Upl bullish viewIt’s just my personal opinion and not an advice.
As it’s looks like a flag pattern in weekly chart it may reach fib levels of 1.6/2.4 .
It has to defend the 52 weeks low only then.
Tutorial
SIGNAL PROVIDERS: EXPERT ADVISORSAs the world of trading evolves and expands, new signal providers are popping up every day, promising to help traders identify potential market opportunities. However, there are many problems among legitimate providers from one of them: signal providers offer fraudulent Expert Advisors (EAs). These unscrupulous providers promise extraordinary returns and flawless trading systems, but in reality, they disappoint and lead to financial losses for unsuspecting rookie traders. In this post, we will examine the reality of EA fraud and give important tips on how to protect yourself in the trading industry.
EA scams primarily target traders looking for automated trading solutions using EAs. 99% of the time these are traders who have been in the industry for no more than a year. Signal providers often use deceptive tactics to lure people into their schemes. The main signs of fraud can include:
1. Unrealistic promises:
This is the biggest red flag. Signal providers make big claims of guaranteed profits or excessively high returns in a short period of time. Things get to the point of nonsense like 100% capital growth every week. But in reality, no trading system can do such results in a short period of time completely eliminating risk or ensuring error-free success.
2. Fabricated results:
To attract inexperienced clients, scammers show fabricated evidence of high EA returns using fake data or false reviews. It is crucial to independently verify track records and performance data as our team has done.
3. Lack of transparency:
Signal providers often lack transparency in their operations. They may withhold important information such as the strategy or methodology behind their EAs, making it impossible for traders to evaluate their performance. An EA may be behind a sliding line crossover. As a consequence, the EA gives signals when the market is in sideways movement, which is likely to lead to losses.
Protecting against expert advisor scams:
1. Do your due diligence:
Before signing up with any signal provider or purchasing an EA, conduct thorough research. Read reputable sources of user reviews and independent analysis to assess the reliability and performance of the provider. Since the reputation of the provider itself comes first. If the provider has a good reputation, they will not offer anything that is not of any use.
2. Check the track record:
Request supporting documents from the signal provider or developer, such as statements from real trading accounts or third-party verification results like we do. Reliable providers should be transparent about their historical performance.
3. Be skeptical of unusual claims:
Be cautious when encountering providers promising guaranteed profits or unusually high returns, this is always a red flag. Remember that trading always involves risk, and no system can completely eliminate it.
4. Test periods and money back guarantees:
Choose signal or EA providers that offer trial periods or money back guarantees. Legitimate providers are confident in their services and allow traders to test them with minimal financial commitment.
5. Get professional advice:
We have reviewed hundreds of signal providers and if you are unsure or inexperienced in evaluating signal providers or advisors, get advice from professional traders who will help and show you the right way.
Conclusion:
Although there are both genuine signal providers and effective advisors in the trading industry, traders must remain vigilant to protect themselves from EA scams. By conducting thorough research, checking history, using regulated platforms, being skeptical of unusual claims, using trial periods and money-back guarantees, and seeking professional advice, traders can reduce the risk of falling victim to scammers.
AI-Assisted Channel Patterns: Visuals for Precision TradingTypes of Channel Pattern
In this educational post, we won't take a trading position, but rather equip you with valuable insights. Today, we delve into the world of channel chart patterns. Channels come in two primary forms: bullish and bearish. Understanding these patterns is essential. A bullish channel appears as a descending pattern, resembling a falling rectangle, while a bearish channel manifests as an ascending pattern within rising rectangles.
Technicals of Channel Patterns
But why are these channels so important? Bullish channels often precede a shift from a bearish trend to a bullish one, signaling a shift from a pessimistic to an optimistic market outlook. Conversely, bearish channels frequently herald a move from a bullish trend to a bearish one, indicating a transition from an optimistic to a pessimistic market sentiment.
Application of Channel Patterns
Channels serve various purposes, from brokers illustrating their expectations to traders preparing for upcoming trends. They also offer an excellent opportunity for automation, as modern AI systems can detect channels with remarkable precision, often exceeding 70%.
Our Notes to Channel Patterns
However, it's worth noting that channel patterns are seldom used in isolation. To make the most of them, traders often combine AI-assisted channel detection systems with volume analysis. When analyzing BTC-USD markets across nine exchanges and over five years, we found that volume frequently aligns with precisely defined channel patterns.
By incorporating volume as a technical indicator and leveraging AI-generated channels, you can enhance your trading strategies and increase your chances of success in the cryptocurrency markets. Best of luck in your trading endeavors!
Best regards,
ELI
BTC Dominance IndexThe BTC Dominance Index is an indicator that shows bitcoin’s share in the total capitalization of cryptocurrencies. The higher dominance is, the more considerable influence of BTC on market
According to the analytical website Coinmarketcap, the total value of all cryptocurrencies in the world is $985 billion, of which $380 billion, that is 39.5%, accounts for bitcoin. This index is called the “dominance of BTC”. The TradingView service began calculating the index in March 2014, and during the first three years, the index was at a level of more than 95%.
In 2017, the ICO boom began, after which retail investors started actively investing in altcoins. This caused bitcoin’s dominance to fall and the capitalization of other crypto projects to rise. During the “bear cycle”, when the crypto market was in decline in the 2018-2020s, BTC’s dominance was growing, but the price of bitcoin itself was declining. This is because the volatility of altcoins is much higher than that of the main cryptocurrency. Due to this, altcoins rise more in a bull market and fall more in a bear market.
BTC dominance does not necessarily correlate with the price. When bitcoin’s value falls, and other cryptocurrencies’ prices fall at a similar rate – BTC dominance will remain at the same level.
DOUBLE TOP FORMATIONWhat is a double top?
This pattern appears when the price reaches some levels, makes a high, then goes down for a while. Then it comes back to about the same level and draws the same high at about the same level as the previous one, and then turns around and goes down. With a double top, this pattern is a reversal pattern and favors, subsequently, a downward price move.
What should I pay attention to?
Let's say you had some buys open; you saw a double top and, accordingly, decided to exit. So, how can you determine whether it is a quality pattern or not?
First of all, you should pay attention if there is a resistance level at the level of the double top. In this case, we have one top, the second one and we can pay attention to the fact that there is a level nearby. And it almost overlaps with our double top.
This gives additional strength to the pattern and it becomes more significant. Secondly, there should be at least six candlesticks between the two tops. That is, the tops should not literally follow each other.
There should be at least six candles between the tops. So that it visually looks like 2 peaks, not 2 or 3 candles next to each other. But at the same time take into account that if the second peak is very far from the first one, then this pattern is most likely not a pattern and it is just a coincidence, and most likely you will not see any strong trend reversal. A correction, perhaps, but no more than that. Accordingly, the farther the first top is located from the second one, the weaker the pattern is. This is because the significance of the chart formation is simply lost in time. Therefore, try to select trades in which the second touch is lower than the previous one, if possible.
And in case the reversal does take place, you can catch a very big movement. And if the space on the left looks filled, then accordingly, you should not count on any strong reversal. But strong global reversals are not so common, so it is not easy to catch them in any case. As they appear by themselves quite rarely.
How to enter the market?
Let's look at an example. As we know, this pattern is a reversal pattern. We have formed the first top, then the second top was formed and the price went up. You do not know what to do, to enter or not to enter, when to enter, where to put stop loss and take profit.
First, we build a trend line of the previous trend. Moreover, it should capture the lows that preceded the second top. In this case, we had an upward trend, so our trend line will be built approximately like this. Next, we put a horizontal line at the level of our last low that preceded the second top.
We will enter, as you guessed, at the breakdown of our trend line or neckline. And our target will be: the distance from our last low to the level of our last tops.
Entry on the breakoout of middle low. And you can put, of course, pending orders, you do not have to sit in front of the screen and wait for this breakout to happen and the stop-loss will be approximately at the level of our two tops, a little bit higher. And this is how the trade will look like.
