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Mastering Trading with Support and Resistance LevelsTrading with support and resistance levels is a fundamental strategy that offers insights into market psychology and potential trade entry and exit points. This guide will explore how to effectively trade using these levels, highlighting the importance of confirmation, rejection patterns, candlestick patterns, and confluence with other indicators. Understanding Support and Resistance - Support : A price level where a downtrend may pause due to a concentration of demand. - Resistance : A price level where an uptrend can pause or reverse because of a concentration of selling interest. The Significance of Confirmation Confirmation is crucial when trading with support and resistance, as it ensures that the price respects these levels before making a trade. Waiting for confirmation reduces the risk of false signals. Candlestick Patterns: The Language of the Markets Understanding candlestick patterns is essential for interpreting market sentiment at support and resistance levels. Patterns like bullish engulfing or bearish engulfing suggest strong reversals. Finding Confluence with Other Indicators Confluence enhances the reliability of trading signals. Combining support and resistance analysis with other indicators like moving averages or the stochastic RSI can provide stronger entry or exit signals. Integrating Support and Resistance into Your Trading Identify key levels : Mark clear support and resistance levels on your chart. Wait for confirmation : Confirm the level is holding through candlestick patterns or price action before trading. Look for rejection patterns : Observe candlestick formations for reversal signals. Seek confluence : Use other indicators to validate your trading signals. Manage your risk : Always set a clear stop-loss order to manage potential losses. By employing these strategies, traders can enhance their market navigation skills, focusing on managing risk and seizing the right opportunities. With patience and practice, trading with support and resistance levels can be a vital part of a successful trading approach.
Education
by AlgoAlpha
TYPES OF ORDER BLOCKThis educational post is great for beginners who are just starting to grasp the concept of SMC. We've already talked about what an order block is. This time we'll talk about other types of blocks in trading. ✴️ Mitigation Block Mitigation Block is a sell or buy zone, which is formed when the market structure (BOS) continues. In other words, it is a broken order block and tested, but from the other side. We all know that when the price is moving along a trend, it is better to open trades in the direction of this trend. The most optimal points for buying and selling are the price pullback. By this logic a mitigation block is formed. Mitigation Block Sell Scheme Mitigation Block Buy Scheme Those who trade classical technical patterns will notice that it is anything but: a support zone becomes a resistance zone, and a resistance zone becomes a support zone. Institutional level traders understand the skills and knowledge of classical technical analysis traders, so they manipulate the price to generate and collect additional liquidity. In this zone we have our block, an ordinary block, which becomes a mitigated block after an impulse breakout. Schematically, the Mitigation Block in sell looks like this: Schematically, Mitigation Block in buy looks like this: ✴️ Breaker Block Smart Money Breaker Block is a sell or buy zone that is formed when the market structure (BOS) continues. In other words, it is a broken order block and tested, but from the other side. An important difference from a broken Block is that there is a change in market character (CHoCH). As you have understood, the essence of sell zones and blocks remains the same as in Mitigation Block, but first there is a liquidity grab, and then there is a change in market character (change in market structure). It looks schematically as follows: Breaker Block Sell Scheme Breaker Block Buy Scheme ✴️ Rejection Block Smart Money A Rejection Block is a selling or buying zone that appears on the chart as long candlestick tails at a market high or low. As in all other cases, the block is formed only after liquidity is grabbed from the previous high/minimum or equal highs/minimums. This is classically referred to as a false breakout or sweep. Bullish and Bearish Rejection Block The logic of building and searching for a Rejection Block is very simple: Bearish Rejection Block: Swing High, find the highest candle whose high and close are higher than the high and close of the neighbouring candles respectively. The tail (wick) of the candle will be the bearish order block. Bullish Rejection Block: Swing Low, we find the lowest candle, the minimum and close of which are lower than the minimum and close of the neighbouring candles respectively. The tail (wick) of the candle will be a bullish order block. It does not matter what colour the candle is. At the maximum it can be not only bullish but also bearish, and at the minimum it can be not only bearish but also bullish. This is worth paying attention to. Look for the highest candle, with the highest open or close and with the highest wick (same in the opposite direction). ✴️ Vacuum Block Smart Money A block stands out as a regular gap - from the high of the first candle to the low of the second candle in an up gap and vice versa, from the low of the first candle to the high of the second candle in a down gap. We can expect 2 variants of price movement: in continuation, return to the gap zone to fill it partially or completely. This is based on the presence and size of the block order. Complete gap filling Complete gap filling of the price void can be expected if there is an order block that is above or below the Vacuum Block. The price can bounce from the beginning of Vacuum Block, but in order to reduce the risk it is better to wait until the block is fully closed and touched. Partial filling of the gap A partial filling of the price void can be expected if the order block is below or above the Vacuum Block, but they overlap. The price can rebound from the beginning of the Vacuum Block, as well as overlap it completely. This is shown schematically in the figure above. ✴️ Conclusion You should realize that you don't need to click the "buy" or "sell" buttons where you see one of the block options. An order block is simply a price range where you can consider buying or selling, depending on your preliminary analysis and determining the context of the price movement. You will trade from every block a capital loss is guaranteed. Price moves for liquidity. This is the main analysis, and only then we look for the place (blocks) where we can jump from a less risky place.
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Education
by DeGRAM
16
Suicide because of loss. A story that didn't happen.This is a story about how a good friend of mine lost over 700.000,- in 9 hours. And about the importance of the role of YOUR psyche in trading. Some time ago, a fellow trader phoned me. Let's call him Tom. He traded occasionally, and by day was the CEO of a small company. We arranged to meet. It supposed to be an ordinary friendly conversation. There was no indication of what I was yet to hear... - You know, actually, I have another matter - here Tom suspended his voice. - Last week I lost more than half a million in the market. I'll admit that I was surprised. I knew he was making money in the market but I didn't think he was trading such amounts. Losing that kind of money for an occasional trader is no small matter. Therefore, before talking to him, I repeated to myself 23 ways to deal with losses (gathered from various sources, including a group of the world's best traders I had interviewed at one time). I was anxiously awaiting the meeting, I have had various traders with big losses but such a situation not yet. A loss of this magnitude, even more - in about 9 hours, can seriously shake the psyche. I have seen situations where people were on the verge of suicide, others were not able to sit down to the market for months, still others are haunted by remorse for years. The issue is as serious as possible. At the meeting Tom told me what happened... For several months he watched an outstanding trader who was able to grow his account 10 times in a month. At some point he decided that it was not difficult, deposited about 30 thousand and traded for a month. He took more than 670 thousand out of the market by putting 19 positions. Last night he decided that he would try to make it two million. He hoped there would be a move that would allow him to do so. He sat down around two in the morning and put 3 positions. Each for more than 40 lots. A few minutes before eleven the next day, they were all automatically closed at a loss. The account was cleared to zero. As he told me later, these entries were outside the system. To my surprise, Tom did not seem at all concerned about the loss! I questioned him in detail about the incident looking out for any signs of trauma, or at all remnants of a severe experience. I found nothing. There was not even a lowering of mood! Tom, as usual, was in a good mood. Intrigued, I began to inquire why he was not concerned about such a loss! I was sure she had meant something to him. It must have! True, he was the CEO of the company, but he didn't earn that much in it to be able to forfeit 700,000 in one evening. Tom responded to me with something that gave me food for thought for a long time and that I want to share with you: - This is virtual money. As long as you don't cash them out anything can happen to them. It's a virtual entity, it can disappear as quickly as it appeared. Only when you have it in your bank account does it become real, but until it does - it's just a row of numbers. That's how I've always approached the markets. It's just numbers, nothing more. Here he surprised me again. I encountered such an approach for the first time. For all the traders I have worked with so far, money mattered. Always. The depth of what Tom told me at the time didn't come to me until a few months later. In a nutshell, I can describe it this way… Each of us has some image of the importance of money in life. We bring this image to the market. A big loss (as well as a big gain, I've had such cases) can throw a person off balance for days, years or permanently. The essence of the problem is that the loss causes pain. This pain can be almost physical and can last for weeks or even months. There are traders who go through months of hell because of losses. On top of that, there are problems related to, for example, the judgment of the environment and the immediate family. I knew that the best traders are very tough and mentally resilient. This is one of the secrets of longevity in the market and the huge fortunes they build. Mental toughness is something I have been studying for many years, in the case of top traders it is outstanding. Here I came to understand that mental toughness has many forms, and the lack of response to very difficult experiences can be due to a different perception of the situation, a different value system or a different value scale. Tom is certainly very mentally tough, this I must admit. The story described is an example of how different traders approach markets and money differently. The way one thinks about money determines the psyche's reactions to profits and losses, and consequently the mental load. As long as Tom treats trading as a game of numbers he will be calm about the outcome. Neither profit nor loss will shake him. I'm sure I'll tell you more about this in other articles, because mental toughness is a little-known topic, and yet it's one of the pillars of success not only in trading, but... everywhere. Give it a boost 🚀 and drop a comment so we know to publish more for you. Cheers! Follow: www.tradingview.com
Education
by drSwierk
