the pending orders, promptly delete the other as a non-operational scenario. This prevents both orders from activating simultaneously. As observed in this image, during the latest NFP event on Friday, December 8, 2023, the price exhibited a robust bearish impulse immediately after the report release at 5:30 pm. This triggered our sell stop pending order, shifting our trade into a profitable position. Following the bearish movement, the strategy aims to close the buy stop position (the opposite direction). At this juncture, traders should take proactive measures to manage the open position. Stop Loss Considerations: Place a Stop Loss in the opposite order or opt not to set it at all, provided the second pending order remains intact to limit potential losses. This ensures that the remaining order acts as a safeguard against adverse market movements. Trailing Stop for Profit Maximization: Implement a Trailing Stop to secure profits. Continuously adjust the Trailing Stop as the price advances, allowing you to capitalize on the maximum price momentum. This dynamic approach helps lock in gains while navigating the evolving market conditions. As depicted in the image, the price, after experiencing a bearish movement, rebounds upward. What could be the reason behind this? The Non-Farm Payroll (NFP) report assesses the percentage of the total workforce that is unemployed and actively seeking employment in the previous month. For this specific event, the forecasted unemployment rate was 3.9%. However, the actual percentage revealed in the report was 3.7%, indicating a lower number of individuals unemployed and actively seeking employment in the preceding month. This positive deviation from the forecast serves as a favorable signal for the USD, prompting an upward movement in its value following the event. In currency markets, an 'actual' percentage lower than the 'forecast' is generally considered beneficial for the respective currency. By the way, Short-term trades had the opportunity to secure a few pips in gains after the activation of the Sell Stop order. Strategy N.2 Meanwhile, in this other image, I have marked a vertical line at the recent NFP event. Additionally, I've incorporated a 20-period Simple Moving Average (SMA) to illustrate the short-term trend. After the release of this significant economic news, you can observe an increase in volatility. This could serve as a component of a monthly strategy where the release of such news acts as a trigger. This second scenario or strategy, especially for beginners, is considered much safer. By analyzing the NFP report results, understanding economic dynamics, and gaining insights into the potential continuation of the trend or a possible pause for a reversal, traders can make informed decisions. In conclusion, it's essential to backtest the presented strategies and conduct a forward backtest in a demo account. Your thorough understanding and application of these strategies are crucial. Thank you for taking the time to read my article.
Education
by FOREXN1
3
HOW TO TRADE GAPSA gap is a seemingly simple thing. It is such a period when the price minimum in a certain trading period is higher than the maximum in the previous period or vice versa - the maximum is lower than the minimum from the previous period. Gaps are not displayed on line charts or charts with closing prices, so they can only be seen on charts with bars or Japanese candlesticks. There they will look like an empty vertical space between trading periods, and this is the zone of extremely heightened emotions. They are usually formed after the trading session, during the overnight period, when the market is digesting fresh negative or positive news. On daily charts gaps are much more common than on weekly charts, because on a weekly chart a gap can appear only between Fridays. Monthly gaps are rare and such gaps on the chart can be formed only between monthly price ranges. The easiest way to find a gap on an intraday chart is to open a trading session. Gaps are an important emotional zone Where gaps form on a chart is an important, potential reversal zone because emotions are running high. As charts are a reflection of the psychological state of market participants. Consequently, when price returns to the area of the previous gap, its upper and lower points become important support and resistance zones where short-term trends can briefly reverse. Why most gaps close from a psychological perspective A gap close is filled when price reverses and rolls back to the full range of the gap, thus "closing" it. On a daily chart it sometimes takes several days, sometimes it takes weeks or even months. And in some rare cases this process may not be completed at all. "The market does not tolerate a void" In other words, gaps are filled, sooner or later, almost always. Of course, there are exceptions, but they are quite rare. The psychology of this process is quite simple. It can take months and sometimes years to fill the gap in the market. That is why you should not create a trading system only on the assumption that the gap will be filled tomorrow. In most cases, the market will try to close the gap, but it often ends up with a partial closing attempt. Why do gaps close at all? Simply, like any emotional phenomenon, they reflect the psychology of market participants: excessive fear or greed, for example, depending on the direction of the trend. The decision to buy or sell at any price by itself is not objective or rational. Consequently, when the market cools down, people will begin to retroactively reconsider their decisions. Which will lead to either closing the gap or trying to close it at least partially. Gaps should be treated with respect, but do not overestimate their importance. If a gap appeared on the formation of a price pattern, it is a general or gap zone. They close quickly and are not particularly important from the technical point of view. Therefore, we are much more interested in three other types of gaps, strong ones, which we will consider: Breakout gaps Continuation gaps Exhaustion gaps Breakout Gaps A breakout gap is created when price breaks a price pattern or any other trading range. In general, if a gap appears, it emphasizes the bearish or bullish nature of the breakout, depending on its direction. Nevertheless, it is highly desirable that an upward breakout be accompanied by higher volumes. However, if the gap breaks down, it usually does not require high volumes. Not every gap on a breakout is important, because as we know there is no such thing as a "sure thing" in technical analysis. However, a gap that is formed on a breakout is more important than one that appears by itself somewhere on the chart. There is a danger of buying on a breakout gap because you will get right into the epicenter of the market storm. The desire to buy at any price will in most cases end in disappointment when the price inevitably rolls back down after the emotions have subsided. Breakout gaps that are formed in the early stages of a major bullish trend are much more reliable than those that are formed after a long rise in price. If a breakout gap is formed at the end of a bull market, the chances of emotional burnout increase. Bulls sell out everything and do not buy back the asset on pullbacks, they are not interested in a low price anymore. Continuation gaps Continuation gaps occur when the price is falling or rising in a straight line, when the price is flying fast and emotions are running high. Sometimes such gaps are closed very quickly, literally within a day. Sometimes they are open much longer and do not close until the market shows a strong or intermediate reversal in the opposite direction from the main trend. The same trend that created such a gap. Such a gap is usually formed between the previous breakout, in the middle of the price movement that follows it. That is why such gaps are also called measuring gaps. It is not uncommon for one trend to have several such gaps at once. Continuation gaps are much more common in weak stocks or markets than in active and strong ones. The reason for this is that the window of opportunity is quite narrow and if everyone tries to get into it at the same time, only a few participants will get what they are looking for at the desired price. In the end, the demand to buy or sell will only be met by a much higher or lower price. Exhaustion Gaps If you see several continuation gaps in a trend, it means that the trend is being influenced by powerful forces. A second or third gap will also hint to a good technical analyst that the trend is stabilizing quickly. Therefore, there is a chance that the second or third continuation gap will be the last one. Accordingly, an exhaustion gap is the final stage of a rapid rise or fall in price, which will be the last of the continuation gaps. And there are cases when the exhaustion gap can develop after a long and extended trend. In the end we have a breakout gap, this is the beginning of the price movement. A continuation/measurement gap is usually in the middle of a new move. And the exhaustion gap is the final gap in a price movement. Therefore, exhaustion gaps are associated with rapid and prolonged price movement. They indicate that buyers gradually give up and stop believing in a new buying opportunity in the form of a pullback. In a downtrend, the opposite is true - sellers are losing at the top into a pullback higher for downside purchases. Intraday Gaps Generally, there are two types of opening gaps on intraday