UNDERSTANDING MOVING AVERAGEHello traders! 👋 🤗 Today I will try to explain to you guys another perspective and the concept of moving average. This is one of the oldest technical indicators and, perhaps, the most popular and most frequently used, as a huge number of other indicators are based on it. A lot has been written about moving averages. And at the same time, despite the abundance of information and respect for this instrument on the part of almost all traders, the issue of trading on MA is poorly covered. What do we often see about moving averages? Most of it is crossover. When one sacred line crosses another, we should enter the trade or something like that. I would like to show one simple method of working with moving averages.
A few important points
Only Simple Moving Average (MA) on closings is used. When working with moving averages, only 2 parameters are important: PERIOD AND SLOPE ANGLE . Any crossings and other things are not taken into account. Only MAs with a high period (from 100 and above) are used.
Thus, we can see the general direction, which looks a bit smoother and more obvious than a regular chart. In general, it is considered that if the price is above the moving average, it is an upward trend; if it is below the moving average, it is a downward trend. At the same time, the higher the period of the moving average, the more long-term the trend is. For example, with a moving average period of 21, we can say that if the price is above it, it is a rather short-term upward trend.
If the moving average period is much bigger, say 100, and the price is above the moving average with a period of 100, then we can say that there is a solid upward trend. If the price is below the moving average with a longer period (for example, 100), then we realize that there is a solid downward trend.
In other words, the longer the period of the moving average, the more inflexible it is because it has to calculate the average value for the last candles (in our case, 100). This is a lot. And, accordingly, the longer the moving average period, the more important it is in the long term. Our job as traders is to squeeze everything out of the movement. The least job is to stay at breakeven and don’t blow the account. That is why large MA periods are used. And do not believe the words when they say that MAs are lagging.
For the demonstration we will use 3 timeframes: 4 hoursly - 1 daily - 1 weekly. As practice shows, the approach described below works even in the combination of 5 minutes - 15 minutes - 1 hour. This for day traders.
Examples of moving averages
As an example, we will now show the chart of one asset from 3 timeframes as already mentioned above:
Weekly (MA 100) will show us the direction of the global trend
Dayly (MA 200) the medium-term trend
4-hourly (MA 100) the actual entry points and setting Stop loss and Take profit
The essence of working with big MAs is very simple: we can trade only in the direction of MA movement, and at the entry point, the price should be on one side of all MAs (above or below it) on all 3 timeframes. In this case, the mandatory condition is that the angle of slope of the MA of the highest period must be strong, approximately 45 degrees.
AUDCHF weekly
Go down to the daily timeframe and apply MA 200. We highlight the areas where the price is also below the MA 200 on the daily timeframe. We also take into account the slope angle of the current MA. We highlight this movement with a green block.
AUDCHF daily
AUDCHF 4H
Now we go to H4 and apply MA 100. This is the timeframe for a possible entry point. We select the block where the price is below the MA on the current timeframe. We cut off all the moments when the price was above the MA, highlight the price movement below the MA with yellow blocks
3 potential areas where we can look for entry points to open short positions. Let's take a closer look at each area.
First opportunity
Second opportunity
Third opportunity
Of course, on live trading, things would be much more difficult. But as you can see, we got at least two very clean trades that screamed to take them.
Another one
EURJPY weekly
EURJPY daily
EURJPY 4H
Closer look
Again in hindsight everything looks good, but the purpose of this post is to help you build and understand a slightly different method of applying moving averages if you use them. As you can see, trend trading is actually much easier.
What about sideways movements?
If the trend is more or less clear, and as soon as the SMA on the higher timeframe (say, daily) shows a more flat angle of slope for the last 5–10 bars, we have a sideways movement. You can try to take advantage of this on the lower timeframes.
In this post I tried to show how to systematize and demonstrate my approach to trading on moving averages. Of course, there are many methods of trading on short-term moving averages, on the combination of multi-period MAs on one chart, etc. Sometimes it is hard to describe in words what is "right" angle of slope, and the overall price movement, I guess all this comes only with personal experience.
Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
GEVO. Manipulation Short squeeze. How short positions are reset.This example is on paper company Gevo inc - manufacturing. Chemical industry. Specialized chemicals.
I will say that I combined the training idea with the trading one , how the stocks will be relevant for trading now, the potential first profit with confirmation of support can be about + 90%.
Everything that happens now, goals, read below under the description of the manipulation of a short squeeze.
But let's plunge into the past and in order to examine this detective story in order to evaluate this masterpiece of trading art by applying the punishment of the zombie crowd of believers “it should be like that” and “put sure Stop-Loss like a smart uncle wrote to us in a book.”
It was like this ... It seems that the downtrend will last forever. After all, the price over the past 2 years has fallen by almost -99%! Dump from $ 245 to $ 3.30!
This is what happens with real companies, but what about non-existent crypto projects?
After all, almost all crypto projects are built on promises that this “nothing” will cost a lot. Buy and hold, and you and the plant employee will become a millionaire in a couple of months / years. The sweetest lie, the more willing poor John believes in it.
As you understand, in many cryptocurrency projects for lovers of “buy and hold”, to become a millionaire and stop going to the factory is still ahead.
It doesn’t matter whether these assets are pumped up yet or not, but their ultimate fate is the complete disappearance in the near future of the life of poor believing John.
The graph shows a strong downtrend , merciless to investors. But among investors, one must not forget that there are very rich uncles who can also make a mistake. But those who want to fix it. Well, it is clear that after such a fall from $ 240 to $ 3, no sane person believes in growth already, how silly it is. Most traders enter only a short position.
But there are more intelligent people who have thought and decided why we don’t make a lot of money on “100% faith” of people.
The strongest downtrend. Drop from $ 240 to $ 3.30. Minus 99% for 2 years.
As part of this trend, many sellers are going to expect a continued decline in the trend.
But after all, everyone was taught that it is necessary to put Stop-Loss, and if you do not, then you should always close somewhere.
Where will everyone have stops on this chart? Yes, everything of course depends on the point of opening positions, but the generally accepted approach - Stop-Loss who enters a short position will be put for the nearest resistance, that is, we will be interested in the zones above the selected levels on the chart.
If everything is clear and the main crowd has so much faith and become accustomed to the eternal fall, why not take advantage of this and start the domino effect? After all, money is burned only initially to start the process, then only fantastic earnings. How everyone will be "trapped" in a trap. Any inadequate Stop-Loss sizes will be reached. Buy or margin Call.
Gevo inc. Levels where the crowd of "shorts" puts Stop-Loss.
It is in these zones that Stop-Loss of most market participants are behind the resistance.
Large players understand this very well, it’s a sin not to use it if you have enough money on hand for this manipulation.
Perhaps the biggest player is the company itself, which is very interested in getting out of a loss-making situation and making big profits. After all, having for this a certain amount of money you can start an avalanche-like process and get the most unattainable Stop-Loss, thereby moving the market up against the current trend on Stop-Loss. This is an avalanche-like process.
You understand very well what will happen to those traders who have opened a short trend and the price will begin to rise against their position, and even grow rapidly impulse with no chance of pardon. Yes, everything is simple, when we reach a certain zone, the order is executed, that is, the position is closed by Stop-Loss. And we all know that a position is closed by opening a reverse position, which means that if we were on sale, then a purchase is opened to close, that is, we create additional demand for growth. And so on the chain.
And it’s not scary that then the price will return very quickly back to the previous values, because the manipulators will be in big profit, and the trader who caught the margin will no longer enter a short position on this asset. This is what came out of the chart below.
Gevo inc. Growth + 600% at closing short on Stop-Loss.
As we can see, the first strong resistance was + 100% of the minimum value before the short squeeze.
That's how you think who believed that the price will reach these values? It is clear that no one, well, especially since the price will reach the last Stop Loos zone.
For such an action, money was needed only until the first Stop-Loss zone, after which the price moves according to the domino effect. Growth fuel is the closing of short positions. Virtually no one believed in growth, which is why the impulse was + 600%, due to the closure of short positions of those who did not believe.
After a while, the price broke the line of the main downtrend. Price shifted to lateral movement. Wishing to enter the short was less and less, as everyone remembered the previous margin Call.
A year ago, there were two more attempts to punish those wishing to enter a short position in this trading instrument. It was not possible to repeat the short squeeze situation on such a scale. The first short squeeze is + 67% and immediately after it + 27%. It can be seen that there are no more willing traders to enter a short position on this trading instrument.