[EDU] 3 quick tips when to cut your losses short in tradingHello fellow traders , my regular and new friends! Welcome and thanks for dropping by my post. We all don't like or don't want to have a losing trade. But this is inevitable in trading, we have to face it. And, Letting your winning run and cutting your losers short has always been the mantra for profitable trading. This is where I wanted to share 3 ways that you can go about doing this. When market structure that you anticipated for the setup is violated. So what it meant over here is that ,for example, you have a trade entered upon the crossover of a particular pair of EMA, e.g. 50 and 100. Once the crossover flips, you should look to exit the trade. Or, when your pre-determined stop-loss is hit, and, you should never pull your stoploss. This is quite self-explanatory because the pulling of stoploss level can get you lucky a few times but making it a habit can have disastrous impact to your trading. Thirdly, Negative price action. This happens when the price action has consistently moved against your trade, meaning to say that constantly you are in the red (losing money). This could be an indication for you to re-evaluate your setup and move on by cutting your losses small if need be. This is especially true if you have noticed that trades that you are in green often validate your entry almost immediately and have positive price actions. Hope these pointers help you better evaluate the trades you are in and make the best decisions out of it! Do check out my stream video for the week to have more explanation in place. Do Like and Boost if you have learnt something and enjoyed the content, thank you! -- Get the right tools and an experienced Guide, you WILL navigate your way out of this "Dangerous Jungle"! -- ********************************************************************* Disclaimers: The analysis shared through this channel are purely for educational and entertainment purposes only. They are by no means professional advice for individual/s to enter trades for investment or trading purposes. *********************************************************************
Education
by Shadowing_The_Big_Boys
[EDU] 4 Numbers You should Know so to be Profitable in FX Hello fellow traders , my regular and new friends! Welcome and thanks for dropping by my post. Here are 4 numbers you should know so that you can become profitable in FX Trading: *Check out the Formula in the Chart picture* Position Size Determine the appropriate position size based on your risk tolerance, account equity, and the distance to your stop-loss level. Ensures that you are risking a consistent percentage of your trading capital on each trade. Risk and Reward Ratio Helps you assess the potential reward relative to the risk in a trade. Margin Level This Represents the ratio of account equity to used margin, expressed as a percentage. It helps you assess the health of your trading account and whether you have sufficient margin to cover your positions. Pip Value (in USD Terms) Its represents the monetary value of a single pip movement in the currency pair. Understanding the potential profit or loss in a trade and is dependent on the position size, pip increment, and exchange rate. These calculations provide essential insights into risk management, trade analysis, and account performance. Do check out my stream video for the week to have more explanation in place. Do Like and Boost if you have learnt something and enjoyed the content, thank you! -- Get the right tools and an experienced Guide, you WILL navigate your way out of this "Dangerous Jungle"! -- ********************************************************************* Disclaimers: The analysis shared through this channel are purely for educational and entertainment purposes only. They are by no means professional advice for individual/s to enter trades for investment or trading purposes. *********************************************************************
Education
by Shadowing_The_Big_Boys
Range Bar Chart, Line Chart & Candlestick Chart - Everything You Hey traders, In this post, we will discuss 3 most popular types of charts. We will discuss the advantages and disadvantages of each one, and you will decide what type is the most appropriate for you. 📈Line Chart. Line chart is the most common chart applied by analysts. Reading financial articles in different news outlets, I noticed that most of the time the authors apply line chart for the data representation. On a price chart, the only parameter that the one can set is a time period. Time period will define a time of a security closing price. The security closing prices overtime will serve as data points. These points will be connected with a continuous line. Line charts are applied for displaying an asset's price history, reducing the noise from less volatile times. Being simplistic, they can provide a general picture and market sentiment. However, they are considered to be insufficient for pattern recognition and in depth analysis. Above, a line chart is applied for analysis of a long-term trend on Gold. 📏Range Bar Chart. In contrast to a line chart, a range bar chart does not consider time horizon. The only parameter that the one can set is a price range. By the range, I mean a price interval where the price moves. A new bar will be formed only once the prices passes the desired range. Such a chart allows to completely ignore time variable, focusing only on price movement and hence reducing the market noise. The chart will plot new bars only when the market is volatile, and it will stagnate while the market is weak and consolidating. Accurately setting a desired price range, one can get multiple insights analyzing a range bar chart. In the example above, one range bar represents 10 pips price range on EURUSD. 🕯Candlestick Chart. The most popular chart among technicians and my personal favorite. ith just one single parameter - time period, the chart plots candlesticks. Each candlestick is formed as a desired time period passes. It contains an information about the opening price level, closing price, high and low of a selected time period. Candlestick chart is applied for pattern recognition and in-depth analysis. Its study unveils the behavior of the market participants and their actions at a desired time period. Each candle stick represents a price action within 4 hours on AUDUSD chart above. (time frame is 4H) Of course, each chart has its own pluses and minuses. Choosing its type, you should know exactly what information do you want to derive from the chart. What chart type do you prefer?
OANDA:XAUUSDEducation
by VasilyTrader
4
THREE DRIVES PATTERNThree Drives Pattern is a price pattern that consists of three consecutive changes in the market. The first and third are strong moves in one direction, while the second is weaker and in the opposite direction. The pattern can be used in trading to determine direction and predict optimal entry-exit points. Below we take a closer look at what this tool is, how it is formed and how to trade it correctly. What is the Three Drive Pattern? • Three Drives Pattern in trading is a reversal pattern formed from three consecutive price movements in the market: • First is an up or down swing that creates a trend; • The second is a correction of the trend, which is usually about 50% - 61.8% of the first impulse leg; • Third resumption of the trend, which is usually in the opposite direction of the correction. In the case of a bullish trend, the Three Drive Pattern often indicates that the trend is about to end. This is the case because a second downward movement indicates high selling pressure on the market. If the second momentum is strong enough, it can lead to a reversal in the trend. In a bearish trend, the Three Drives Pattern often indicates that a bearish trend may end in a reversal. This is because the second upward movement indicates the following: buyers are starting to put pressure on the market. If the second momentum is strong enough, a trend-reversal scenario is possible. The harmonic reversal pattern requires a competent approach on the part of the trader. It is important to use it in combination with other technical indicators, not to trade against the trend, and not to enter the market before the completion of the pattern. This means that the second movement is completed, and the market returns to the previous version in the direction of the first movement. The Three Drive Pattern is a useful tool that can be used in trading to determine the direction of the trend and forecast the optimal entry and exit points. How the Three Drives Pattern is Formed? Bullish Pattern The bullish pattern of three movements consists of three consecutive downward impulses. It is formed when market makers place shorts and is formed as follows: • A strong downward movement, which is usually the beginning of a trend. • An upward correction in the form of a weaker impulse. Indicates attempts to stop the downtrend by market participants. • A strong downward movement that exceeds the level of the first move. Ratios of impulse legs: First is 1.13 or 1.27; Second is 0,786; Third is 1,618. In the case of a bullish pattern, it is worth considering selling after the completion of the third movement. Additional signals could be a change in indicators, a decrease in trading volume, a break of support, or a resistance level. As in the case discussed above, it is not recommended to use such a tool on its own, trade against the trend, or act early. As you can see above, the market started the trend with the first downward impulse. Then it experienced an upward correction and resumed the trend with the third downward impulse. We always place a stop loss to protect against losses. After opening a position, wait for a pullback towards the first impulse to close the trade or add another position to it. Take into account that the price may be at the right point, but the pattern still may not work. Bearish Pattern A bearish pattern of three movements is a price pattern formed from three impulses showing growth. It is used by traders to find the best point to open a position against the market changes. • A strong upward movement, which is usually the beginning of a bearish trend. • A downward correction and a small market reversal that does not reach the level of the first impulse. This may be preceded by the fact that sellers show resistance and try to stop the trend. • A powerful upward movement that exceeds the level of the first impulse. This indicates that the trend is continuing and that the end of the trend is not imminent. Impulse legs have the following level: First move is 1.13 or 1.27; Second move is 0,786; Third move is 1,618. The ratios mentioned are not strict. The pattern is more reliable if it is accompanied by other signals, such as: A change in trend direction indicators; an increase in trading volume; divergence with an oscillator; the presence of support below or resistance above. Always use the tool in combination with other technical indicators to get an accurate prediction. Also, do not trade against the trend. As you can see on the chart, the market started a bearish trend from the first impulse upwards. After it experienced a downward correction, it did not reach the minimum or level of the first impulse. Finally, the market resumed the trend with the third upward impulse. How To Trade Using The Three Drives Pattern? 1. Find three consecutive movements on the chart that meet the criteria of the pattern. 2. Do not enter the market until the pattern is complete. 3. Make an entry at the initial point of the third move after it reaches the fibonichci extension level of 127.2% - 161.8%. 4. Place a stop above the 161.8% expansion level to protect losses in case the pattern doesn't work and goes lower or higher. 5. Close the trade when the market reaches the target profit at the 50% - 61.8% retracement of the whole pattern or you can at the level of the start of the first impulse. As you can see in the chart below, the market started bullish - the first impulse. Then there was a correction, which did not reach the level of the first impulse. Finally, the market resumed the trend and finished with the third impulse, in which the price went down and completed the pattern. Note that the price was at a strong co-contraction level. You can draw a trend line from above. The last element that hinted at a change of trend was the divergence. Use other technical indicators. The three-move pattern is a valuable tool, but it is not an accurate one. Using other tools, such as trend direction and volume indicators, can help improve the accuracy of your forecasts. Do not trade against the trend. A three-move pattern can be more reliable if it is used to confirm a trend. Be prepared for the pattern not to work like any other technical pattern. Bottom line The Three Drive Pattern is a reversal pattern. It can be used to determine the trend direction, as well as to predict potential entry and exit points. The optimal place to open a position is the level of the first impulse, and the exit point is reaching the target profit calculated using the Fibonacci ratio. Trading against the trend is riskier than trading in the direction of original market movement. This is because the price can continue to move in a given direction even if you see a reversal signal. This is why you need to proceed with caution and use other tools to back you up. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