charts. The first one is formed after the price opens below the trading prices of the previous session. The second, much more widespread type of gap is formed exclusively on intraday charts, where the opening price of a new day jumps far away from the closing candle of the previous trading session. Intraday traders should avoid trades when the market opens sharply up or down. In the stock market, this happens due to extreme imbalances, where liquidity providers are forced to open down positions to meet the demand from open orders. Therefore, the ideal situation for them is when the price bounces slightly at the opening and then declines, allowing the liquidity providers to close all or part of the down positions. This process will be exactly the opposite if the price opens with a fall. Therefore, it is critical to observe what happens to the price after the opening range. As a rule, if after a gap up, the price goes further and opens a new trading range, it sets the sentiment for the whole market for at least a few hours, and sometimes even longer. Island reversals An island reversal is a small trading range that is formed at the end of a long price movement and is separated from the previous price by an exhaustion gap and a breakout gap. Remember that islands do not occur very often on charts, and when they do, they do not last long. However, they are a frequent guest at the end of an intermediate or even major trend and are formed as part of a price pattern. Such as the top/bottom of a head and shoulders (or inverse head and shoulders). In addition, islands are often a one-day phenomenon. Summary Gap on the chart that was formed due to excessive emotions in the market. Gaps are closed almost always. They also act as potential support and resistance zones. The high volume on the gap confirms its importance. A breakout gap is formed at the beginning of the price movement, continuation gaps in the middle of the movement, and exhaustion gaps at the end of the trend. An island reversal is a small price pattern on a 1-day chart, isolated from the main price by two gaps. They often indicate the end of an intermediate trend. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
7
LTC/USD Main trend. Halving. Cycles The psychology of repetitionMain trend. The graph is logarithmic. The timeframe is 1 month. This idea is relevant both for understanding the secondary trend work and as a training in simple cyclic, logical manipulation processes. Note also the halving of the LTC and the designated time zones between cycles. The primary trend is an uptrend in which a huge butterfly is forming (forming part 2) Secondary trend is a downward channel. Local trend in the secondary trend is a wedge. Coin in the coin market : Litecoin The chart is taken from the Bitfiniex exchange, I used it because of the long price history (the coin has been traded on this exchange for a long time). Of course, the chart is relevant for all exchanges with liquidity. The coin and the pair are liquid, it is acceptable to set large positions. The price behavior is predictable. Ups/Downs are similar. Let's consider them below. Everything is unpredictable only for absolutely predictable people, it always was, is and will be. Same time frame on a line chart (no market noise, pure trend direction) A close-up of this area on the line chart. And this area on the candlestick chart. What matters is the average buy/sell. Approach the market regardless of the size of your deposit as a major market participant. Stop thinking like a "hamster". You don't need to guess, you need to know and be prepared for any outcome, even unlikely scenarios. Psychology of behavior in the market. Expectation. Reality. "Stop-loss resets. Cyclicality of predictable behavior. . Predictable price behavior. "Knockouts" of obedient (acting by the rules) and naughty (acting on emotion) fools are as logical and predictable as anything else everywhere else. Increase your knowledge and experience, and it won't affect you. Remember, theory without practice is nothing. Real trading is very different from theory, you should understand that. That's why all "programmed traders" lose money or their earnings are quite modest. You should not ask anyone where to buy/sell this or that crypto-asset. You should initially know yourself under what conditions you will buy and under what conditions you will sell. Past "stop-losses" before secondary trend reversals . Secondary trend reversal zones and "takeout" before pullbacks in 2019 (+450 average) and 2021 (+900% average). Candlestick chart. 3-day timeframe. Fear peak zones. Line chart. Three-day timeframe. Fear peak zones. (without market noise). As we can see, this "fear peak" on the line chart evaporates, all these local "super resets" have no effect on the trend. It's just the "death of hamsters." The capitulation of human stupidity and greed. You can add predictability and submissiveness to this. The train always leaves without such marketable characters. Such always sell (fear) at the lowest prices, shortly before the trend reverses. It is worth adding that they buy at the highest prices "at the behest" of the pump to get fabulously "rich. This makes the cryptocurrency market super profitable. Such fuel is the basis of profit. "Market fuel flows" lend themselves to cycles. Price management is the psychology and manipulation of people's minds through basic instincts through price values. All of this is real and as old as the world. A foolish person keeps stepping on the same rake, each time telling himself that this is the last time, or this is a special case. This "last case" must be repeated systematically, but in different conditions that you create. Your effectiveness depends on how masterful you are at forming such obsessive thoughts in the mind of such market characters. Fundamentals of Trading. Trading strategy. Capital management. Price forecasting. It is your trading strategy and money management, based on your experience, that is the basis of trading, not guessing the price. But guessing is what most people want. Such people should have no money. As a rule, such people in real life are very poor, do not have their own business, go "to work" (do not want to take responsibility). They think real life doesn't give them many resources, but market speculation will quickly make them fabulously rich. Rather the opposite is true. Total impoverishment regardless of the direction of the trend due to the reinforcement of destructive qualities of a person with financial instruments. The behavior of such people in the market is a projection of what they are like in real life. The behavior of people in financial markets is a projection of what they are in real life. That is, their positive and negative psychological qualities. You can't run away from yourself. A stupid person will be overtaken by his own stupidity, a greedy person by greed, an intolerant person by intolerance, an indecisive person by indecision, an irresponsible person by irresponsibility. Such will be punished by their own destructive qualities. The main thing is that the victim draws conclusions from this and it is an incentive to correct the root cause and basis of the failures, rather than looking for the culprit of his own stupidity in "random events" and other people. You guessed once, second time, third time zeroed in and hit your own self-confidence with your own stupidity and predictability. Consequently, all your previous guesses at the distance equals zero. Trading is a probability game. It is impossible to guess everything because of the many components of pricing. It is possible not to guess, but to know the more and less potentially realizable probabilities because of certain market conditions. No one knows the exact future, there is only an assumed more likely future and the work that leads to it. The basis of profit/loss is what you are in the here and now. Your knowledge and experience are projected onto the chart. The symbiosis of these two parameters makes or loses money in practice. Read these 6 points carefully: 1) The first problem most marketers have is that everyone wants to get a lot of money in the moment and, most importantly, without effort. That's what most people want, so it's not rational or dangerous to satisfy their desires. 2) The second problem is that they can't be "out of the market" until they find a good entry point. "Fear of missing out" does its destructive work. 3) The third problem is, of course, the disease from "childhood," which manifests itself in adulthood. People begin to collect various crypto coins, endowing them with different values according to their beliefs and, above all, their desires. 4) The fourth problem is greed, insatiability combined with inexperience. People don't want to protect their profits, they want more and more and more and more and more, eventually from greed and inexperience they completely (more greedy) or partially (less greedy) nullify themselves. 5) Lack of knowledge and experience. Lack of desire to develop and learn. The less experienced a market participant is, the more confident he is in his competence and "screams text". 6) The sixth most serious problem - laziness. It manifests itself in the fact that few people want to work, everyone wants to have. Under ideas are captured my trading ideas for this trading pair over the past 3 years. Most of them are previously closed trade ideas. There are 3 learning ideas that I have shown on this trading pair (based on publicly published simple trading ideas) .