Gevo inc. The situation is now.
Please note that only on short-squeezes did a large volume go out at the auction. Traders with short positions were squeezed out of the market specifically.
In lateral movement, the price is now drawing a formation that could become a triple bottom. If support is confirmed , the growth potential to the previous local maximum and the first resistance is about + 90%.
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Manipulations.
Someone thinks that manipulations occur only in the crypto market, this is not so, they are everywhere, only in the crypto market they are open and arrogant, as there is no responsibility for this.
In other markets, there is price manipulation, but to a lesser extent, as if the relevant authorities prove guilty there will be huge fines, or the deprivation of a license for trading activities up to the prison.
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What is a squeeze on the exchange. Short squeeze. Long squeeze.
Squeeze (eng. Queeze - squeeze out) - a situation in the financial market when Stop Loss is sharply collected. As a result of the sharp increase, part of the Stop Loss is squeezed out, and part is closed at the “what is” price, this leads to an even greater increase / decrease in the price.
Since positions can be held both in purchase and in sale, both short-squeeze and long-squeeze are possible.
Short squeeze - it happens when sellers (shorts) are forced to close their open positions in order to avoid even greater losses, which only spurs the price even higher. On the graph, the hairpin (shadow) is up.
Long squeeze - exactly the opposite. A sharp decline in the price of assets, forcing buyers (longists) to close their positions. Here, the buyers are already the “victims”, who are forced to close open transactions at a loss in order to prevent even greater losses, which provokes a further drop in the price of the instrument. On the graph, the hairpin (shadow) is down.
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Short squeeze on margin trading.
If it comes to margin trading, the strongest buyer today is yesterday's short. The vicious circle for bears is called "short squeeze" - short squeeze. In order not to be trapped, market participants must understand the principle of short positions, see the potential for a situation that could provoke a “short squeeze”. Experienced traders know how to make a profit with a short squeeze.
The strongest short-term growth waves often occur during periods when a large number of lower players find themselves locked in an unprofitable position due to an unexpected price increase for them. As a rule, these are mid-level traders and so-called “hamsters” market participants with a level of knowledge and experience that is close to zero and close to it. Unfortunately or vice versa, fortunately the bulk of the crowd of the crypto market is precisely this layer of society. In such a situation, in order to get out of the trap they have to actively buy this cryptocurrency in which they are locked at any price in order to save part of their capital and fix the loss. I will explain in more detail so that the mechanism of this phenomenon becomes more clear.
A short position or short-term transaction (from impudent short) is an operation when a trader sells a borrowed coin with the intention of buying it back later at a lower price. After the return of the borrowed coins, the difference between the sale price and the purchase price becomes profit.
You can borrow cryptocurrency from the exchange, which as a guarantee for such a loan requires an adequate amount of guarantee security in the account. As a guarantee, money, bitcoin or other cryptocurrencies, which are valued at a certain discount, can act.
When the value of the coin in which you are in a position increases, the size of the required guarantee for short positions also begins to grow rapidly. If the amount of funds in the account is insufficient to cover the required amount of security, the exchange may forcefully close the position.
Downgrade players usually try to prevent this situation and close the position before submitting a margin call request from the exchange. However, their tactics here are essentially the same - a quick purchase of a coin that has grown in price, and you are in a short unprofitable position on it. If the size of the positions of such participants is large enough, then this situation can lead to skyrocketing prices and the avalanche-like closure of other shorts.
Scalper traders and intraday traders who often open counter-trend trades in the hope of a pullback after active growth can aggravate the situation even more. If the rollback is not realized, then their purchases may become additional fuel for the upward movement.
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The immaturity of the cryptocurrency market provides opportunities for manipulation.
An important feature of the cryptocurrency market, which is often ignored, is its tendency to respond to the actions of individual bidders. By individual bidders, I mean large traders, the creators of individual cryptocurrencies on which manipulations occur, as well as exchanges, which naturally themselves are owners of large cryptocurrency assets. And also, if desired, can affect their price. Roughly speaking, these are market participants who are called “whales” in the slang of traders.
The cryptocurrency market is more affected by the influence of these particular market participants than other markets, due to the lack of maturity and insufficient control of the relevant state financial control bodies.
No fundamental does not work without money support, but money on the exchange without the influence of the fundamental works in such an uncontrolled market perfectly. For example, we are all familiar with such frequent phenomena in the crypto market as "pumps" (artificially pumping prices). Very often they occur even without the release of FUD news on a particular coin.
Also, the entire crypto market is very much tied to the dynamics of bitcoin, which can lead it in the opposite direction to fundamental factors.
In recent years, the market has become more “mature”: instead of the buy-and-hold trading strategy, many have begun to use more advanced methods. Futures contracts, trading with leverage, opening short positions are now available. The more powerful players appear in the industry, the more the community takes on them “tricks” from the field of trading.
More and more traders are using short positions in a falling market, allowing them to earn money in such conditions. And naturally, in such conditions, short squids and long squises often occur. Since the majority of traders take short positions in the bear market, many receive big losses, some especially greedy and not experienced margin calls.
Large investors can begin to behave dishonestly Short-squeeze can be carried out only by a large market participant, such manipulations are beyond the power of ordinary traders. How to do this you need a huge amount. As a rule, such manipulations are done by the exchanges themselves. This is illegal - but everything is legal on the cryptocurrency market!
There are conspiracy theories that such manipulations are carried out by exchanges, thus getting rid of customers who will definitely be in the black due to short positions and withdraw money from the exchange ecosystem.
TradingView Masterclass: How To Use Drawing ToolsWe continue with our Masterclass series, which we created to teach people how to get started with charting, research, and analysis. In this lesson, you’ll learn all about the Drawing Panel located on the left side of your chart. Let’s get started!
Drawing tools 🎨
There are eight categories in the drawing tool section: Cursors, Trend line tools, Fibonacci tools, Patterns, Forecasting and measurement tools, Geometric shapes, Annotation tools, and Icons. In addition, just below these categories, there are handy features that augment and optimize your research in specific situations, such as zooming in/out, measuring, and a magnet tool for selecting specific price points. Let’s analyze each of these in detail:
- Cursors: Located at the very top corner of the drawing tool section, Cursors gives you the capability to change your mouse as you move around the chart. For example, we have other variations such as the dot cursor or the simplest of all, the arrow cursor. Finally, we have an eraser tool to remove objects from the chart by clicking on them.
- Trend lines: Trend lines can be used to identify and visualize the direction of a price trend, and are sometimes used for drawing support or resistance lines as well. In this section, you can also find trend channels and pitchforks.
- Gann and Fibonacci tools: These advanced tools are often used by technical analysts and quants to locate retracements, pullbacks, measured moves, and advanced price sequences. The Fibonacci tools include retracement, extension, fans, arcs, and more. The Gann tools include box, square, and fan.
- Patterns: In this section, you’ll find popular drawing tools for mapping our complex patterns that require several different points to be drawn such as Elliott waves, head and shoulders, and impulses.
- Forecasting and measurement tools: These invaluable tools are used to make projections either long or short, study specific stats such as time or price ranges, and also give you the capability to analyze volume with VWAP and volume profiles.
- Geometric shapes: These tools are where you can find the brush tool to freely draw on your chart, but it also goes deeper than that, as there are also important shapes whereby a trader can highlight important areas on the chart with a rectangle or arrow such as accumulation or historical rebound zones.
- Annotation tools: These can be used to write notes, reminders, prices, and journal entries. These are key tools for traders who want to track their progress over time and always have specific notes attached to the chart. It also includes the ability to insert X links and images from your computer.
- Icons: Need a little more color or character on your chart? This section gives you hundreds of emojis, icons, and stickers to add to your chart. Highlight an area, add more art to your chart or spice up your creativity.
Tip: Keyboard shortcuts 🔠
Did you know that you can use keyboard shortcuts for the most popular drawing tools? To find out the command, you need to open the drop-down menu of one of the 8 drawing tool categories and you will see the command on the right side of some tools. For example:
Alt + T = Trendline
Alt + F = Fib retracement
Alt + H = Horizontal line
Alt + V = Vertical line
Alt + I = Invert chart
Alt + W = Add current symbol to watchlist
If you're a Mac user, use ⌥ instead of Alt.