12
BOOM AND BUST CYCLE IN TRADINGThe "boom and bust" cycle in trading is a period in a trader's journey when significant gains are followed by periods of significant losses, which can lead to financial consequences and emotional burnout for traders. Breaking out of this cycle is not easy but very important for long-term trading success. When a trader doesn't know what he or she is doing, but is trying to break out of this cycle, the right direction is needed to find a way out of this difficult trading journey. Here are some tips that will help you stabilize your trading when you are not earning yet but also not losing all the capital as it was before. 1. Develop a solid trading plan. This sounds like a cliché. But if you don't have a trading plan you shouldn't be trading real money. Make a trading plan. A solid trading plan should describe your trading strategy. With a clear trading plan, you will be better able to anticipate market movements, avoid impulsive decisions, and stay focused on your goals. Start your trading day with a trading plan and end it with a trading plan. 2. Everyone talks about risk. The first job of a trader is to protect capital. You learn to defend first and only then attack. Apply strict risk management rules to protect your capital from day one. Because if you don't follow risk management it will become a habit that is hard to get rid of. What to consider about risks? This includes always setting stop loss orders, using the right position size to limit risk. Not trading everything. Less is more can never be applied to trading. 3. Sticking trading strategy. Consistency is the key to getting out of the boom and bust cycle. Stick to your proven trading strategy even in difficult market conditions or during losing streaks. Abandoning a strategy due to impatience or frustration can lead to inconsistency and poor performance. When you don't follow a trading strategy you don't give it a chance to show results. Deviation from a trading strategy kills any strategy. Stick to your trading strategy, give it a chance. 4. Discipline in trading. Discipline is the key to avoiding impulsive decisions. Avoid the temptation to recover losses or over-trade. If you are constantly losing money, just look at your trades for the past week. You will say to yourself, "if I had stopped trading, I wouldn't have lost so much". Why? Because the next day or week market always presents A+ setups that would have easily covered past losing trades. So, stick to your trading plan, manage your emotions and focus on making trades according to your strategy. 5 .Everyone says manage your emotions. Practice emotional discipline and keep your mind clear while trading. But how to do that? Emotions such as greed and fear can have serious consequences on trading results. One of the surest methods of dealing with emotions in trading is backtesting your strategy. You are afraid because you don’t know what to expect from the strategy. If you know all the numbers, for example which days are unprofitable, which session is more suitable for you, etc. then you won't panic and be afraid. You know what to expect. And all these techniques, like meditation, mindfulness or other methods of dealing with stress, will not help you in the beginning. After losing your capital, will you really sit and meditate? These methods work later when you have achieved stability. 6. Last but not least: journaling. Markets are constantly evolving, and pro traders adapt their strategies to changing conditions. How do you know the markets are changing? Or how do you know if you are trading better than last month? How do you identify the trading mistakes that are dragging you down? By logging what you trade, you have to regularly analyze your trading results and be prepared to try new ideas or adjust existing strategies to improve your consistency. Collect the data. If you can't measure it, you won't be able to improve it. Conclusion Avoiding the boom and bust cycle in trading requires a lot of work. You will need discipline, the right approach and 100% focus. Success in trading is not your golden goose strategy or some kind of secret money management. It is a combination of several things that bring success. Constant work on yourself, patience and consistency are your allies in overcoming the boom and bust cycle.
Education
by DeGRAM
5
[EDU] Lossing How much is too Much? (Risk Management)Hello fellow traders , my regular and new friends! Welcome and thanks for dropping by my post. A picture speaks a 1000 words and that is so true! Recently I came across this picture from moo moo. It actually strike a chord with the message that I always wanted to bring across, which is the importance of risk management! Always keep in mind that having your trade size manageable such that is wont devastate your trading account is very important. So let's say you are trading between 1-2% risk per trade, if you are so unlucky to have 10 straight losses, you will be down with a drawdown of 10-20%, as shown in the picture you will need almost equal % of profit to get back your losses. But, what if you were to trade with 4 or 5% risk per trade? With that,10 straight losses will get you a drawdown of 40-50%! And as you can see the gains you need to recoup these losses will be 67 to 100%. It is not hard to imagine what will happen if you are risky 10 or 20% risk per trade. So anything can happen in trading and it is always wise to protect your downside! Trade Safe! Do check out my stream video for the week to have more explanation in place. Do Like and Boost if you have learnt something and enjoyed the content, thank you! -- Get the right tools and an experienced Guide, you WILL navigate your way out of this "Dangerous Jungle"! -- ********************************************************************* Disclaimers: The analysis shared through this channel are purely for educational and entertainment purposes only. They are by no means professional advice for individual/s to enter trades for investment or trading purposes. *********************************************************************
Education
by Shadowing_The_Big_Boys
WHAT IS NONFARM PAYROLLS?Let's talk about trading on Nonfarm payrolls news. What is this news, why traders always expect it, when it comes out, where to look for it and most importantly why the market fluctuates like crazy when NonFarm Payrolls are released? What is Nonfarm Payrolls? Nonfarm Payrolls (NFP) is the number of new jobs in nonfarm sectors of the economy over the past month. The released figures show the dynamics of changes (increase, decrease) relative to the previous period. This statistic covers about 500 sectors of the economy: construction, trade, business services, transportation, logistics, financial sector, health care, tourism and so on. The calculations do not take into account workers in the agricultural sector, non-profit organizations and self-employed citizens. A change in the NFP value of 100-200 thousand jobs will lead to strong volatility in prices of world currencies in pairs with the U.S. dollar, gold and stock markets. When Is This Data Released? NFP is calculated and published by the U.S. Bureau of Labor Statistics (BLS), releasing preliminary data on the first Friday of each month. Given the significance and impact of the event on the global economy, a repost of these statistics can be seen on any economic calendar, the primary source is on the BLS website. You can also view upcoming economic events on the popular Forex Factory service. The time of news release depends on the U.S. Bureau of Statistics. A trader should check the exact time and date of release every time, as it depends on the readiness of calculations of the Bureau of Labor Statistics. Any calendar indicates the format of data in the form of three figures: previous, actual value and forecast. How Does The Market React? Traders evaluate the released data by several criteria: • Matching with the forecast or with the previous value. With such figures, a spike in volatility can take place without a strong and directional short-term movement; • Strong changes cause global shifts such as reversals or strengthening of long-term trends, changes in historical volatility values. Job growth is a leading indicator of growth in the U.S. economy. New hands in an office or manufacturing facility is the last stage of preliminary work done by a company to expand its business. By this time, it has: 1. Attracted investment 2. Expanded production capacity or sales departments for already purchased products 3. Growing employment leads to US GDP growth, low nonfarm payrolls data is a sign of a coming crisis This is clearly seen in the graph of all employees, built on the dynamics of changes in NFP since the beginning of the calculation, where the areas of global economic crises are marked. Why Does The Market "Fly" On Nonfarm Payrolls ? Significant price changes occurring in the Forex market when macroeconomic indicators are released are due to the lack of support for prices by market makers. During the release of important news, there is no need to support market liquidity, as the attention and funds of large players are attracted. As it was said above - the value of the indicator is a signal for revision of long-term trends, so huge amounts of funds are put in motion. The absence of a market-maker leads: • Spread widening (distance between buying and selling prices); • Low volumes of nearby orders in the stack. Therefore, the inputs of large players literally "collect the stack" at the moment of dismantling orders at all price levels, the same applies to the exit from positions. The market moves by 50-150 points, which is an acceptable error for long-term positions, but it is killer for stops, which limit losses of intraday traders. Roughly speaking, the market "flies" during the NFP release because it is relatively easy to move the price at this time. And not because all traders of the world are panic selling/buying currencies. What Should You Do If Nonfarm Payrolls Are On The Calendar Today? There's only one 100% profitable way to trade the nonfarm payrolls! So how do we trade them? YOU DON'T. Yeah, that's right. If you see the NFP coming out today, then: - When trading intraday, close all positions half an hour before the news comes out - When trading long term, remember that the average price movement is 50-60 pips and the maximum is 150-200 pips. This should be taken into account, it is possible to change the stop loss - Remember that after an average of 6 hours the price often returns to the same level as before the news An interesting point: if you study many strategies, you will see that on bigger timeframes (H4, D1), news carrying changes can serve as a trigger. The market plays back the data in a "second wave", after the volatility calms down, market makers will start accumulating positions on the flat movement. The tactic is called "step" at the end of fluctuations in a narrow channel there is a strong impulse and directional trend, actively shifting the markets to new price levels. Conclusion Let's summarize the rules of 100% profitable strategy of trading on Nonfarm Payrolls. Half an hour to an hour before a major news release, simply clsoe all positions. Even if there is a small loss, it is probably better to close them. Two hours after the Nonfarm Payrolls release you can trade again in a normal mode. But since it is already Friday and evening, there is no sense to trade. So, an hour or half an hour before the nonfarm close all positions and go to rest.