BITFINEX:LTCUSD
by SpartaBTC
18
LIQUIDITY GRAB IN TRADINGLet's talk about liquidity grab and why the market moves against you the moment you open a trade. At Smart Money, liquidity grab is at the heart of the trading systems, because without it, there can't be a market. ✴️ Market Liquidity No matter how long you have been trading, at some point you must have questioned the depth in the market you are trading. In other words, its liquidity. Liquidity is the #1 element that makes a market work and competitive. For a market to be rich in liquidity, there must be broad participation from both buyers and sellers. That's why it makes sense for smart money or market makers to extract liquidity from the market. Liquidity hunting is a very common practice. It is nothing but the art of forcing losing players out of the market who are known to be weak long and short holders. ✴️ Liquidity Grab Often Occurs Against The Underlying Trend The bigger and brighter the liquidity zone, the more likely it is that Smart Money will target that particular zone, especially if it is located against the underlying trend. For example, in a bearish trend structure, you can often see clear liquidity picking up from below, against the trend, and reversing the price up. This is more common in very liquid markets with high trading volume (e.g. Forex, stock market). Why does it happen? Big players know that most of us use various indicators, moving averages, candlestick and chart patterns and other popular tools for our day trading, scalper trading. The big players can easily lure retail traders to enter the market at bad points and act against their positions. Many traders use significant levels to place stop losses and buy or sell stops for exits and entries respectively. It is these price levels that are used by smart money to provide their needs with the right liquidity. Institutional players cannot trade the same way as retail traders because in low liquidity price zones, they can up/down too much on large orders. So, they use high liquidity zones to place their own large orders in the market without having too much impact on the price. Liquidity grab is actively used mainly in the forex and cryptocurrency markets, as these markets are quite volatile and attract inexperienced traders. Besides, it is easy to use margin trading on them. Inexperienced (and even experienced) traders don't know, and those who do, don't believe that a market maker uses their stops to "make a market" on a regular basis. ✴️ More is Better The more liquidity that accumulates above a significant price level, the more likely that liquidity will be harvested. Where price consistently bounces off a demand (support) or resistance (supply) level several times, there is a huge concentration of stops by some players and orders in the other direction by others. It is important to focus on finding these spots, as you can find great entries after liquidity is collected. The more bounces, the better. The key factor for a major player is time. The more time passes, the more liquidity there will be. And if price cannot break through areas with multiple highs or lows, it is likely that liquidity around those price levels will increase over time. The more time that passes, the more liquidity will increase (unless major highs/lows are broken). Because of this factor, if you want to trade a liquidity seeking pattern, you should be aware of how time plays a role in consolidating orders above/below key liquidity zones. ✴️ Grabing Liquidity And Finding Stop Losses A liquidity grab is a liquidation event in which buyers' or sellers' stop losses are removed and traders who took a trade on a breakout are trapped. ✴️ Stop Loss Grab By A Major Player Stop loss finding and liquidity grab are similar concepts. Finding a stop loss is when price drops or rises behind the structural elements of the chart, or just goes to a round value. The smart money knows there aren't many stops and liquidity accordingly. These places are visible to almost all traders, everyone sees some "key" level, where the price hits the same place a hundred times. A big player realizes that half of the players will play on the rebound, putting their stops above or below the zone, while the other half will play on the breakout, jumping in after the breakout of this zone. As long as stop losses of the former and pending (buy/sell stops) or market orders of the latter are triggered, smart money will absorb all these orders. ✴️ Look For A Quick Price Reversal After A Breakdown The goal of the Smart Money trading system is very simple - retail traders, should avoid falling into the trap of the market maker and just follow the market maker. A liquidity grab should always be accompanied by a quick, strong reversal move after reaching a critical low/maximum essentially a quick turn in price back to structural support or resistance. How quickly the price will come back, we do not know, but the time of being outside the demand or supply zone will depend on the liquidity of the market itself and the volume of big players. ✴️ Monitor The Lowest Low And The Highest High Of The Structure When you do not see areas with the same lows or highs on the chart (consolidation), the main area to monitor is the lowest minimum or the highest maximum of the structure, i.e. where the highs or lows are connected by the trend line. ✴️ Maximum And Minimum Of The Market Structure Most traders' stop losses will be located exactly where the high or low of the trend is visible. When the price falls below/below the start of the move, then stops will be triggered and new orders will be opened in the hope that the trend has finally changed. Liquidity will also be under other lows, traders will also jump in there to update the nearby structure, but the very beginning of the move will be the key level. This can be attributed to the time frame or simply fractality. There is a difference between targeted and non-targeted liquidity, i.e. caused by a market maker or caused by general market action. On the left side we have targeted and on the right side we have untargeted. The difference between the two is that the targeted liquidity grab is initiated by smart money and the non-targeted one by general market action. In the former case the targeted attempt to take out stops will start from the middle of the previous move where there are not many stops and liquidity, in the latter case there is a move under general market action.