Measure and zoom 📏🔎
When you use the Measure tool (the ruler icon just below the 8 drawing tool category icons), you can see at a glance how much an asset has fallen or risen in numbers, percentages, bars and days. Combined with the Zoom tool (the magnifying glass with +/- icons), you can also focus on the most important areas of the chart. For both measuring and zooming, the procedure is the same: select the tool, click on the point where you want to start measuring or from where you want to zoom, and end with another click where you want to end. You can also use the "Shift" hotkey instead of the icon. To remove a measurement, simply click on the chart.
Magnet mode 🧲
Magnet mode is a wizard that helps you to bring the drawing tools closer to the nearest price bars that you hover over with the mouse. There are 2 modes: Weak magnet and Strong magnet. This tool allows traders to perfectly connect a drawing tool to a specific price point. The current values are OHLC, meaning when Magnet mode is turned on, all drawing tools will connect to the nearest open, high, low or close value. Want to draw support lines that always connect to a specific price? Use this tool.
Stay in drawing mode 🎨
If you are going to make several drawings on the chart at the same time, you may find it useful to activate this option (pencil + padlock icon), as it will allow you to make as many drawings as you want without deactivating the selected drawing tool. Remember that you must deactivate this option to return to normal mode.
Lock all drawing tools 🛑
Once the chart has been configured, if you do not want to make any further changes, you can lock everything that has been drawn with this option (padlock icon) so that you do not accidentally delete elements in the future.
Hide/Show drawings/indicators/positions & orders 👁🗨
This option allows you to toggle the visibility of the drawings, indicators, positions & orders or even all three to make comparisons with a blank chart. The keyboard shortcut is "Ctrl + Alt + H".
Drawing sync 🔄
This allows you to synchronize the drawings of the selected charts in the current layout or in all layouts (globally). You’ll surely want to test this feature as it’s perfect for those who perform multi-timeframe technical analysis and research across multiple charts or timeframes. For example, when this tool is turned on, if you draw on one chart, all of your drawings will appear on your other charts that have the same symbol.
Delete objects 🗑
With a single click, you can delete all drawings or indicators, or even both at the same time. There are also a few other options to remove specific things on your chart. Use this tool wisely and don’t accidentally delete everything!
Show favorite drawing tools toolbar ⭐
To set up the favorites toolbar, first, you must first go to one of the eight drawing categories and click on the gray star in one of the tools. When you click on it, it turns orange and the quick access toolbar for drawing tools is created. Once you have selected all your favorites, move the favorites toolbar around so that you can use it conveniently every time you want to draw something on the charts.
That’s a wrap! We hope you found this guide valuable. We'd love to hear about your favorite drawing tool, so please share your thoughts in the comments below. Additionally, if you have any feedback or suggestions, drop us a line.
- TradingView Team
Dissecting SPY Price trends With Fibonacci Price TheoryHave you ever wanted to learn the one technique you can use on any chart, any interval, or any technical or price set up to help you become a better trader?
Let me show you the basics of Fibonacci Price Theory and how to use it.
Price is always seeking new highs or new lows - ALWAYS.
You'll hear others talking about price filling voids or moving through accumulation/distribution phases - which is all true. Price moves through these support/resistance levels or quickly through price voids to reach new highs or lows. This is all part of Fibonacci Price Theory.
When you learn to understand various intervals using this technique (Weekly, Daily, 30 Min, or others), you'll quickly be able to identify short-term, long-term, and intra-day trends like a pro.
It is not about catching every trend reversal/setup. This technique is about teaching you to stay on the right side of trend and to target the Sweet Spot in the middle of breakaway/breakdown trends.
Follow my research. Learn how I can help you become a better trader.
BUILDING A CHART "BRICK BY BRICK"What is it Renko?
Renko charts were invented in Japan, just like regular candlesticks, many years ago and they are called Renga, which means "brick". They display charts symmetrically and are effective for identifying major trends and structural support and resistance levels. Renko charts are very well suited for trend trading as they are visually appealing, making it easy to screen out noise and highlight trends easily.
Renko charts show a trend in a way that bars and candlesticks charts cannot. They are able to filter out the noise and create the sameness underlying the trend. In order to understand what a Renko is, let's remember what candlesticks show on our charts? They are the fluctuations in the price of a particular currency pair over a certain period of time: price and time.
The main difference is that Renko charts show only the change in price, neither trading volumes nor time intervals are taken into account in their development. The principle of building Renko bricks is based, as already mentioned, only on price fluctuations. In order for the chart to be displayed correctly, first of all, it is necessary to set the size of one brick. For example, many traders use a simple rule: 1 brick equals 10 pips. In other words, for a new brick/block to appear on the chart, the price must change by at least 10 points.
Candlestick chart:
Renko bars:
This is the feature of the Renko chart: it is extremely smooth and clear. All blocks have the same size. At the same time, if the price has changed by only a few points, it will not be displayed on the chart.
There are two types of brick size assignment methods: traditional and ATR-based. It measures the volatility of the asset, i.e. the values will be different at different periods of the trading period and on different time intervals. If you use this method, the value of the Renko bar should be equal to the ATR value.
Main Advantages and Disadvantages
Like any other graphical display of price changes, Renko has its pros and cons.
Advantages of Renko:
• This principle of construction allows to eliminate almost all noise from the chart as mentioned above.
• Renko shows itself perfectly in work with most indicators. Let's remember the main problem of some popular indicators - they output data with some delay (information is substituted into the formula only after the candle is closed). And since Renko is not tied to time, the indicator displays more real information as a result.
• Renko indicators show themselves perfectly in intraday trading. The trader does not need to wait for the candle to close.
The Main Disadvantages of Renko are as Follows:
• The chart does not work with most volume indicators.
• A new brick is built only when the trend increases/decreases by a certain number of points (which is equal to the size of one block). That is, the chart can remain unchanged for a long time if the market is consolidating.
• Renko chart does not show consolidation and impulse moves as seen on regular charts.
• In order to be aware of the likely measurement of trend direction, it is necessary to constantly monitor the market with other charts.
Examples
We will use a simple strategy based on the moving average with a period of 20 on the 15 minute timeframe. The sell and buy signal will be pinbar. Enter the trade when the pinbar is created near the moving average. Of course you can create your own strategy. You just need to spend some time with the chart and you will know if it will work for you or not.
EURAUD
USDJPY
GBPUSD (Sometimes Renko chart gives really beautiful and clear signals.)
Conclusion
Renko charts are quite convenient and practical because they display symmetrical candles and are effective for identifying major trends, support and resistance levels by filtering out noise. They can also be used in combination with other indicators to improve trading results. Renko charts allow you to identify various reversal patterns and see price structures in the market. However, they are mainly suitable for intraday trading.
Algorithmic Trading for BeginnersIn the trading landscape, the fusion of technology and finance has birthed the practice known as Algorithmic Trading. This method leverages automated pre-programmed trading instructions to execute orders, accounting for time, price, and volume variables. Once a domain exclusive to institutional investors and hedge funds, algorithmic trading has become an accessible venture for individual traders due to technological advancements. This tutorial seeks to demystify algorithmic trading and lay down a solid foundation for beginners to embark on this journey.
What is Algorithmic Trading?
Definition:
Algorithmic trading, also known as algo-trading or black-box trading, involves using computers programmed to follow a defined set of instructions (an algorithm) for placing trades, aiming to generate profits at a speed and frequency unattainable for a human trader.
Historical Evolution:
The journey from open outcry in trading pits to algorithmic trading on electronic platforms marks the evolution of the trading landscape. The development of electronic trading platforms, high-speed internet, and complex computational tools has fueled the rise of algorithmic trading.
Benefits:
Cost Efficiency: Reduced transaction costs due to automation.
Speed & Accuracy: Algorithms can process vast amounts of data and execute trades in milliseconds.
Backtesting: Ability to test strategies on historical data to gauge effectiveness.