Education
by Lingrid
1
HOW TO TRADE THE EURJPYToday we will talk about how to trade EURJPY; one of the most volatile, but also the most popular cross-currency pairs on the forex market. Quite a large percentage of profitable traders include it in their trading arsenal. We will tell you about the differences of this pair, which is sometimes called "the beast". THE ECONOMIES OF JAPAN AND THE EUROZONE Japan has the 3rd largest GDP, behind only China and the USA. The country is a producer and exporter of automobiles and high technology and is therefore very sensitive to energy prices. The central bank, the Bank of Japan, is a publicly traded company with 45% of shares owned by private and institutional shareholders. Interest rates are interspersed between negative and very low, ranging from -0.1% to 0.1%, which makes borrowing in yen extremely popular. The government has traditionally struggled with a high yen and low inflation rates to make Japanese exports more competitive. Earlier it was achieved through so-called currency interventions, and many traders had an opportunity to earn good money by anticipating the moment of the next sales by the Japanese Central Bank, but today the increase in inflation is achieved through stimulus programs - purchases of long-term government bonds and other financial assets by the Central Bank. The Euro is the official currency of the Eurozone, which consists of 27 EU member. Between them, these 27 countries of the Union form a single market with an economy that accounts for 14% of the world's output in 2021, making it the third largest economy in terms of nominal GDP, the largest exporter and the largest importer of goods and services. The main governing bank, the European Central Bank, regulates the monetary policy of the eurozone's constituent countries, maintaining overall price stability. In the long term, the ECB's policy pursues similar goals to the Bank of Japan of growing the economy through stimulus programs. GLOBAL TREND There has been an uptrend since the beginning of 2020. This is when the Eurozone consumer price index went into negative territory (from 0.3% at the beginning of 2020 to -0.3% by the end of 2020), due to the aftermath of the pandemic. No significant recovery has followed since then, and the situation was only exacerbated by the escalation of Eurosceptic sentiment in certain countries of the Union, which ultimately led to Brexit. At a greater distance EURUSD shows that this was not always the case, and the strongest uptrend in the post-crisis 2012 is proof of that, followed by a decline. And if we consider EURJPY, we should assume that the uptrend will continue in the coming time, which means that when trading on daily charts, the advantage remains for the upward signals. Of course, the situation may change, but based on the currently available data and the dynamics of recent years, the global trend indicates an upward trend. EURJPY VOLATILITY The average daily volatility of EURJPY is approximately 88 pips. The most volatile days are Wednesday and Thursday. The highest intraday volatility is observed at the American session and at the European and Pacific sessions. But it should be noted that there is no such a strong dependence on the sessions as for EUR and GBP, and therefore activity can be expected at any time of the day. CORRELATIONS The most stable correlation is observed with USDJPY on the 4-hour charts. Therefore, if you have detected some signal on this pair that has not yet played out on EURJPY, it may be worth getting ready to enter a position. USDJPY is well correlated with the Japanese stock market, namely the Nikkei 225 index. And accordingly, EURJPY will have similar correlations with the Nikkei 225 due to its close correlation with USDJPY, which is observed below: ECONOMIC CALENDAR When working with the economic calendar, it is important to follow the news related to the European currency and Japan, as well as the US dollar, paying attention to the most volatile ones, which are marked with three red bars. Speaking about the news background, it will also be important to note that cross pairs, such as EURJPY or GBPJPY, react more smoothly to USD news, as they are less popular among traders and investors who prefer to take risks during such hours on EURUSD or, say, USDCAD trading. There are noticeably fewer spikes. TRADING EURJPY The pair is universal and is perfect for both scalpers and trend traders both on higher timeframes and lower timeframes. But reasoning from the point of view of practical popularity, let's say that intraday trading certainly prevails over trading on daily charts. Strong trends are perfectly visible on daily charts, which opens up acceptable conditions for long-term trading. On 4 hourly and even 1 hourly timeframes you can easily observe steady trends with pullbacks. In addition, due to the relatively higher volatility of the pair compared to the same EURUSD, and with exactly the same characteristic sharp movements, EURJPY trends are more clean and prolonged. It is worth considering that for this pair you may also need to increase the stop loss because of the spikes, where on low timeframes it is simply necessary to put it farther away, otherwise there are risks that they will be knocked out. Breakout strategies also work well on the same strategies of consolidation exit, allowing to take good profits. Boxes (consolidations) are visible to the naked eye, but even here it is worth setting the indicators properly so that they take into account these candle wicks. TO SUMMARIZE • The EURJPY pair trades perfectly and universally both intraday and on daily timeframes. • It is worth taking into account spikes and tails, which can easily knock out your stop loss. And therefore, calculate the stop loss with the appropriate correction for higher volatility. • The same candlestick wicks can be used for your benefit by opening opposite small-target positions after long wicks. • Breakout strategies work well, in particular, bull flag and bear flag patterns. • More clearly defined trends than classic pairs such as EURUSD. • There are correlations with USDJPY, as well as the Nikkei 225 stock market.