Education
by DeGRAM
1
Domination of USDT + USDC and lows/maxims of BTC. CorrelationIn the graph, combined into one graph of the dominance of such stablecoins as USDT and USDC. Orange color—chart of the bitcoin price against the dollar. The time interval is 1 week. The graph is logarithmic. The same chart and the same parameters on the candlestick chart . All BTC price lows and highs are specially shown. Compare what the capitalization of stablecoins was at the time. At an earlier time, the dominant stablecoin was one USDT, later USDC was added. They occupy a significant capitalization. BUSD and DAI are less capitalized. They too can be added to this “indicator” of the Pumps/Dumps market. I think the dominance history and the bitcoin overlay chart illustrate well which market phase and in which areas to buy and sell bitcoins and other speculative crypto coins. Centralized Stablecoin capitalization of a decentralized market . Sounds crazy, doesn't it? The dominance of centralized in a decentralized market. The 3rd,4th,6th places are naturally occupied by centralized stablecoins such as: #USDT #USDC #BUSD. This kind of decentralized cryptocurrency financial world (freedom from the dictatorship of banks, power states, and so on) did you imagine, for example, in 2015-2017? Is it good or bad? What will happen after a while? What trend will develop further after the community bait has been swallowed? 3rd place . USDT ( .... "Reds" .... ) $67,562,687,657 4th place . USDC (Circle, Coinbase, JPMorgan, Blackrock .... ) $51,726,419,583 6th place . BUSD (Binance) $20,003,320,692 13th place DAI ETH (!) BTC and ETH dominance. Continuing on this “democracy” theme of crypto sandbox capitalization. Today 14 09 2022. Market Cap: $989,560,104,72 Dominance: #BTC: 38.9% #ETH: 19.9% Total 2 assets: 58,7% Also add 3,4,6,13 top stablecoins to this. Stablecoins over 20%. Almost 60% of the market is 2 assets. Over 80% of the market is 6 assets. So much for the true mythology of decentralization ))). How to look for a “live chart” for yourself and combine the dominance of USDT and USDC: 1) Look for the MARKET CAP USDT DOMINANCE, % 2) On the right side of the chart in the search field, press the + button 3) Write MARKET CAP USDC DOMINANCE, %. For the analysis, it will also be useful to track at the same time: 1) BTC dominance 2) US dollar index (DXY, USDX) BTC dominance BTC to altcoin dominance. Stablecoin dominance and market pamp. US Dollar Index (Fed)with prices of BTC lows/maxims. Correlation of assets. DXY and PampDump BTCMarkets Cycles. This is what it looks like on a line chart to illustrate simple correlation things. Preparedness for force majeure. I would also like to say that all stabelcoins are focused on the "stability" of the U.S. dollar. Think about what would happen if, for some reason, that stability were to be undermined in the blink of an eye. Then you are faced with a very difficult choice. What to do? Sell/buy cryptocurrency/shares? Just think ahead "What do you do" if, purely hypothetically, for some fantastic, hard-to-imagine reasons this happens. Think ahead in today's calm time (are you sure it's not calm now?), so you won't be caught off guard in a turbulent time.
CRYPTOCAP:USDT.DEducation
by SpartaBTC
24
HOW TO RECOGNIZE A SCAM SIGNAL PROVIDER WEBSITEForex signal providers can be a good resource for traders looking to access the markets. However, not all signal providers are created equal, and some of them act as scammers, preying on unsuspecting novice traders. In this article, we will look at how to recognize a fraudulent signal provider's website and how not to fall victim to their machinations. The provider's website can be a great indicator of professionalism or, on the contrary, a desire to deceive you. 1. Bad website design One of the easiest ways to recognize a fraudulent signal provider website is to check its design. Fraudulent sites often have poor design with low-resolution images and poor grammar. You won't find any information about the provider itself on such sites. Non-working buttons or links are also a reason to be cautious. The sites of legal signal providers are usually well designed, have professional images and clear language. 2. Lack of contact information The websites of fraudulent signal providers often lack contact information or provide fake contact information. In many cases there are icons of almost all social networks, but when you click on the link there is nothing there. If there is even an account in social networks, they are mostly completely anonymous. On the other hand, legitimate signal providers should have a physical address, phone number and e-mail address on their website. Traders should check the contact information provided and make sure it is legitimate. 3. Unverified performance Fraudulent signal providers may provide unverified results or manipulate performance metrics to appear more profitable than they actually are. It can be easy to show fake trading results on a website. You should treat such results with caution. You should always check the accuracy of the performance results before using services from any signal provider. Legitimate signal providers should provide verified performance results from third-party sources. Our team has already checked a huge number of them and found out who is working correctly and who is falsifying the trading results. 4. Lack of social proof Social media is a staple of business these days. Social buttons can lead to the homepage of a website, to an empty profile, or to nowhere at all. Social media proof is a powerful tool that can help traders identify fake signal providers. The websites of fraudulent signal providers often have no reviews or they usually have fake reviews. There are always satisfied customers on their website and social media pages with no way to read the comments. Providers using a well-known consumer review system is usually a good sign. But you still should also check third-party review websites to see what other traders are saying about the provider. If there are a lot of short positive reviews you should also be wary as they may be fake. 5. Check the domain name Domain names registered for a short period of time, say a year, can be suspicious because scammers don't invest a lot of money in their sites. They purchase domain names with short expiration dates to minimize their costs. Websites that are newly created and have a short lifespan are more likely to be fraudulent. In conclusion, recognizing scam signal provider websites is crucial for traders to avoid falling victim to scammers and achieve their trading goals. By checking for poor website design, lack of contact information, unverified performance, lack of social proof, traders can identify legitimate signal providers and avoid being scammed. Be safe.