Reduced Emotion: Automated trading minimizes emotional trading decisions.
Components of Algorithmic Trading
Trading Algorithm:
This is the brain of algorithmic trading. It’s a set of rules derived from quantitative analysis that guides trading decisions based on variables like price, volume, and time.
Trading Platform:
The platform hosts the trading algorithm, providing the necessary infrastructure for executing trades, managing portfolios, and analyzing market data.
Market Data:
Real-time or historical market data is crucial for the functioning of trading algorithms. This data feeds into the algorithm, allowing it to analyze market conditions and execute trades accordingly.
Backtesting:
Backtesting involves testing a trading strategy on historical market data to evaluate its performance and robustness before deploying it in the live market.
Getting Started with Algorithmic Trading
Choosing a Trading Platform:
It’s imperative to choose a user-friendly platform with robust data, backtesting facilities, and support for programming languages.
Learning a Programming Language:
Acquiring programming skills is a cornerstone of algorithmic trading. A language known for its simplicity and a wide range of financial libraries is often a good choice.
Developing a Simple Trading Algorithm:
Starting with simple strategies like moving average crossovers or mean reversion is advisable. Gradually, as you gain confidence and understanding, you can venture into more complex strategies.
A Simple Strategy Example
The Moving Average Crossover Strategy:
This strategy is based on two moving averages, one short-term and one long-term. When the short-term moving average crosses above the long-term moving average, it generates a buy signal, and vice versa for a sell signal.
Explain the process of coding this strategy, backtesting it on historical data, and interpreting the results.
Simulated Trading:
Emphasize the importance of practicing with a simulated trading account to understand the dynamics without risking real capital. Discuss various platforms offering simulated trading environments.
Conclusion:
The odyssey into algorithmic trading is filled with learning and exploration. This tutorial serves as a stepping stone into a vibrant world where finance dovetails with technology, unveiling a spectrum of possibilities for optimized trading. As you delve deeper and hone your skills, the blend of analytical acumen, programming prowess, and market comprehension will not only morph you into a proficient algorithmic trader but also augment your market sagacity.
Disclaimer:
This educational content is not financial advice. It's intended to provide an understanding of algorithmic trading. Before engaging in such trading activities, conducting thorough research and consulting with financial advisors is strongly recommended.
TRADING SESSIONS CHARACTERISTICSIn this post, we will look at the three major forex sessions and their features to understand when and where we can expect volatility and movement in the forex markets. This will be helpful for those who want to associate their forex market trading as a day trader.
Main Sessions in the Forex Market
When trading currencies or indices, there are three main sessions that occur every day. We all know that the currency market is open 24 hours, but during those hours when the markets are open there are spikes and lulls in volume and volatility that we need to be aware of.
Asian Session
The Asian session comes first. The reason why the trading day starts with it is that it opens the trading week as early as Sunday, at 8:00 am in Tokyo and 9:00 am in Sydney. This session is usually marked by very volatile price action, with the exception of some pairs (JPY, AUD, NZD) occasionally showing volatility during the Asian session. In addition, there is usually little volume or manipulation by banks and financial institutions at this time, resulting in very organic and slow price movements.
Liquidity at the Asian Session
There is one interesting feature here. This thing is that a little volatility in the Asian session is created naturally, because of this over the range of the session, above and below, liquidity is created. As the London session begins, the price moves strongly to one side. When day trading, you must realize and consider that that liquidity above and below the Asian session range is highly likely to be absorbed almost immediately after the London session opens.
London Session
Following the Asian session, the London session opens. This time is the main trading time in the UK and Europe. Why do people love the London session? Asia tends to accumulate liquidity in or around its range, the further out, the more volatile the market gets. When trading opens in Frankfurt or London, there is a huge volume of orders coming into the market. This creates ideal trading conditions, especially for those who want to capitalize on large intraday movements.
Before London Opens
The official opening starts at 8:00 am local time. The London session is characterized by high volatility for the first 2-3 hours, after which this volatility starts to slow down as both retail traders and financial institutions start having lunch. London time is great, especially if you will be trading major pairs, European indices or equities, because London movement is real movement.
Lull in London Session
From about 11:00 to 12:00 (noon), price fluctuations quieten down a bit as the major movements in the London session come to an end. This does not mean that the trading day is over and there is no more volatility, from three o'clock and up to an hour before or after the opening of the New York session you can see it rising again. Most traders who trade both sessions take a break, and those who trade only the London session may call it a day.
New York Session
Next we have the New York session, which is a favorite for those living in North and South America, as well as for Europeans who are just too lazy to get up early for the London session and prefer to start trading at 13:00 local time zone. The New York session is special because it also includes the opening of the US stock market, which leads to volatility in certain asset classes that forex traders can trade, including indices.
Before the Opening New York Session
As with the opening in Frankfurt before London, the hour before the session opens is worth devoting some attention to trading and analysis. There is usually a bit of a lull with volatility during this time frame as well. This is something to be aware of and remember, as a good trader, that normal movement will soon begin again.
Opening of New York Session
Next, the New York currency session opens at 8:00 am EST, which is usually accompanied by a lot of volatility, but not as consistently as the hour or two of the London session. During the New York session, you will usually see a big spike in volatility across the major pairs and North American indices, and sometimes a little volatility into the evening. It should be noted that the London session closes at 4:00 p.m. local time, which means lower volumes from London banks and other financial institutions.
The Highs and Lows of the Day
The day's highs the day's lows are key liquidity levels that can either be consumed or used as target liquidity to drive movement. Typically, you will want to mark the highs and lows of previous days to get an idea of what liquidity is being harvested where, as well as the current day's high and low if globally you are in a price range.
Traders, If you liked this educational post, give it a boost 🚀 and drop a comment
We’ve Paid Over $25,000 To Our Creators and CodersOur vibrant community is not only for professional investors, everyday traders and Pine scripters, it’s also home to content creators who share their wisdom, experiences, and market insights. We love our content creators and that’s why we recently launched our first-ever community content rewards program that gives $100 cash to anyone who is selected to Editors’ Picks and Pine Script Picks .
Since the launch of our program, we’ve given out over $25,000 .
Yep - $25,000 to our best creators, contributors, and coders.
Because of the success of this program, we’ve decided to keep it going, and invite more of you to join our social network whether it’s for meeting other traders, growing a brand or sharing insightful content about financial markets. If you still don’t know how to use our social network, we have plenty of resources available:
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Open a chart.
Click the Publish button in the top right-hand corner or the Pine Editor button at the bottom of the chart.
Write your idea or code your script (if you’re up for a challenge), and when you’re ready, publish it to our network.
Our network values creativity, deep research, and insightful content. Here are some recent examples to showcase what our network values: example 1 , example 2 , and example 3 .
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10-6 Using Price/Fib Theory To Catch NFP MovesThis short video shows you how I used Fibonacci Price Theory techniques to identify trends, catch the biggest moves in price today on the SPY/SPX500.
This is an instructional video - attempting to show you how to use PRICE (the ultimate indicator) to help you learn to become a better trader.
How did I know price would REJECT at $425.40 this morning and sell downward?
How did I know the bottom would confirm near $421.20?
How did I know the price rejection near $421 (after the bottom) would result in a bullish rally phase?
Fibonacci Price Theory teaches us:
Price must always seek higher highs or lower lows - ALWAYS.
Failure to establish higher highs means price will attempt to make lower lows.
Failure to make lower lows means price will attempt to make higher highs.
Watch the video. Ask questions if you have them.
Price is the ultimate indicator - use it.
THE IMPORTANCE OF TAKING BREAKS IN TRADING✴️ How to do the job right
Around 2-3 hours in the afternoon you feel tired, your brain is not working as actively as in the morning and you want to take a nap. Is that normal? More than normal. All of us to more or less conscious age were taught to sleep at night and stay awake all day. But it's not the best habit for our mental health and it's certainly not how our ancestors used to sleep.
People in the pre-industrial era, when there was no electricity yet, would go to sleep around 8pm, then at around 2am wake up for a couple of hours, do some creative work, go visit neighbors and then go back to sleep until morning.