Education
by DeGRAM
1
Learn Ascending, Decending and Symmetrical Triangles | Powerful Hey traders, In this post, we will discuss 3 simple and profitable types of a triangle pattern. 1️⃣ The first type of triangle is called a descending triangle. It is a reversal price action pattern that quite accurately indicates the exhaustion of a bullish trend. Setting a new higher high the market retraces and sets a higher low, then bulls start pushing again but are not able to retest a current high and instead the price sets a lower high and drops to the level of the last higher low setting an equal low. Multiple lower highs compose a horizontal support that is called a neckline. The price keeps trading in such a manner, setting lower highs and equal lows till the price sets a new lower low. Most of the time, it gives a very accurate signal of a coming bearish move. Please, note that a triangle formation by itself does not give an accurate short signal. The trigger that you should wait for is a formation of a new lower low. Take a look at a descending triangle formation that I spotted on Crude Oil on a 4H time frame. Bearish movement was confirmed after a breakout of the neckline of the pattern. 2️⃣ The second type of triangle is called a symmetrical triangle. It is a classic indecision pattern. It can be formed in a bullish, bearish trend, or sideways market. The price action starts contracting within a narrowing range, setting lower highs and higher lows. Based on them, two trend lines can be drawn. Breakout of one of the trend lines with a quite high probability indicates a future direction of the market. Above is a great example of a symmetrical triangle. Bullish breakout of its upper boundary - a falling trend line was a strong bullish confirmation. 3️⃣ The third type of triangle is called an ascending triangle. It is a reversal price action pattern that quite accurately indicates the exhaustion of a bearish trend. Setting a new lower low, the market retraces and sets a lower high, then bears start pushing again but are not able to retest a current low and instead the price sets a higher low and bounces to the level of the last lower high setting an equal high. A sequence of equal highs compose a strong horizontal resistance that is called a neckline. The price keeps trading in such a manner, setting higher lows and equal highs till the price sets a new higher high. Most of the time, it gives a very accurate signal of a coming bullish move. 📍Please, note that an ascending triangle formation by itself does not give an accurate long signal. The trigger that you should wait for is a formation of a new higher high. Ascending triangle formation helped me to accurately predict a bullish reversal on USDJPY. Its neckline breakout was a strong bullish confirmation. Learn to recognize such triangles and you will see how accurate they are. Let me know what pattern do you want to learn in the next post?
OANDA:XAUUSDEducation
by VasilyTrader
6
WHAT IS A SWAP IN FOREX MARKET?All participants in forex trading sooner or later leave an open position overnight. Most often, beginners do not have access to impressive sums of money as initial capital, so they actively use leverage. Although it carries a lot of risk, it gives an opportunity to earn good money trading currency pairs in a relatively short period of time. Around midnight, changes occur in the client's account: a certain amount is debited or credited, which is called "swap." What is it, and is it worth being afraid of? What is a Swap? Traders whose position has not been closed overnight are sure to ask the question: What is swapping on Forex? Some believe that it is a guarantee of loss; others see it as an opportunity to earn. Each currency, whether it is the American dollar, Japanese yen, or euro, has its own central bank, which sets the interest rate. This rate is the determining value for granting loans to other financial institutions. For example, Japan's central bank sets the interest rate on the yen at which other banks in the country are lent. When trading begins in the market, a position is opened for a currency pair, one of the components of which is Japanese money. At the same time, the interest rate of the Bank of Japan will be valid for the yen on the exchange. The second currency in the pair, let's say the dollar, also has its own rate. The difference between these values will be called a forex swap. Since each country sets its own interest rate for loans, the value between them in a currency pair can be either positive or negative. For example, the Japanese yen is lending at 1% and the dollar at 0.5%. Then an open JPY/USD position can bring 0.5% profit from the deposit amount if it is held for a long time. If you swap the components of the currency pair, you will get the same value but with a negative sign. Swap accrual occurs at night, i.e., after the end of the trading session. This means that those who are engaged in scalping or intraday trading do not face this concept at all. Other traders see its impact on the account every day. What is a forex swap, in simple words? It is the difference in a currency pair between the interest rates that banks set. Traders often use it in trading and can sometimes make a significant amount of money in a short period of time. An important point: the use of leverage is a guarantee that a certain amount of money will be charged or debited to the account. Otherwise, trading is done without the use of loans and deposits, which, although it reduces risks, does not eliminate them altogether. Why Do Overnight Swaps Occur? An open position in the forex market is typically held for a few minutes, hours, or, in some cases, days. When a trader holds an open position beyond the end of the trading day, they need to roll it over to the next day. This process is called an overnight swap. The purpose of overnight swaps is to ensure that open positions are settled at the end of each trading day, allowing traders to continue holding their positions and making adjustments based on their trading strategies. How Does An Overnight Swap Work? Perhaps one of the main features of swaps is their occurrence when trading with leverage. That is, there is no such concept for ordinary investment accounts. As soon as leverage is used, swaps appear. Brokers increase their income not only from account commissions but also from the negative difference. Therefore, no one will warn a beginner about the need to close a position overnight so as not to make a loss. Islamic Account Without Swap At the same time, traders have the opportunity to trade with leverage without swap. The so-called Islamic account is used, which can be opened by anyone. According to religious canons, Muslims can not use interest in any activity. A special account was created for them, and not only those who use Islam can apply for it. It is important to realize that brokers do not work for free. If a trading account has a swap, it means that the commission or spread has been increased. Information about this should be found before opening to avoid unpleasant surprises over time. Time Of Swap Setting Traders are often interested in what time the swap is set on Forex. The difference is accrued or written off at night. The exact time of the swap is 0:05. Every night, the servers go to reboot at 24:59. After that, they start working again at 0:05, and at the same time, the swap is calculated. If a trader manages to close a position before midnight, her/his account will remain unchanged with a 100% guarantee. Triple Swap Financial market participants face one more peculiarity of the swap: its triple size. On the night from Wednesday to Thursday, the value multiplied by three is charged or withdrawn from the account. Why does it happen? Conversion on the Forex market takes place in three days. So, the swap value is available for calculation three days after opening a position. On weekends, the difference is calculated, but the forex exchange does not work on weekends. So, it turns out that for Friday, Saturday, and Sunday, i.e., three days, the commission should be set on Monday. And since the real commission is paid only after 3 days, the formal calculations fall on the night from Wednesday to Thursday. On different markets, the increased swap can be debited in different ways, but on Forex, the triple size is only on Wednesdays. It is important to take into account the time zone. For some traders, the triple commission is charged on Thursdays due to the time difference. In conclusion, overnight swaps are a critical component of the forex market, enabling traders to hold positions beyond a trading session. Understanding how overnight swaps work and the factors that influence swap rates can help traders make informed decisions when trading currency pairs. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
7
TRADER'S CREDOThe world of trading is filled with risks, challenges, and opportunities. As traders navigate the ups and downs of the markets, it's essential to have a strong set of principles and beliefs to guide their actions. The Trader's Credo serves as a useful reminder of these core values, helping traders stay focused, disciplined, and committed to continuous growth. The Trader's Credo 1. I am responsible for my actions : As a trader, I understand that my success or failure depends on my decisions and discipline. I will take full responsibility for my actions and their outcomes. 2. I respect the markets: The markets are my ultimate teacher. I will respect their wisdom, learn from my mistakes, and constantly improve my trading skills. 3. I am committed to continuous learning: The world of trading is ever-changing. I will stay up-to-date with the latest market trends, trading strategies, and technologies to enhance my knowledge and success. 4. I practice discipline and patience: Trading success requires discipline and patience. I will follow my trading plan, manage my emotions, and avoid impulsive decisions. 5. I prioritize risk management: The preservation of capital is paramount. I will never risk more than I can afford to lose and adhere to strict risk management protocols. 6. I embrace accountability: I will be accountable for my decisions and accept the consequences. I will learn from my mistakes and use them as valuable lessons for future success. 7. I focus on the process, not the outcome: Trading success is a journey, not a destination. I will focus on the process, enjoy the learning experience, and trust that my hard work will eventually lead to success. 8. I respect others' opinions: The trading community is filled with diverse perspectives. I will respect others' opinions, engage in constructive discussions, and learn from their insights. 9. I strive for continuous improvement: I will never be satisfied with my current level of knowledge and success. I will always aim to improve and grow as a trader. 10. I am committed to ethical trading: As a trader, I will act with integrity and honesty. I will never manipulate the markets or engage in unethical practices. Conclusion The Trader's Credo is a powerful tool for traders looking to develop a strong foundation of principles and values. By adhering to these guiding beliefs, traders can improve their skills, manage risk, and ultimately achieve long-term success in the trading aren
Education
by DeGRAM
4