Education
by UnknownUnicorn15614419
4
Top 6 Most Tradable Currency PairsForex traders have the luxury of more highly leveraged trading with lower margin requirements compared to traders in equity markets. But before you jump headfirst into the fast-paced world of forex, you'll want to know about the currency pairs that trade most often. Here's a look at six of the most traded currency pairs in forex: 1. EUR/USD: Trading the "Fiber" The most traded currency pair is the EUR/USD, most likely because of the global prominence of the economies of the European single market and the United States. It made up 22.7% of overall market share, as of the latest BIS survey. That's down from 24% market share in the previous 2019 survey. The high daily volume and liquidity of this pair ensure tight spreads for traders. The EUR/USD tends to have a negative correlation with the U.S. dollar and Swiss franc (USD/CHF) and a positive correlation with the British pound/U.S. dollar (GBP/USD). This is due to the positive correlation of the Euro, the British pound, and the Swiss franc. 2. USD/JPY: Trading the "Gopher" The next most actively traded pair was the USD/JPY, with high liquidity and a market share of 13.5%, slightly higher than its prior 13.2%.2 This pair has been sensitive to political sentiment between the United States and the Far East. It tends to be positively correlated to the USD/CHF and the U.S. dollar/Canadian dollar (USD/CAD) currency pairs. This relationship is due to the U.S. dollar being the base currency in all three pairs. USD/JPY also responds to changes made to interest rates by the Bank of Japan and the effect on the yen relative to the U.S. dollar. 3. GBP/USD: Trading the "Cable" Trading in the GBP/USD currency pair represented 9.5% of forex market share, a small decrease from the prior survey in 2019. Again, the popularity and volume of trading in this pair reflect the strength of the British and U.S. economies. The GBP/USD tends to have a negative correlation with the USD/CHF and a positive correlation with the EUR/USD. This is due to the positive correlation between the British pound sterling, the Swiss franc, and the Euro. 4. USD/CNY: Trading the Yuan The USD/CNY currency pair represents the relationship between the U.S. dollar and the Chinese renminbi, more commonly known as the yuan. Its market share grew to 6.6% from its previous 4.1% of market share in daily forex trades. The U.S.-China trade relationship has been a volatile one, providing USD/CNY traders with plenty of speculative trading opportunities. Those interested in the USD/CNY should maintain awareness of developments in that relationship, as they could affect the pricing of the pair. 5. USD/CAD: Trading the "Loonie" Market share for the USD/CAD currency pair increased to 5.5% from 4.4% in the previous survey three years ago. Interest rates in the U.S. and Canada will affect the price of this pair, reflecting the effects on the individual currencies. In addition, as oil is a major economic driver for Canada, its price will affect the price of Canadian currency. This in turn can have an impact on the currency pair. The USD/CAD tends to be negatively correlated with the AUD/USD, GBP/USD, and EUR/USD pairs due to the U.S. dollar being the quote currency in these other pairs. 6. AUD/USD: Trading the "Aussie" The AUD/USD currency pair captured 5.1% of forex market share, compared to its previous 5.4%. It tends to have a negative correlation with the USD/CAD, USD/CHF, and USD/JPY pairs due to the U.S. dollar being the base currency in these cases. The value of Australia's currency is closely tied to the role and value of its exports in its economy. Therefore, a downward movement in that value could affect the AUD/USD currency pair value, strengthening the dollar to the loonie. The relationship between the interest rates set by the respective central banks can affect the currency pair price, as well. Conclusion The list of the most actively traded currency pairs starts with the EUR/USD, which has the greatest trading volume. All six currency pairs offer the liquidity that investors who trade them need for profits. However, various factors such as trade relationships, changing interest rates, economic upheaval, and country disputes, including war, can affect individual currencies (and thus pairs). So make sure that you're up to date on such news and information before leaping into the forex market so you can choose the most viable currency pairs to trade.
Education
by tradingconmike
HOW TO TRADE RECTANGLESAs we already know, a price trend does not usually reverse instantly. As a rule, upward and downward trends are separated by periods when the price is in a trading range - a sideways trend. To take a simple analogy, imagine a huge ship. It's not easy to slow it down, it takes a lot of time. Now imagine how long it takes to turn around? It's the same with prices. Hence the simple rule that the longer the trend is, the more time it takes for it to reverse. In this case, the process of reversal, aka the horizontal phase of the market is of great importance. Because it is the horizontal range that separates an upward trend from a downward trend (or vice versa). But when the sideways range comes in the shifting phase, the battle between sellers and buyers is equal. Until, for one reason or another, the price does not go down under selling pressure. It is the breakout of the sideways range, with a new low being reached, that indicates to the trader that a trend reversal is taking place. In other words, when the price falls out of the trading range, it is a sell signal. When the bearish trend ends, the reversal process begins. The Reversal Rectangle And The Psychology Behind It When the rectangle is just starting to form, some news is released on the asset and uninformed market participants, who heard about it for the first time, jump in to buy. At this stage, there are positive forecasts everywhere and to go long seems to be the right choice. We remember that absolutely every trade has two participants: the seller and the buyer. At the same time sellers have absolutely different view on the market. They diligently bought much earlier, on rumors of positive news. And now the positive news has arrived, which means what? That's right, it's time to sell. And who is the best person to sell to? Uninformed participants. This is how the well-known principle "buy the rumors, sell the facts" looks to everyone. If price patterns like a rectangle are formed at the bottom of the market, they are called accumulative, and the process itself is called accumulation. Here the psychology is exactly the opposite. Sellers see that the price of the asset is falling and decide to sell when bad news and future forecasts become known to all investors. Potential buyers previously hesitated because they did not want to enter on such bad news. Simply put, the upper reversal rectangle is just a version of the signal that the series of rising highs and lows will reverse. And exactly the opposite is true for the bottom rectangle. You also need to realize that a reversal pattern needs something to reverse. In other words, there should be a clear trend in the opposite direction from the expected reversal before such a rectangle. Accordingly, there should be a strong upward trend up to the top rectangle, and a downward trend down to the bottom rectangle. How Is The Rectangle Formed? In the picture shown above, the upper and lower boundaries of the rectangle are formed by at least 3 touches between two horizontal trend lines. However, the rectangle could actually be made on the first two touches. Don't forget, any sideways trend is just an area where buyers and sellers are fighting. If the battle results in a rectangle with more than two touches, it means that the battle between the two sides has turned intense. It also means that the bearish characteristics of the rectangle in the example above are intensifying. The more touches the rectangle has, the more significant it is As you will notice we use the phrases "touches" and "approaches" this is important because on real charts rectangles will not be so perfect and beautiful. Approaching any trend line , including the horizontal one in a rectangle, is as important as actually touching it. So, if the price reaches the boundary and then reverses, it reinforces this support or resistance zone anyway. Significance Of Any Price Pattern The principles of price patterns are universal. They can be used on any timeframe, from 1-minute candles to monthly candles. However, it is the size and depth of the pattern that influence how significant it is in a particular timeframe. 1. Timeframe The larger the timeframe, the more significant the pattern is If a pattern is drawn on a monthly chart, it means that it is significantly more important than the one seen on an intraday chart. Suppose we are looking at a daily chart and we have noticed two patterns. The first one took 10 days to form, while the second one took 4 weeks. It is understandable that the significance of a 4-week epic battle between buyers and sellers is much higher than a 10-day clash. 