A similar story happens during the day. The fact is that our brain prefers to fall asleep and wake up more often than once a day. From 2pm to 4pm is the so-called "Nap Zone", a time period ideal for daytime naps. It is known that the ancient Romans in the first century BC liked to nap in the afternoon, such breaks they called Meridiari, then they began to call them Sexta (sixth hour, according to their time measurement), well, and the word Sexta over time transformed into Siesta.
Many studies show the positive effects of a short nap during the day. Concentration improves, attentiveness improves, you can do more things.
Moving on. The following interesting keys are given to us by a 30-year study of people who are outstanding in their fields - musicians, athletes, writers, etc.
Number 1 : it is only possible to perform at peak performance for about an hour without rest. This is worth taking note of for scalpers who follow the market intensively. If you have traded for an hour, take a break.
Number 2 : people who have achieved great results in their fields practice/train about 4 hours a day on average. Increasing the workload time only leads to burnout and injury (in the case of athletes). Therefore, it makes little sense to trade more than 4 hours a day. And of course, the most effective period is from morning until lunchtime. If you have any business that requires extreme attention and concentration it is better to do it in the morning.
If we summarize all of the above, then:
• We do the most important thing in the morning
• It is possible to work hard, at the limit of your capabilities without resting for only about an hour, feel free to take small breaks
• It is pointless to practice trading/sports for more than 4 hours a day
• Between 14 and 16 hours it would be good to allocate 15-20 minutes for a short nap
An important note, if you have entered the flow you do not need to stop through force. If, for example, you are happily testing a new system until one o'clock in the morning, this is a good sign.
✴️ How to rest properly
The best way to relax is something involving physical and mental activity, with deep immersion in the process. For example: rock climbing, painting, golf. The goal is to completely disconnect and not think about work/trading, etc.
Of course, if you are wildly tired then sleep, watch TV series, play video games when it's simply not physical strength. And perhaps you should focus more on athletics If you want to play a sport.
As for vacation in general, scientists agree that it should ideally be about one week every three months. Hard work or trading without weekends and vacations will only lead to health problems. You can't make all the money you want anyway. So, health is wealth.
✴️ Conclusion
It is understandable that not everyone can apply the above tips. But if this post made you at least think about the importance of rest and breaks in work and trading, then this post was written for a reason. I myself thought for a long time that it was cool and great to be busy all the time, even sometimes I felt guilty during weekends or vacations when I didn't do anything, but as it turned out, there is nothing to feel guilty about without rest and breaks, productivity is simply impossible.
Keep in mind the market will be here tomorrow. And if you feel that you want to take a break from trading for a day/week/month then go ahead. Nothing bad will happen, even on the contrary during this time you will surely come up with new, cool ideas on how to improve your trading.
SIGNAL PROVIDER TESTIMONIALSWhen choosing signal providers, it is a difficult task to determine the quality of the provider. One way of course is to look at testimonials. Testimonials are a common tool used by signal providers to showcase success stories or attract potential customers. While testimonials can provide valuable information about a provider's performance, they should be approached with caution. It is important to study them thoroughly. Here are a few key factors to consider when you read forex signal provider testimonials:
1. Authenticity
First of all, you need to make sure that the testimonials are genuine and not fabricated. This is where details are important. Look for specific details such as the trader's name, location and trading experience. General or vague testimonials without any identifying information should alert you.
2. Verifiability
Check if testimonials can be verified through independent sources. Reputable signal providers often provide links to their clients' social media profiles or trading accounts, which allows you to cross-check the information provided. Such transparency indicates a higher level of trust, as testimonials without verification are not a good sign.
3. Consistency
Analyze the consistency of testimonials. Do they all sound the same or use identical wording? For example, identical and short sentences. Such testimonials may indicate that they are scripted or fake. Genuine testimonials should reflect individual experiences and vary in tone and content.
4. Duration
Pay attention to the duration of the testimonials. Are they recent or written several years ago? Testimonials that cover a significant period of time indicate consistent performance and reliability. But too old testimonials, say left 3 - 5 years ago, may not accurately reflect the current work of the provider.
5. Third-party testimonials
Look for independent reviews as we do for example or testimonials about the signal provider in reputable sources like Trustpilot. Such reviews can provide an unbiased point of view and verify the claims made in the testimonials. Internet forums, social media groups, and specialized review websites are excellent resources for finding such information.
6. Track record
Evaluate the overall track record of the signal provider. Does it have a track record of generally providing accurate and profitable signals? Look for evidence of long-term success, including consistent positive testimonials from numerous clients that reflect the provider's profitability.
In conclusion, while testimonials can be a valuable tool for assessing the reliability of signal providers, you should approach them with skepticism. Considering factors such as authenticity, verifiability, consistency, longevity, third-party testimonials, track record and trial period give informed decisions on which signal providers to trust. One must remember that thorough research and due diligence are crucial when choosing a reliable signal provider.
UNDERSTANDING COMPLEX PULLBACKWhat is a two-legged pullback ?
A two-legged pullback in the market is a pattern of price action in which the market retreats in two separate steps or movements before resuming its primary trend. This is a counter-trend move. After a strong trending move, price needs to sort of take a break and there is a double attempt to reverse the trend. When the price hits a strong zone, the price pulls back from it and if the trend does not continue, a second pullback occurs. Here the second pullback is approximately equal to the first one. We use this model for 2 purposes in the market:
- Projection of the next move
- End of pullback
If you look at the market, it likes power of two, be it a double top/bottom, a double test of the uptrend, followed by a breakout. Let's look at the example of the recent movement on EURUSD. As we can see the asset has been in a strong bearish trend for a long time. The price bounced off the support and made the first pullback and then the second one. Note that the first pullback ended where there were no strong levels. But when we have the second pullback, we can see that it ends right at the strong resistance. This was an additional signal to enter a trend trade.
A two-legged pullback in the context of the market
Traders using the two-legged pullback strategy usually wait for both legs of the pullback to complete before entering a trade. It is very important to look at the context of the market here. If it happens that the second leg breaks through the lower high or higher low, it is a reason to be wary because it is usually a sign of a trend shift. The first leg can be projected and wait for the price at these levels. If it coincides with a strong level, it is a trade with a high probability of success.
Let's look at some examples
The recent example of gold shows well the interaction of a two-legged pullback with a strong level. The first time we got a pullback A. The price paused and then went up. The question remains where we should wait for price. We simply take the A pullback and project it and get the approximate end of the C pullback. This pullback ended on a strong resistance, which led to the price reversal .
The EURUSD, too, after a strong bearish movement, rolled back to the resistance, making a two-legged pullback. Note that the EURUSD touched a strong level and fell. Although it did not lead to a complete reversal of the price, but we got a reaction and a short term trade. Here you can see a perfect example that there can be a third leg, which exactly led to the price reversal.
The UKOIL example perfectly shows a trending trade. The price bounced off the resistance, and as you noticed there was a two-legged move before that. When A and B have formed, we use the projection method to wait for the price at the end of C.
The last example is a great example of a perfectly formation of the two-legged pullback. The price has not yet triggered the level. But what do we have here? A downtrend, a two-legged pullback and a strong resistance at 1.66000. Will the trend continue, what do you think? Let's see.
Traders, If you liked this educational post, give it a boost and drop a comment.
WHAT IS A PRICE DECELERATION?✴️ What Is A Price Deceleration?
A price deceleration is when the market slows down after a trend movement. It occurs when the price of an asset begins to slow down its ascending or descending impulse. It usually occurs at key levels, such as support and resistance. The price finds it difficult to make highs at resistance and lows at support. It all looks like an upward or downward wedge at levels or just channels. Price deceleration can occur at the end of a trend movement or at the end of a pullback.
When the price approaches key levels, the bulls are reluctant to buy and the bears are reluctant to sell, which is characterized by price deceleration and poor highs and lows trading. As a result, this leads to a pullback or a complete reversal of the trend. Therefore, this one works well for price reversals.
✴️ Price Deceleration Identification
One of the key features of a deceleration and then a price reversal is divergence. The pattern is formed when the price touches the channel border for the fourth time. Thus, we determine the first clues of the future price reversal or price continuation. Another important sign of deceleration is a decrease in the slope angle or steepness of the trend line, as well as a decrease in the size of price swings. It means that the price is squeezed before the impulse movement. Price usually shoots up and accelerates after the squeeze.