How to trade Smart Money Concepts (SMC)This trading strategy was initially popularized by an infamous trader who is also the founder of the Inner Circle Trading (ICT) method which is claimed to be the evolved version of the SMC. Let’s first take a look at the building blocks of this trading strategy and compare it with the well-known trading concepts by industrial titans (Dow, Wyckoff, Elliott). Essentially, SMC puts forth the notion that market makers, including institutions like banks and hedge funds, play a deliberate role in complicating trading endeavours for retail traders. Under the Smart Money Concepts framework, retail traders are advised to construct their strategies around the activities of the "smart money," denoting the capital controlled by these market makers. The core concept involves replicating the trading behaviour of these influential entities, with a specific focus on variables such as supply, demand dynamics, and the structural aspects of the market. Therefore, as an SMC trader, you'll meticulously examine these elements when making trading decisions, aligning your approach with the sophisticated techniques of prominent market figures. By embracing this perspective and closely monitoring the actions of market makers, SMC traders endeavour to establish an advantageous position in their trading activities, aiming to capitalise on market movements driven by smart money. When you initially dive into the Smart Money Concepts (SMC), the technical vocabulary can be a bit overwhelming. To help demystify it, here's an overview of some common terms used by SMC traders. 1. Order Blocks These are used to discuss supply and demand. Some SMC traders consider order blocks as a more refined concept than standard supply and demand, although not everyone agrees on this. An order block signifies a concentrated area of limit orders awaiting execution, identified on a chart by analysing past price movements for significant shifts. These zones serve as pivotal points in price action trading, influencing the market's future direction. When a multitude of buy or sell orders cluster at a specific price level, it establishes a robust support or resistance, capable of absorbing pressure and triggering price reversals or consolidation. 2.Fair Value Gap You should clarify whether your current trading style suits you. If you don't have time to look at charts during the day, you should not focus your strategy on intraday trading using 1 5-minute or 30-minute charts. It is definitely better to develop an approach that works on a 4-hour or daily chart so that you have enough time to analyze the charts before or after work. Ideal time and timeframe This phrase describes an imbalance in the market. It occurs when the price departs from a specific level with limited trading activity, resulting in one-directional price movement. In the case of a bearish trend, the Fair Value Gap represents the price range between the low of the previous candle and the high of the following candle. This area reveals a discrepancy in the market, which may indicate a potential trading opportunity. The same principle applies to a bullish trend but with the opposite conditions. 3.Liquidity Liquidity plays a pivotal role in SMC. It pertains to price levels where orders accumulate, rendering an asset class "liquid." Essentially, these are price points with available orders ready for transactions. Liquidity can manifest in various forms, such as highs and lows or trend line liquidity. How liquidity is handled varies depending on the trader. One of the most common approaches is to use a pivot high or pivot low. For better understanding, a pivot high or low is formed when several adjacent candlesticks have a higher low or lower high. In the picture, we can see the pivot low. The candlestick has the lowest low compared to its three neighbours to the right and left. 4.Break of Structure (BOS) Once you become familiar with this terminology, you'll realize that many SMC concepts are consistent with traditional trading ideas. A fundamental element of SMC market analysis is the emphasis on the "break of structure" (BOS) in the market. 5.Change of Character (ChoCH) For instance, in a chart illustrating breaks of structure, each time the price surpasses the previous high, a break of structure occurs. Conversely, when the price drops below previously established lows, it signals a change of character (ChoCH). SMC traders leverage their understanding of these patterns to make informed decisions based on the market's behaviour.
Education
by Golden_Star1994
2
Why Supply and Demand Zones Matters?Supply and demand zones are crucial concepts in technical analysis. They represent where the market tends to pull back before moving in its natural impulsive move. You can gain valuable insights into your trades' potential entry and exit points by identifying these zones. 🔑💪 Demand represents the quantity of buyers vs. sellers in the market. Supply represents the currency being bought. We will keep it that simple. How to Identify Supply and Demand Zones 🔍📊📉 There are several methods you can use to identify zones: Swing Highs and Lows: Look for areas where the price has previously reversed direction. These swing lower highs and higher lows can serve as potential entry zones. Zones: Draw your zones on the wicks of the candlesticks depending on the direction the price is moving to highlight your entry. Price Action: Use price action candlesticks to permit you to enter your trade. Utilizing Supply and Demand Zones in Trading 📊📈💰 Once you have identified your zones, you can incorporate them into your trading strategy. Here are a few ways to utilize these zones: Entry and Exit Points : Use supply and demand zones to determine optimal entry and exit points for your trades. Buying and selling when the price touches the zone can increase your chances of profitable trades. Stop Loss Placement : Place your stop loss orders below your last low when buying and above the last high when selling. This helps protect your capital if the price has a little bit further to go before going your way. Profit Targets : Set profit targets back at the high in an uptrend and low in a downtrend. Now, you want to turn your knowledge into a trading plan. Creating a trading plan is all about writing down what you do on the price chart. You don't want to rush this step because you are detailing how you will make money trading here. Before doing that, you must ensure you have backtested your strategy and its profitability. I 🚀📈 Developing a Trading Plan and Setting Realistic Goals to Achieve Consistent Profitability Now, we will dive into the importance of developing a trading plan and setting realistic goals to achieve consistent profitability in the forex market. 📈💰 Why a Trading Plan Matters Having a well-defined trading plan is like having a roadmap to success. It provides structure, discipline, and clarity to your trading activities. Without a plan, you may make impulsive decisions based on emotions or market noise, leading to inconsistent results and unnecessary losses. So, let's get started on creating your trading plan! 🗺️✍️ Define Your Trading Strategy The first step in developing a trading plan is defining your strategy. This involves determining the type of trader you want to be, whether a day trader, swing trader, or position trader. Each style requires a different approach and time commitment, so choose the one that aligns with your goals and lifestyle. Inside the Trade On Purpose Community &Trading Strategy, we focus on swing trading because many beginner traders work, and day trading may not fit their work schedule. Also, swing trading allows you to breathe through your trades. You can make money trading and enjoy your profits while waiting for the next setup. Next, identify the trading indicators and tools you will use to analyze the market. This could include moving averages, trend lines, or candlestick patterns. Remember, focusing on a few reliable indicators is important rather than overwhelming yourself with too many. Inside the community, we don't focus on indicators. We focus on the 4 most repeated candlesticks on the price chart. Doing this allows us to use these candlesticks as our structure and entry so we don't become overwhelmed with looking at too much. Set Realistic Goals Now that you have your trading strategy, it's time to set realistic goals. Setting achievable goals is crucial for maintaining motivation and measuring your progress. Start by determining your desired monthly or yearly profit target. Be realistic and consider factors such as market volatility and your available trading capital. Break down your profit target into smaller, manageable goals. This will help you stay focused and prevent feeling overwhelmed. Remember, consistency is key in trading, so aim for steady growth rather than trying to hit home runs with every trade. For example, the monthly goal for 2024 is between 5-10%. This means I only need to focus on my A+ setups and can risk between 0.50%-1% per trade on any given idea. If it's a good month, I'll only need 3-4 winning and swing trade setups. Risk Management and Trade Execution No trading plan is complete without addressing risk management and trade execution. Determine your risk tolerance and set appropriate stop-loss levels for each trade. This will help protect your capital and minimize losses when the market doesn't go as expected. Additionally, establish rules for trade entry and exit. Define the criteria that must be met before entering a trade and the conditions that will trigger your exit. This will help you avoid impulsive decisions and stick to your plan. We use a mix of pending and market orders inside the community. Pending orders are good to set if you're not in front of your computer often. You can set your order and let the market do its thing. Market orders are good if you can be in front of your chart and desire to enter the trade yourself. Stay Disciplined and Adapt Lastly, remember that a trading plan is not set in stone. The market constantly evolves, and you must adapt your plan accordingly. However, avoid making changes based on short-term market fluctuations or emotions. Stick to your plan, analyze your trades regularly, and adjust based on data and evidence. By developing a trading plan and setting realistic goals, you are taking a significant step towards achieving consistent profitability in forex trading. Stay disciplined, be patient, and always keep learning. Tomorrow, Implementing risk management strategies to protect your capital and minimize losses. Stay tuned! 💪😊
Education
by ShaquanLopez
3
Trading BTC : Dunning Kruger Effect 🐸Hi Traders, Investors and Speculators 📈📉 Ev here. Been trading crypto since 2017 and later got into stocks. I have 3 board exams on financial markets and studied economics from a top tier university for a year. Daytime job - Math Teacher. 👩🏫 Have you ever wondered what it takes to be a good and profitable trader? Have you wondered how long it will take before you would have mastered the art f trading? Myself and Dunning Kruger will let you in on a little secret - the journey of pretty much every person that has ever started trading is explained in the chart above. The Dunning-Kruger effect, in psychology, is a cognitive bias whereby people with limited knowledge (in a given intellectual or social domain) greatly overestimate their own knowledge or competence in that domain relative to objective criteria or to the performance of their peers or of people in general. This happens in trading all the time. In fact, we probably all started there if we're being honest . So - What causes the Dunning-Kruger effect? Confidence is so highly prized that many people would rather pretend to be smart or skilled than risk looking inadequate and losing face. Even smart people can be affected by the Dunning-Kruger effect because having intelligence isn’t the same thing as learning and developing a specific skill. Many individuals mistakenly believe that their experience and skills in one particular area are transferable to another. Many people would describe themselves as above average in intelligence, humor, and a variety of skills. They can’t accurately judge their own competence, because they lack metacognition, or the ability to step back and examine oneself objectively. In fact, those who are the least skilled are also the most likely to overestimate their abilities. This also relates to their ability to judge how well they are doing their work, hobbies, etc. The Dunning-Kruger effect results in what’s known as a double curse : Not only do people perform poorly, but they are not self-aware enough to judge themselves accurately—and are thus unlikely to learn and grow. So how can we prevent ourselves from falling into this trap? Here's a few things to keep in mind: To avoid falling prey to the Dunning-Kruger effect, you should honestly and routinely question your knowledge base and the conclusions you draw, rather than blindly accepting them. As David Dunning proposes, people can be their own devil’s advocates, by challenging themselves to probe how they might possibly be wrong. Individuals could also escape the trap by seeking others whose expertise can help cover their own blind spots, such as turning to a colleague or friend for advice or constructive criticism. Continuing to study a specific subject will also bring one’s capacity into a clearer focus. 💭Practice these habits to ultimately escape the double curse: - Continuous learning. This will keep your mindset open to new possibilities, whilst increasing your knowledge over time. - Pay attention to who's talking about what. Is the accountant talking about bodybuilding? - Don't be overconfident. This is self explanatory. I hope you enjoyed this post today! Please give us a thumbs up 👌 _______________________ 📢Follow us here on TradingView for daily updates and trade ideas on crypto , stocks and commodities 💎Hit like & Follow 👍 We thank you for your support ! CryptoCheck