2. Significance of price fluctuations The more price fluctuates within a pattern, the more important it is If the price stands still for a long time, traders and investors inevitably get used to buying at one price and selling at another. That is why the price moving beyond the usual prices changes the whole picture dramatically and represents an important event from the psychological point of view. 3. Significance of pattern depth The more in-depth the pattern, the greater its significance A breakout of a wide trading range is much more important than a breakout of a narrow trading range. The bigger (proportionally) the price fluctuations inside the pattern, the stronger the subsequent movement will be. If the pattern is formed by wide price movements, it means that the end of the pattern is likely to be marked by them as well. It is also important to note that if you get a very narrow rectangle, it means that the battle between buyers and sellers is very balanced. This is especially true if there is almost no trading activity. When the balance is broken for one reason or another, the price will often move faster and further than initially expected. How To Measure The Impact Of A Breakout To assess the impact of a breakout, simply measure the distance between the inner boundaries, and then project them downwards. In most cases, the price will go further than the potential target we have highlighted. In very strong movements it will go further by many percent. Moreover, these price range projections often become important support and resistance zones in themselves. Unfortunately, we cannot determine exactly where the next level will be after the price move, because technical analysis, again, does not allow us to accurately determine the duration of the price movement. However, we can well estimate the probability of whether this zone will be support or resistance. To put it plainly, this approach is a minimum expectation of the price movement. Cancellation Effect The minimum distance after a breakout can become a new zone where another accumulation or distribution begins. It usually takes a long period in the new range for the price to move back into the old range. That being said, if there was a breakout of, say, a 2-year rectangle and price reached the minimum target, even though it didn't go any further, it will usually need the same accumulation/distribution period as it did in the previous range. It is only then that price can move back up. False Breakout As we have already found out, a price breakout outside the price pattern, even if it is small, often indicates a trend reversal or its confirmation (if the price was in an accumulation/rectangle). However, it is not uncommon for price to show deceptive, movements, so we need to introduce clear rules to avoid mistakes. It is quite ironic that false breakouts actually confirm the significance of certain support or resistance zones. For example, on a daily chart, you see a confident breakout of a rectangle. But if the price does not hold above the broken line for more than one day, such a signal becomes suspicious. From a technical point of view, such a breakout can be much less significant, because if it does not hold, it means that the momentum is exhausted. If the price has uncertainly broken the level, in most cases it turns in the opposite direction to the breakout A hesitant breakout is often accompanied by further concentration of the price in the range until the price structure is technically prepared for a new breakout. When the price has confidently exited the pattern, this is an indication that the breakout has taken place. Indications of a false upside breakout: price is moving back into the range and breaking the previous lows, the rising trendline connecting the previous lows. Indications of a false downside breakout: price moves back into the range, breaks the previous high, a descending trendline connecting the previous highs. Keep Risk Management In Mind We remember that an upward breakout indicates a possible price rise. However, the same can be said about a pullback. If the price is back in the range, the probability of it reaching higher values decreases rapidly. Unfortunately, there are no quick and easy ways to determine this in any market conditions. Every market situation is different. This is the reason why you need to think everything through in advance, even before opening a trade. Otherwise, if the trade is already open, your emotions will come into play and affect the result. If you do not think over your risks in advance, if things go badly, you will be emotionally stressed and tense when you exit the trade. You will be influenced by some news, sharp price movements and in general anything except a sober, logical plan thought out in advance. Let's Summarize A rectangle is a trading range between two parallel trend lines. We measure the consequences of a breakout: the depth of the pattern is projected in the direction of the breakout. Indications of a false upward breakout: price moves back into the range and breaks the previous lows, the rising trendline connecting the previous lows. Indications of a false downside breakout: price moves back into the range, breaks the previous high, downward trend line connecting the previous highs. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
11
The Concept of Supply / Demand TradingThe principle of supply and demand trading involves identifying a counter-trend candle that precedes a sequence of three consecutive candles exhibiting strong bullish or bearish momentum. This specific candle is designated as the supply or demand level. The underlying theory posits that when the price retraces to the region where demand previously triggered a robust price movement, it is likely to encounter renewed demand, consequently attracting a larger number of buyers, thereby sustaining the prevailing trend. Rule 1: The aggressive price movement must consist of 2-3 (3 preferred) candles that demonstrate remarkable strength in their respective directions. Rule 2: The candle retracing to the demand zone should close outside of the zone, accompanied by a wick that reflects considerable strength.
CME_MINI:NQ1!Education
by AmpedTrading
LIQUIDITY TYPESThere are a huge number of trading strategies in trading, however, there are some that significantly prevail over all others. They are based on the concept of liquidity. Let's look at them in detail. ✴️ STRUCTURED LIQUIDITY Swing High and Swing Low are market highs and lows respectively, and Equal high and Equal low are equal market highs and lows respectively. BSL (Buy Side Liquidity) - liquidity at the highs SSL (Sell Side Liquidity) - liquidity at the lows Trend liquidity. Trend is the most popular trading model all over the world and has been used for decades. No matter what you read, no matter what you watch, everywhere there will be a system of trend detection and trading logic described. It is hard not to guess where market participants, who trade both along the trend and against it, will set stop-losses. ✴️ LIQUIDITY IN A BULLISH TREND Let's consider where liquidity appears behind the nearest maximum in an upward trend. Historically, the most traders set stops above/below some highs or lows. The first participants are sellers who started shorting the market and successfully caught the reversal. These traders set their stop losses behind the nearest maximum, i.e. over the top where the reversal started. Those with experience will start to partially close their orders or get rid of the whole position during the pullback. The second participants are those who trade the reversal, who do not believe in the continuation of the trend. They set their limit orders for a rebound from a significant zone (or jump on the market) and set their stop losses in the same place as the first ones - over the nearest maximum. It is understandable, if it goes higher, it means that the analysis was wrong. And here are the third participants who trade breakouts, who trend trade and enter the battle only when the price updates the maximum. There are two options to enter the trade: buy-stop or manual, where both types of orders are market orders. It's simple, if the price breaks through the resistance zone, then they jump just follow the trend. What have we found out? The first ones set stops behind the level, the second ones set their stops in the same place, the third ones work according to the market. All this crowd set tons of market orders behind the nearest maximum. All these market orders are liquidity. What do you think, if the big player has plans to mark down the price, will it go after this liquidity? ✴️ LIQUIDITY IN A BEARISH TREND Liquidity in a bearish trend is the same, but in reverse. ✴️ LIQUIDITY POOL Equal high (EQH) and Equal low (EQL) are equal market highs and lows, respectively. From technical analysis are support and resistance zones. When price approaches the previous high in a bull market, participants begin to both buy and sell. What happens if the price does not make the high in a continuation of the trend and bounces back? Those who doubted the rebound from this zone start jumping in by the market, putting their stops above this high. What do we have? The first stops were put by those who caught the reversal at the peak, the second ones are those who came in on the rebound, the third ones are those who are still waiting for the breakout and do not believe in the reversal, and the fourth ones are those who start jumping on the rebound. And there are also those who have not decided what to do. How to get them into the market? Simple is to show more rebound from this zone. The more touches of one significant zone are made, the more liquidity accumulates behind this zone. ✴️ TREND LIQUIDITY When the price rolls in one direction, clearly bouncing off the trend line visible to everyone, it does it for a reason. In addition to those who jump on the market structure, there are those who open trades from the trend line. Stops of all participants are distributed below the lows (if we consider the trend line upwards), someone puts thembelow the first, someone below the second, someone fears to put them farther away. More often than not, all this liquidity will be cleaned out in the near future, and very often it happens in one sharp move. Why? To show the effect of surprise and prevent most from jumping out of the trade. Essentially, it's liquidity both structural and trend-following. Since the market is fractal, this happens on all timeframes. You don't think that you have seen a trend and you need to urgently open a trade in the other direction. You need to realize that this liquidity can be collected once, collected by the same movement or not collected at all. It all depends on the market context of the higher timeframe. ✴️ DAILY LIQUIDITY It's simple here liquidity accumulated behind the previous day's high and low. ✴️ SESSION LIQUIDITY Similarly liquidity generated outside the minimums and maximums of the time sessions. Someone trading to collect session liquidity usually hunts for Asian session liquidity.