✴️ Confirmation Of Price Deceleration
Oscillators are used to confirm the deceleration. For example, the relative strength index (RSI) shows divergence very well. Price, after a strong movement like a big ship, still makes some motion moving forward. So, it does not stop immediately. At this time, RSI shows that there is no strength in this movement and goes in another direction, confirming divergence and a soon reversal. Once we have four touches forming the channel, we can look for entry opportunities. Usually the 3rd or 4th touches of the border lead to reversal IF it is confirmed by RSI divergence.
✴️ Plan Your Entry and Exit Points
Once we have identified the price deceleration, we need to plan entry and exit points. If the price touches the upper channel and the oscillator shows a bearish divergence, it can be called a confirmation. Usually, if there is a divergence, the price immediately goes in the opposite direction. The engulfing candlestick or pinbar can be used as a trigger to enter the market, as it perfectly shows the current market sentiment and the dominance of one of the sides, be it bulls or bears.
The optimal risk/profit ratio in trades is 1:2, because if the trade is counter-trend, there is a probability that the price will go further along the trend.
More Examples
BTC/USD
USD/CAD
XAU/USD
Joe Ross Trading StrategyHello everyone
This post will be devoted to the trading methods of the famous trader Joe Ross. There is very little information about Ross on the internet, mostly copied from his books, so let's try to study this situation more deeply.
The information is not for beginners. Support and resistance, trend lines, the concept of flat market, all this should be already worked out. You should already know and be able to apply them. You should also take into account that this Ross strategy used only in a trending market. It is not applicable in a sideways movement or choppy.
1-2-3 Setup
1-2-3 setup according to Ross is a reversal formation, that is, its development is information for thinking about the change of the current trend. This setup works absolutely on any timeframe and asset, which once again confirms its quality and flexibility.
Bullish Setup
This setup is formed at the end of the downtrend and consists of 3 key points. EURUSD chart, 1 hourly timeframe will be used as an example.
What is the point of the setup; after the bearish movement, when the price consistently made new lower highs and lows, a breakout of the last local high was formed. This means that there may have been a change of movement and market sentiment.
The setup is considered complete after the breakout of point 2. It is not the closing of the candle above point 2 that is considered a breakout, but the creation of a new high above this mark. After that it is taken as a condition that there is a new bullish trend. So, what we have in the case of a set-up occurring:
• A clear 1-2-3 pattern
• The pattern is finally formed and considered formalized after breaking the high/low at point 2
We identify the peaks, then we look for some sort of 1-2-3 formation to begin to emerge. If the last high is broken in a bullish setup, we look to see if this formation is clearly visible. If yes, we can enter the trade.
Bearish Setup
How this formation is built and what to pay attention to when marking charts. As we can see on the 1st chart, point 1 has formed a new low with its shadow. And here, when moving to the potential point 2 and then to point 3, the most important thing to pay attention to when marking this setup (for the example, we take a bullish setup) is hidden, namely:
• The highs of the candles from point 1 to point 2 must be higher than the previous ones. In other words, each new candle makes a new high. As soon as the next candle is formed without making a high - we have point 2
• When moving from point 2 to point 3, each candle should make deeper lows, while the upper highs of the candles should not be higher than point 2. If shorter, we have a decline going down like a ladder
• As soon as the next candle closed without forming a new low - ready, we have point 3
Ross Hooks (RH)
The next step, and it is the main one in trading this method, is Ross's Hooks. This is the fundamental part of his strategy, which, by the way, uses it more than half a century.
So, we have a 1-2-3 setup. There is a breakout of point 2 and the price goes up further. Each new candle makes a new low, while the highs does not go above the point 3. As soon as the next candle fails to make a new low, we have a Ross Hook (RH).
Let's look at an example for clarity:
We broke through point 2, created a new low and rolled back. The first RH and confirmation of the trend change to a downtrend appeared. Further price movement will be based on attempts to break through RH and pullback after the breakthrough and further attempts to establish new lows.
It would be interesting to note that at the current stage we do not care what candles formed this trend, there is no need to pay attention to Price Action setups. Even this simplified view shows the development of the trend, its growth and direction. Later we will see how to apply hooks and trade with them in combination with Price Action setups.
Ross Reversal Hooks
Ross Reversal Hook (RRH) is formed by a pullback from RH and the formation of a new low in the current trend. Let's take a look at the same example above:
Ross Trend Detection Methods
So, let's summarize the main methods of determining the Ross trend and its pros and cons.
Cons:
• Firmly identifying a trend change happens quite late. In other words, a part of the trend movement is lost.
• It is extremely rare that a 1-2-3 formation is formed, then RH, and the trend changes sharply to the opposite.
Pros:
• Despite the late entry, we have fairly reliable entries with low risks to our capital.
• We have a strict orderly system and we can clearly see if there is a trend on the current timeframe or not.
• The 1-2-3 and Rh formation works perfectly on any timeframe.
• The period of trend change can be detected at an early stage if we apply filtering and Price Action methods.
Now let's discuss trend detection methods in conjunction with basic Price Action methods. Forex trading is highly dependent on a few major factors. These are leverage size, spread size, lot size to trade, asset to trade.
Now, as for the definition of trends. Ross' principles are applicable to any timeframe, so, having defined your trading timeframe (let's say 1 hour), you should proceed to 4 hourly, 1 daily, 1 weekly timeframes. On each of them, in accordance with the rules of technical analysis, mark the trend lines, starting from the higher timeframe. As a result, we get a picture on the trading timeframe, within which we can see the price movement at the current moment of time. And, having a complete picture, we mark 1-2-3 setups, hooks (if any) and the potential for further price movement.
Finding the Best Trend Depending on the Timeframe
How to determine if a trend is good? How to quickly and easily determine the timeframe, which is most interesting when trading using the Ross technique.
Simply put, there should be a good growth, then a pullback of no more than 3 bars, possibly with the formation of RHR and a break of RH. If we see choppy market, a bunch of dojis, inside bars, incomprehensible moves; this timeframe is not quite well chosen.
In particular, on GBPAUD a good timeframe can be seen on the 4 hourly timeframe, but on the hourly one the same trend does not look so good. Let's see:
4H
1H
And it happens that on the hourly timeframe there is a perfect trend, but when you switch to the 4-hour or daily timeframe, there are confusions. The same is true for 15 minutes, and so on. The main thing is to learn to determine whether a trend is ""nice"" or not by just looking at it. It is also very useful to look at the previous trends on the selected timeframe. History repeats itself and trends can behave similarly precisely because there will be support and resistance lines in approximately the same places.
RHs Filtering Methods
Here we come to one of the most difficult parts of the Ross trade. RH filtering is something you need to pay the most attention to. Even if you don't trade Ross, but know his filtering methods - it helps a lot in terms of identifying such moments, what we call "false breakout", "collecting stops" and so on.
Support and resistance line
Trend line
A price break or gap
Accumulation
The first and easiest way of filtering is, of course, in support and resistance lines. If we see that the hook hit the monthly resistance when trading on a 4 hourly timeframe, it is a good reason to think about whether a trend change will follow. But on the other hand, a breakout of the maximum of such a hook combined with strong resistance can be a good buy signal. Also, if the trend is long enough and the hook is formed at the resistance level, there is a good chance that the trend will turn sideways.
The next way of filtering is the trend line or channel lines. They are good for determining the end of a pullback in a trend and the formation of reversal setups.
This post is a simplified representation of Joe Ross's strategy, there are so many nuances, subtleties, and filters. Ross in his books shows combinations of his hooks with such indicators as Stochastic, ATR, Bollinger Bands, moving averages and much more. In practice, as soon as there is some "confusion" of the price, which is out of the framework of the normally current trend, you should put this tactic aside and use other ones. Hooks work exclusively in a trending markets.
Traders, If you liked this educational post, give it a boost and drop a comment.
AUDIO/USDT Psychology. Accumulation. Distribution. Local fractalOne of many such cryptocurrencies whose price makes a huge profit from early accumulation. If you want to earn from a distance—buy and accumulate positions before the "promising crowd hype" or when working on similar instruments skillfully limit your potential losses.