Editors' picks
Education
by CryptoCheck-
60
How To Make Money With Crypto Trading BotsWe are at the beginning of a huge crypto bull run when it is possible to make millions of dollars with strong altcoins. So how is it possible to know if an altcoin strong or it is weak? Look at the community around the altcoin you want to profit with. I prefer to count the traffic which comes to its official website first. Is the traffic rising or it is falling? Also look at the altcoin's twitter and discord. How people react to the news. Do they write many comments or not? But the most important thing is which funds have invested into the altcoin. Lets look at the biggest gainers from the previous bull run. I remember Solana, THETA, Polkadot, Cosmos etc. I prefer altcoins which were funded by Tier 1 funds. At least one or two (there are only 22 Tier 1 funds in the market now). After that I look at the chart. I don't want to buy altcoins that are already overpriced. One of the best examples of altcoins I have found for accumulation for the future bull run is APTos. It is not very expensive, have the great community, valuable traffic to its official website and so on. We will need to find 10 - 15 altcoins like APTos to make our millions of dollars. And I will help you to find the most profitable ones. The best way to accumulate an altcoin I have found is starting a position with a grid trading bot. It is the most simple yet very powerful tool you can use to get as much altcoins as possible before it is not too late. Why I prefer to use grid trading bots? Because these bots can accumulate literally "free" altcoins for me. Here is how I use grid trading bots. First I need to define the range for trading and second - how many orders will trading bot have. And with APTos the low price for the trading is $ 3 and the high one is $ 25. The number of open orders are 100. And the profit is 0.72% ~ 7.16% per grid. So what is the goal? The trading bot should return to me all the money I invested and also it should give me a certain number of APT coins before I close it. After that I can start a new trading bot position with the USD the bot have made for me and keep APT coins for the bull market to sell at the best price. Do you like the strategy I use to accumulate strong alcoins for the crypto bull run?
CRYPTOCAP:TOTAL3Education
by vitsha
VOLATILITY IN THE FOREX MARKETHello Forex traders. Today we are going to talk about the concept of Volatility in the Forex market. We will talk about what it is, what volatility depends on, and most importantly how we can use this data to build and improve our own trading strategies and, as a result, get more profit from trading. What Is Volatility? Volatility is the range of price changes from high to low during a trading day, week, or month. The higher the volatility, the higher the range during the trading time period. This is considered to be a higher risk for your positions, but it gives you more opportunities to earn money. Volatility can be measured over different time periods. If we open a daily chart and measure the distance from high to low, we will get the volatility of the day: It turns out that on the chart above, it was 121 pips. We can also measure on another timeframe, for example, weekly chart. The distance from the high point to the low point was 162 pips. The total volatility during the week was 162 points. Volatility can be measured within a trading session or within a trading hour. This allows us to conclude that it is a fractal value. As a rule, the average volatility for the last candles is taken into account. If we take daily charts, the average volatility is usually considered for the last 10 days. Roughly speaking, the last 10 candles are summarized and divided by 10. What Does Volatility Depend On? It depends on the number of trades in the market, players, trading sessions, the general state of the economy of a currency, and, of course, on speculation. It depends on how speculative the market is about a given currency. Note that volatility can be measured both in points and in percent. But it should be noted that most often, the volatility of stocks is measured in percent. In forex, it is more usual to measure in pips. If you are told that the average price change of EURUSD is 0.7%, you can easily convert it into pips. And vice versa, you can calculate percentages from points if you need them for any research. Now let's move on to the most important question. How To Apply Volatility Data For Profit? It's actually quite simple. As they say, everyone knows about it, but no one applies it. This is especially true for intraday trading. Nobody wants to apply the simplest rule. Suppose you know that the average volatility of GBPUSD is 120 pips. Question: if the price has moved up 100 pips from the beginning of the day, should you open a buy position? The answer is obvious, we should not. Because the probability that the price will go up another number of pips is too low. Therefore, we should not open a buy position and on the contrary, we should focus on bearish positions. But for some reason people forget about this simple technique and follow their system. I believe that it is absolutely necessary to include volatility, at least on intraday strategies, in your checklist for market entry. The same can be done with higher timeframes. Let's imagine that we know that GBPUSD has an average weekly volatility of 200 pips. If the pair has moved 50 pips since Monday, we can expect that if the price continues to move down, there is a potential of about 150 pips. Of course, there are days when some movements become bigger or smaller, but we try to rely on statistics. With its help we can calculate the sizes of stops and take-outs. If we decided to be guided by the volatility data and open a sale on the pound, then we would try not to put a large (relative to the weekly timeframe) take profit. Because our expectation within the week is 150 pips. If the average volatility of a pair is 200 pips, it is silly to expect 1000 pips move. At least within a week. Thus, volatility can also be used for risk calculations. If you have opened many positions on different pairs, you can calculate what will happen if all stop-losses are triggered. Of course, the market is not obliged to obey your calculations, but it gives some support for your convenience and trading. Volatility-based Indicator The first indicator is ATR Average True Range indicator invented in 1972. It shows the average volatility and it is used most often to set targets and stop losses. The value of the indicator is multiplied by a multiplier and thus calculate the stop loss or and/or take profit. The calculations will automatically change depending on the current volatility. Volatility is higher, take profit becomes higher. Volatility is smaller and take profit becomes smaller. The next indicator is the CCI It is based on average price and moving average data. It is used as an oscillator, that is, when it is in the oversold zone, it is recommended to buy. And when it is in the overbought zone, it is recommended to sell. Another indicator, which is known to everyone, is Bollinger Bands They consist of a standard moving average and a moving average plus and minus standard deviation, which is calculated based on price. These bands are used most often to determine the limits of movement from the standard average. We can draw conclusions based on this indicator about the end of the movement, correction, etc. Conclusion In this article I have tried to give you an understanding of what volatility is in the forex market and most importantly how we can apply it in our trading. I hope that it will help you in developing and adjusting your own trading systems. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Editors' picks
Education
by Lingrid
11
INTUITION IN TRADINGWhy is it that when you feel that you should buy and you buy, the price goes down, and when you feel that you should sell, but do not open an order, the price immediately and sharply goes down? Murphy's Law? What should I do with my inner voice? Should I tell it to shut up or listen to it? In various sources, one can often find completely opposite opinions about the role of intuition in trading. Some say that only a systematic approach can bring success, while others, on the contrary, claim that it is impossible to achieve significant results without a "sixth sense". Who is right? Many people are interested in this question and we can make the most adequate conclusion: "Intuition is worth using, but only after you have gained experience of more or less successful trading within a year or two". Let's think for a second. How can a person who has no experience as a construction worker take a look at a house and immediately realize that there is "something wrong" with it? You can't. The person simply does not have enough experience, he is too poorly informed about the subject to make any judgments. There is a wonderful book by Malcolm Gladwell called Blink: The Power of Thinking Without Thinking. It deals in great detail with the "Thin-slicing Theory", what we call Intuition. I suggest you read it. So how to apply intuition in trading? The answer is simple. At first, gain experience by trading according to a mechanical system, without using any judgments like "I feel it, we are about to fall" or something like that. And only then, when you have an insight, be sure to check it with the help of technical analysis. Having found confirmation of your intuitive guess, you can already take some actions. In fact, there is even a book written on this topic, it is called "Trading from Your Gut". It is written by one of the "Turtles", Curtis Faiths. There is not so much information in this book specifically on the use of intuition, but there are a couple of useful thoughts. The less fear, the better intuition works. Perhaps this is the reason why it is so easy to make thousands of dollars on a demo account and so difficult on a real one. When trading on a demo, we release the full potential of our brain, because nothing limits our freedom, because the money is virtual and there is no fear of losing it.