Education
by DeGRAM
1
LONG Strategy I Use With The Logical Trading Indicator V.1In this post I want to explain how I use the Logical Trading Indicator V.1 that I published as a community script here on TradingView. The following strategy is what I use on a daily basis with a number of different assets, primarily crypto and FOREX, but can work with just about any asset with a chart. This post is not specific to one particular timeframe, but I made the chart on the 1HR as that is the timeframe that the default settings were keyed in on. It is based on a LONG strategy. A SHORT trade would be just the opposite, which I will also make a post about as well. When I sit down to the charts, I set my alerts so the indicator tells me when to trade so that I can go about my day and make my moves with the alerts hit. This keeps me with a mechanical strategy that I can use to help keep my emotions out of the trade. Steps I take to prepare for a LONG trade: STEP 1: Set alert and watch for a bullish cross of the basis line. This indicates that the trend is changing and to be on the lookout for momentum change as well as the BUY signal. STEP 2: Set alert and watch for the next BUY signal. This happens when the price is above the basis line and the ATR meets the multiple set in the settings. So by default it is set to 2x multiple. So when the price jumps 2x the ATR figure, that means we are getting some serious bullish momentum and it is time to enter a long trade. STEP 3: Although this indicator works on a trailing stop loss strategy, it's always good risk management practices to set what I call an emergency stop loss. This protects your capital in-case everything just goes wrong. I set my emergency stop loss inside or just to the outside of the lower bollinger band range. This gives your trade room to move and go in the direction that it is indicating, but protects you incase the market turns quickly and you aren't paying attention. STEP 4: Set alert and watch for Take Profit signals. This happens when the price closes inside the upper bollinger band range, which also indicates an 'overbought' range similar to an RSI. The signal fires when the next candle closes below the band. This let's you know the momentum has changed and it could be a great time to take at least 50% or more of your position off the table. STEP 5: Set alert and watch for a bearish cross of the basis line. This indicates that the trend is starting to change and is when I usually close out the rest of the trade. STEP 6: You can set an alert to let you know when the SELL signal fires. This is the absolute LAST chance to get out in profit. This is the trailing stop loss signal that is built into the indicator. With my particular strategy, I am usually out of the trade at this point, but if I didn't get a chance to do anything when I got the bearish basic cross, I am definitely closing everything out when I see that SELL signal. This is also when you could be looking into flipping bearish and taking a SHORT trade, then it's just the opposite. I hope this helps answer some questions that people might have about how to use the Logical Trading Indicator V.1!
BITSTAMP:BTCUSDEducation
by thelogicaldude
2
TRADING BASICS: TRENDLINESTrend lines are the simplest and most basic concept of technical analysis. It is also, paradoxically, one of the most effective tools. Since almost all price patterns require the use of trend lines, the latter are the basic element of both pattern definition and its use. Now we will discuss what trend lines are, how to work with them and how to determine whether they are working. A trendline is a straight line that connects descending lows in a rising market or highs in a falling market. Lines that connect lows are called rising trend lines, and those that connect highs are called falling trend lines. To make a falling trend line, we connect the first high to the subsequent highs. When the price breaks the trend line, it is a hint that the trend may change. Similarly, for a rising line. How to draw a trend line? ✔️ For a trend line to be real, it must connect the previous highs or lows. Otherwise, there is no sense in such a line at all. This is called the major trend line. It is where the first low of a bearish trend connects to the first intermediate low. In the example below, the trend line is not particularly steep (it is at a low angle, and angles are important in a trend). Unfortunately, price then accelerates sharply after the next low. In a situation like this, it's best to simply redraw the trendline as price moves further away. This is called a new line in the picture and it reflects the changed trend much better. This line will be a secondary trend line. Well, the downtrend lines are drawn in the same way, but in reverse. Since the trend can go sideways, it is quite possible to guess that trend lines can be drawn horizontally. This is often the case when we find price patterns like the "neck" in the Head and Shoulders pattern, or the upper and lower borders of triangles. In such patterns, if the trend line is crossed, it is an indication that the trend is changing. The same is true for rising and falling trends. It is also important to realize that drawing a trend line is a matter of using common sense, not a set of very strict rules. A trendline breakout could indicate a reversal or consolidation The completion of a price pattern can indicate: 1. reversal of the previous trend, aka reversal pattern; 2. continuation of the previous trend, aka consolidation or continuation pattern. Similarly, a trend line breakout indicates either a reversal of the trend or a continuation of the trend. An example demonstrates this concept for a downtrend. In this case, the trend line connecting one high after another is broken in a downtrend. The fourth high will be the highest point of the bearish trend, so an upward breakout of the trend line in this case indicates the beginning of a bullish trend. In the picture above we see again a rising trend and a trend line breakout, but this signal has a completely different outcome. The reason is that the break of the trend line caused the trend to continue, but at a much slower pace. The third scenario is when the price goes into consolidation (aka sideways) instead of reversing, which is shown in picture. Accordingly, when a trendline is broken, it is a strong indication of a trend reversal. A changed trend can eventually reverse or go sideways after rising or falling. Unfortunately, in most cases we can't tell accurately what will follow a trendline breakdown. However, there can be some pretty good clues, such as the angle of the trendline. Since trends that run at an acute angle are less stable, their breakout more often leads to sideways rather than reversals. Useful hints can be hidden in the general state of the technical structure of the market. In addition, a trend line breakout often occurs at the successful completion of a reversal price pattern or shortly before. Extended trend lines ✔️ Many beginners, when they see that a trend line is broken, automatically conclude that the trend is about to change and immediately forget about the line. After all, an extended trend line can be as important as the fact of its breakdown. For example, if a rising trend line is broken, the price very often returns to the same line, but later. This is called a throwback. Significance of trend lines ✔️ So, we have it all figured out - a trend line breakout leads to either a trend reversal or a trend slowdown. Of course, it is not always possible to say what exactly happens there, but we need to understand how effective a trend line breakout is in general, which we are going to do now. In general, the significance of this event depends on three factors: The length of the line; The number of touches; The angle of inclination or rise. 1. Trend line length ✔️ A trend line is used to measure a trend. The longer the line, the longer the trend and the more such a line will become important to us. If descending lows come one after another for 3-4 weeks, such a trendline is less relevant. If the trend line lasts 1-3 years, its breakout is extremely important to us. The breakout of an old trend line is very important, it is a powerful signal. The breakout of a fresh (relatively) trend line is a less important signal. 2. Number of touches or approaches to the trend line ✔️ The more touches or interactions with the trend line, the more important it is, there is a direct correlation. Why is this so? Because the trend line represents a dynamic zone of support or resistance. Each successful touch of the line strengthens it, reinforces its importance as a support or resistance zone. Thus, the trend line's role as a guide for the trend as such is also strengthened. Approaching the trend line is no less important than touching it, because this is how the zone is actualized. If the trend line has become strong due to the touches, its continuation will be no less strong, but from the other side. After all, in an extended trend line, support often becomes resistance and vice versa. 