Coin Market: Audius AUDIO
It's worth noting that a local fractal (the smart ones sell to the stupid ones) is forming in the distribution zone, which could potentially work (repeat). To sell it is necessary to make an "interest to earn" (to attract the less clever "traders"), in other words, waves to the growth of +500% on the secondary trends to attract attention. It is possible to make money on this, but with the condition of limiting potential losses. On such coins and at such values, it is rational to use stops, even at the "bottom" of the channel, if the price falls there.
It's worth noting that you shouldn't trade marginally (including shorting) on such coins with such liquidity and price. The liquidity allows you to manipulate both ways making margin calls.
Locally, this potential reversal zone looks as follows (the marker shows the direction of price movement) .
Coin as an example. There are many of these. As a rule, people notice such coins when investors need to get rid of them rather than buy them.
Greed and people's cloned mental behavior do the trick. New market entrants buy, old market entrants sell and then buy at a higher price (typical hamster behavior) or wait for even higher profits.
Since people sometimes write to me asking me to consider such hamster coins when HYIP (the news "diarrhea" phase for selling promising coins) is going on, I decided to consider.
Again, make money on this by "trading local price movements". One must work as a trader and not buy because of news background, promising super profits in distribution and expecting "cosmic targets". You need to limit your losses from the start and not be greedy.
Coin as an example. The name of the crypto coin and the legend from the creators doesn't matter much. It's all the same and created for the same thing (earning from speculation).
Always when trading an old/new instrument, you need to understand where the accumulation is, where the distribution is. And also, where the price is in the main trend.
ACCUMULATION/DISTRIBUTION INDICATOR ✴️ Accumulation/Distribution (A/D) is a standard pack of technical analysis tools of many trading platforms. Today we will get to know this tool in detail and see how it works on Forex. This indicator can be especially interesting for supporters of the VSA method, as it takes into consideration trading volumes in its analysis. The author of the tool, world-known theorist and practitioner of technical analysis of stock markets Mark Chaikin, managed to describe the market phases with the help of volumes and price behavior:
Accumulation - purchases of shares by investors and speculators;
Distribution - sales of stocks at fixation of income.
The forex market looks somewhat different: the accumulation or growth phase is interpreted by the A/D curve as an increase in the strength of the bulls, while the distribution or decline is perceived as an increase in the pressure of the bears' positions.
✴️ How indicator works
Accumulation/Distribution is considered a technical tool for confirming or rejecting a trend. The growth or fall of prices on the chart must necessarily coincide with the direction of the indicator curve. All divergences are interpreted in the direction of A/D, i.e. any divergence is considered as a signal of the soon reversal of the currency pair.
Indicator divergences from price are the most popular signals in technical analysis, but only A/D indicators have a high leading predictive accuracy. The indicator formula uses real volume indicators compared to price range changes, thanks to which Chaikin has achieved the best algorithmic display of VSA theory principles on the chart.
✴️ How to use the indicator in trading
The most common strategy for applying Accumulation/Distribution is considered to be the oscillator method proposed by the author himself. It consists in finding the difference between two exponential moving averages with a period of 3 days and 10 days, taken from A/D values. Due to the settings of A/D to generate leading signals of trend change, the Chaikin oscillator (CHO) indicator has an important feature of signals synchronized with the current change in prices, despite the use of exponential averages, which traditionally lag due to averaging the result of calculations.
The strategy of trading on the oscillator signals is to open positions:
Long - the CHO curve crosses the zero line from bottom to top;
Short - the CHO curve falls below the zero line.
M. Chaikin suggested using divergence signals, divergence of tops and bottoms of the chart and oscillator trends as a trade filter, interpreting them in favor of CHO.
The chart above shows how an uptrend is not confirmed by the next top of the curve, which means that we open a Short position at the zero line crossing from top to bottom. The situation is similar with a falling trend: if it is not confirmed by new CHO lows, we open a Long position after the indicator crosses the zero line.
Positions are closed by reversal on the reverse signal, it is possible to insure the open order with a stop-loss moved to the breakeven zone. At the first opening of the trade, it is located at the nearest maximum or minimum, usually coinciding with the top CHO.
Some traders who trade exclusively counter-trend divergence signals choose Accumulation/Distribution. As soon as a divergence is identified on the chart - a pending order is placed:
Sell limit at the maximum not confirmed by the A/D indicator;
Buy limit at the minimum at which the A/D divergence occurred.
In other cases, the Accumulation/Distribution indicator is used as part of trading systems as an overbought/oversold oscillator filter. The picture below shows a simple MA + RSI strategy, where one of the conditions for a sell signal is the A/D divergence in the overbought zone. Having confirmed the trend reversal in this way, the trader waits for the prices to cross the MA and opens a Sell order on the market.
✴️ In conclusion
Accumulation/Distribution is a sample of perfect synchronization of trading volume indicators with the dynamics of market quotes. The indicator is easy to interpret and use, it will not cause problems with its application even for a beginner, as it has no settings that would have to be selected. Like any other tool of the chanalysis, A/D indicators are better used as a part of trading systems or together with other developments of Mark Chaikin. They are published on the Chaikin Analytics website, repeatedly recognized as the best portal for quantitative analysis of financial markets.
CONTRACTING AND EXPANDING TRIANGLESTriangle patterns are powerful technical indicators that provide traders with valuable insights into potential market trends and price movements. Among the various types of triangle patterns, horizontal triangles, contracting triangles, and expanding triangles are widely recognized for their reliability and effectiveness.
Horizontal triangles, also known as symmetrical triangles, occur when the price consolidates between two converging trendlines. These trendlines are drawn by connecting a series of lower highs and higher lows. Horizontal triangles signify a period of indecision in the market, as buyers and sellers battle for control. There are two types of horizontal triangles: Contracting Triangles and Expanding Triangles.
Contracting Triangle:
Contracting triangles, also known as descending or ascending triangles, are characterized by converging trendlines with one trendline slanting upward or downward. These patterns indicate a gradual decrease in price volatility and suggest an imminent breakout.
Characteristics:
1. Converging Trendlines: One trendline is drawn horizontally, acting as support or resistance, while the other trendline slants in the opposite direction.
2. Decreasing Range: The price range between the trendlines gradually narrows as the pattern progresses.
3. Breakout Anticipation: Traders expect a breakout in the direction opposite to the slant of the converging trendlines.
Entry and Exit points
1. Entry Point: Wait for a confirmed breakout above the upper trendline (in descending triangles) or below the lower trendline (in ascending triangles) to enter a trade.
2. Stop-Loss Placement: Set a stop-loss order slightly outside the triangle pattern to mitigate potential losses if the breakout fails.
3. Target Price: Measure the height of the triangle pattern and project it in the direction of the breakout to determine a potential target price.
Expanding Triangle:
Expanding triangles, also known as broadening triangles, are characterized by diverging trendlines, indicating increased volatility and uncertainty in the market. These patterns often precede significant price reversals.
Characteristics:
1. Diverging Trendlines: The upper and lower trendlines move in opposite directions, creating a widening pattern.
2. Increasing Range: The price range between the trendlines expands as the pattern develops, reflecting growing market volatility.
3. Breakout Anticipation: Traders anticipate a breakout in the direction opposite to the widening of the triangle pattern.
Entry and Exit points
1. Entry Point: Wait for a confirmed breakout above the upper trendline or below the lower trendline to initiate a trade.
2. Stop-Loss Placement: Set a stop-loss order slightly outside the triangle pattern to limit potential losses if the breakout fails.
3. Target Price: Measure the height of the triangle pattern and project it in the direction of the breakout to determine a potential target price.
Horizontal triangle patterns offer traders valuable insights into potential market trends and price movements. By understanding the characteristics and formation of these patterns, traders can effectively identify entry and exit points, set appropriate stop-loss orders, and determine target prices. However, it is essential to combine triangle patterns with other technical analysis tools and indicators for a comprehensive trading strategy. With practice and experience, traders can harness the power of triangle patterns to enhance their trading decisions.