Education
by DeGRAM
1
9 Essential TIPS For Newbie Traders (Learn from my Mistakes!) In the today's article, I will reveal trading secrets I wish I knew when I started trading. 1️⃣ Forget about becoming a pro quickly Most of the traders believe, that you can learn how to trade easily and that it takes a very short period of time in order to master a profitable trading strategy. The truth is, however, that trading is a long journey. I spent more than 3 years, trying different strategies and looking for a profitable technique to trade. Once I found that, it took more than a year to polish a trading strategy and to learn how to apply that properly. Be prepared to spend YEARS before you find a way to trade profitably. 2️⃣ Focus on One Strategy While you are learning how to trade you will try different techniques, tools and strategies. And the thing is that newbies are trying multiple things simultaneously. The more strategies you try at once, the more setups you have on your chart. The more setups you have on your chart, the more complex and difficult is your trading. Remember that in this game, your attention is the key. You should meticulously study each and every trading setup. For that reason, I highly recommend you to focus on one strategy, one approach, one technique. Test it, try it and look for a new one only when you realize that it doesn't work. Here is the example how the same price chart can provide absolutely different trading opportunities depending on a trading strategy. Price action pattern trader would recognize a lot of a patterns, while indicator based trader could spot absolutely different bullish and bearish signals. Now, try to imagine how hard it would be to follow both strategies simultaneously. 3️⃣ Start with small capital that you can afford to lose You will lose your first trading deposit and, probably, the second one and potentially the third one as well. Losses are the only way to learn real trading. While you are on a demo account, you feel like a king, but once you start risking your savings, the perspective completely changes. For that reason, make sure that you trade with an account that you can afford to lose. The fact of blowing such an account should be unpleasant, but that should not affect your daily life. 4️⃣ Use stop loss I am doing trading coaching for more than 4 years. What pisses me off is that the main reason of the substantial losses of my mentees is the absence of stop loss. Why can it be if naturally everyone: from your broker to Instagram trading gurus repeat that day after day. Set stop loss, know in advance how much you risk per trade, and know the exact level on a price chart where you become wrong. Imagine what could be your loss, if you shorted USDJPY and hold the trade while the market kept going against you. 5️⃣ Forget about getting rich quick That is the iconic fallacy. I believe that around 90% of people who come in this game want to get rich quick, want easy money. And no surprise, when I share a trading setup on TradingView, and it loses I receive dozens of messages that I am a scammer. People truly believe that professional trading implies 100% win rate and quick and easy money. The truth is, traders, that trading is a very tough game. And with a good trading strategy, you have just a little statistical edge that will give you the profits that would slightly overcome your losses. 6️⃣ Train your eyes Professional trading implies pattern recognition: it can be some technical indicators pattern, the price action or candlestick formation, etc. Your main goal as a trader is to learn to identify these patterns. Pattern recognition is a hard skill to acquire. You should spend dozens of hours in front of the screen in order to train your eyes to identify certain patterns. Here is how many patterns you would spot on GBPUSD chart, paying close attention. 7️⃣ Track and analyze your trades Study all the trades that you take, especially the losing ones. Look for mistakes, look for the reasons why a certain setup played out and why a certain one didn't. Journal your trades and make notes. 8️⃣ Don't use technical indicators Newbies believe that technical indicators should do the work for them. They are constantly looking for one or a bunch that will accurately show where the market will go. However, I always say to my mentees that technical indicators make the chart messy and distract. If you just started trading, focus on a naked chart, learn to analyze the market trend, key levels, classic price action patterns. Learn to make accurate predictions relying on a price chart alone. Only then add some technical indicators on your chart. They won't do the work for you, but will help you to slightly increase the accuracy of a certain setup. Above is the classic chart of newbie trader. A lot of indicators and a complete mess The same chart would look much better without technical indicators. 9️⃣ Find a Mentor There are hundreds of trading mentors. Find the one with a trading style that you like. Follow him, learn from his trading experience, listen to his trading recommendations. 9 years ago I found a guy, his name was Jason. I really liked his free teachings, and they were meaningful to me. I decided to purchase his premium coaching program. It was 200$ monthly - a huge amount of money for me at that time. However, with his knowledge I saved a lot, I learned a lot of profitable techniques and tricks that helped me to become a professional forex trader. Of course, this list could be much bigger. The more I think about different subjects in trading, the more important tips come to my mind. However, I believe that the tips above are essential and I truly wish I knew all that before I started. I hope that info will help you in your trading journey! Good luck to you. ❤️Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
6
Very basic understanding of support and resistance areas (2 min)In trading, support and resistance are key concepts that help traders analyze price movements and make informed decisions. Here's a basic explanation: Support: Definition: Support is a price level at which a financial instrument (like a stock, currency pair, or commodity) tends to stop falling and may even bounce back up due to buyers. Analogy: Think of support like a floor that prevents the price from falling further. It's a level where buyers are more inclined to enter the market, seeing the current price as attractive. Resistance: Definition: Resistance is a price level at which a financial instrument tends to stop rising and may face difficulty moving higher due to seller pressure. Analogy: Picture resistance as a ceiling that prevents the price from going higher. It's a level where sellers may be more active, considering the current price as too high. In summary, support and resistance are like psychological levels in the market where buying and selling interest tends to cluster. Traders use these levels to make decisions about when to enter or exit trades, set stop-loss orders, or identify potential trend reversals. When the price approaches support, traders may look for buying opportunities, while at resistance, they may consider selling or taking profits.
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NYSE:NIOEducation
by ThePrintingRoom
5
HOW TO IDENTIFY AN ASCENDING WEDGE AND A DESCENDING WEDGEThe wedge pattern is a popular chart formation that traders use to identify potential reversals in the markets. This pattern is formed from a series of higher highs and higher lows in an ascending wedge or lower highs and lower lows in a descending wedge. As the pattern narrows, the price action becomes more compressed, eventually leading to a breakout that can result in a significant move in the opposite direction. In this article, we will look at how to identify and trade this pattern. How to identify an ascending wedge and a descending wedge Rising wedge An ascending wedge is a bullish pattern that forms when price is sandwiched between an uptrend line and a horizontal or slightly upward sloping resistance line. To identify an ascending wedge: a. Draw a trend line connecting the lower lows. b. Draw a resistance line connecting the upper highs. c. The wedge should look like a symmetrical or slightly expanding formation. Downward wedge A descending wedge is a bearish pattern that forms when price is sandwiched between a falling trend line and a horizontal or slightly downward sloping support line. To identify a descending wedge: a. Draw a trend line connecting the upper highs. b. Draw a support line connecting the lower lows. c. The wedge should look like a symmetrical or slightly expanding formation. How to trade a wedge Rising Wedge When trading a rising wedge pattern: a. Place a buy stop order above the upper resistance line, aiming for a return to or beyond the initial point of the wedge. b. Place a stop loss below the lower trend line to minimize potential losses. c. Exit the trade when price reaches the target or when the pattern does not move beyond it as expected. Downward wedge When trading a descending wedge: a. Place a sell stop order below the lower support line, aiming for a return to or beyond the initial point of the wedge. b. Place a stop loss above the upper trend line to minimize potential losses. c. Exit the trade when price reaches the target or when the pattern does not break as expected. Risk Management Trading wedge patterns can be profitable, but it is important to manage risk effectively. Consider using a fixed percentage of your account for each trade and set strict stop loss orders to protect your capital. Also, remember that no pattern is foolproof and the market can sometimes give false breakouts. Conclusion When properly identified and traded, wedge patterns can provide valuable trading opportunities. By following the steps outlined in this article, you can improve your ability to identify these patterns and capitalize on them. However, always remember that trading involves risk, and a thorough understanding of market dynamics and risk management is essential for success.
Education
by UnknownUnicorn15614419
2