3. Angle of slope ✔️ A very steep trend is usually unstable and easily broken, even by a short sideways movement. All trends break sooner or later, this is a fact. However, steep trends break much faster. The breakout of a steep trend is less significant than the breakout of a smooth and gradual trend. It sounds paradoxical, but the point is this - the break of a steep trend usually causes a short correction, sideways price movement, after which the trend resumes, but much less strong and smoother. Accordingly, the breakout of a steep trend line is a confirming pattern, not a reversal pattern at all. To summarize Trend lines are an easy tool to understand, but they must be used correctly and thoughtfully. A trend line breakout indicates a temporary interruption of the trend or a reversal of the main trend. The significance of a trend line consists of its length, the number of touches/approaches to it and the slope angle. A good trend line always reflects the underlying trend and forms significant support and resistance areas. Extended trend lines change former support/resistance in places, which should be paid special attention to. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
36
INDUCEMENT IN TRADINGInducement is the most popular phenomenon in the smart money concept, but most traders don't know how to label it properly and what its definition is. This post will definitely improve your ability to pinpoint the exact location of the inducement and how to use that inducement to your advantage. What is Inducement? Inducement is labeled IND on the chart, sometimes you may see IDM. Inducement is the area and specific point that encourages (incentivizes) traders to buy and sell. In the Smart Money concept, most traders buy after the breakdown of the previous high and sell after the breakdown of the previous low. This is a normal phenomenon and it is what most people do, because this is what all classic trading books teach from the point of view of market structure. ✴️ Examples Look at the initial structure. The bullish movement is accompanied by small pullbacks. According to the classics, if the price breaks the last low, the bullish movement will be replaced by a bearish one. What we see is that the pullback starts and the price updates the previous low. Traders start to buy on the pullback towards the continuation of the movement and sell on the breakout, towards the new, bearish direction. The previous low in a bull market is the Inducement. This is the place where inexperienced traders give their money to the big player, a bait, not otherwise. After liquidity is collected, the big player drives the price in the direction of the true trend. When the price updates the high it will be a BOS, i.e. confirmation of the structure. Note that when the price rises, lows are formed again, these are again the places where you usually buy and sell. ✴️ The idea behide it As you can see, the real market structure is a bit more complicated than retail traders imagine. After the last example, the price can go higher again, there is nothing to prevent it, but we will just move our structural low under the previous inducement. The essence of price movement is only one thing and that is to collect and form liquidity. That is why the price very often goes down when trending up and updates the low, and then continues to fly up, but without you. The same is true for a downward trend. In the picture above you can see the logic of price movement. As you may know or already know from classic books, the price after an impulsive movement starts to make a pullback. This pullback is done not because the price needs to rest, but because the price needs liquidity to continue the trend. Each pullback is an achievement of inducement, that is, a set of liquidity, and within each pullback you can find the same thing. That is, there are pullbacks within a pullback, and within that another pullback, etc. The market itself it is a fractal. This is what confuses millions of traders to choose the right place to enter a position. Reality is very different from what is portrayed in books, people just don't realize which low will be the break. Which top is extreme? Show one chart to 10 traders and all 10 will show a different structure. It also strongly influences why some traders make money while others, in the same pattern, lose. As you have already realized, price will always take out highs and lows to gather liquidity. If you buy or sell without understanding and practicing such a concept, that liquidity will be you. You must understand and be able to identify where that very spot will be inducement. The main thing to remember is that IND appears only when the price updates a structural high or low. You don't have to incorporate a bunch of Smart Money trading principles into your trading strategy. You just need to realize that without liquidity there will be no movement in the market. Price needs only one thing and that is liquidity. You can trade profitably, even without using any instrument, if you understand what highs and lows most traders buy and sell.  
Education
by DeGRAM
4
BULLISH AND BEARISH FLAG PATTERNSBullish and bearish flag patterns are common patterns in forex that are used by traders to determine potential price movement in a trending market. These patterns can provide clues about market sentiment and help us make informed decisions about when to enter or exit a trade. It should be remembered that this pattern is a continuation pattern, not a reversal pattern, as these patterns appear after a strong movement. How to apply in trading patterns bullish and bearish flag? The bull flag pattern is a continuation pattern that forms after a strong upward price movement. This pattern is characterized by a sharp price rally, followed by a period of consolidation in the form of a descending channel or flag, and then a continuation of the movement. The flag is usually accompanied by a decrease in market volatility and momentum, which indicates a temporary pause in the uptrend. The price is resting after a strong bullish movement before continuing. How to apply in trading? 1. Identify a strong upward movement (flagpole): The first step is to identify the flagpole of the initial strong upward price movement that precedes the formation of this pattern. 2. Flag formation: After identifying the flagpole, traders must draw a trend line connecting the highs and lows of the consolidation to see the flag pattern. You need to watch the price closely because this pattern can turn into an ascending triangle. 3. Breakout of the contraction: Then wait for a breakout above the upper trend line of the flag pattern, accompanied by an increase in momentum. A breakout of the co-principal level confirms the continuation of the uptrend and is a potential entry point for long positions. Usually the price makes a move equal to the flagpole, which gives an approximate take profit point. Conversely, the bearish flag pattern is a continuation pattern that is formed after a strong downward price movement. This pattern is characterized by a sharp decline in price followed by a period of consolidation in the form of an ascending channel or flag. Similar to the bull flag pattern, the bear flag pattern is accompanied by a decrease in momentum, which indicates that the price is temporarily resting in a downtrend. How to apply in trading? 1- Identify a strong bearish move (flagpole): The first step is to identify the flagpole of the initial strong downward price movement that precedes the formation of the flag pattern. 2. Flag formation: After identifying the flagpole, we must draw a trend line connecting the highs and lows of the consolidation boundary to recognize the flag pattern. 3. Waiting for support breakdown: We should wait for a breakdown of the lower trendline of the flag pattern, accompanied by an increase in price momentum. Such a breakdown confirms the continuation of the downtrend and is a potential entry point. In conclusion, the use of bullish and bearish flag patterns in trading requires identifying a flagpole, building a flag pattern and waiting for a breakout to confirm the continuation of the trend. By understanding and effectively utilizing these patterns, we can enhance our analytical skills. This pattern can complement your existing trading method.
Education
by UnknownUnicorn15614419
2