Explosion in the price of live cattleThis commodity has been trending since 2020, and recently made a new high just after a moderate pullback.
It is going up in a straight line, currently hovering around resistance/support, the MA100 started pointing up and the price made a bullish pattern.
The target for such a pattern is approximately the size of the pole which brings us to about 210.
With cattle there are no Elliott Waves it just does whatever it wants.
Because it is trending so strongly the risk to reward is something ridiculous.
And it could certaintly keep going up and up and up.
If you look at the all time chart you will notice LE has not trended like this ever. Something is going on. Bubble time.
The latest CME article is 6 months old, they talk about a contraction in the US cattle market (which is part of the cattle cycle theory which is more than 2 century old).
www.cmegroup.com
The US cattle inventory is the smallest in 73 years, that plus inflation means the price logically should be the highest ever.
People are addicted to macdonald's and are not going to give up their burgers, the Biden adminitration is going to have to do something I don't care what as long as it makes me money.
www.fb.org
Watch up expiry is in a few days, it might be a good idea to wait, also we are a bit early in the triangle pattern (but it feels like it could mega-break anytime).
If you trade this make sure to use guaranteed stop or another good form of risk management, it often gaps alot.
With a certain broker that has guaranteed stop the minimum risk you can take is $400 so this is not for everyone, depends on your broker.
I believe this is absolutely worth taking a 1% risk, and adding to it if it becomes a big winner.
Community ideas
Liquidity as the Key to understanding the MarketLiquidity in the market is a key factor in price movement especially in the cryptocurrency market. Understanding how and where liquidity appears is fundamental to being able to determine the future price movement of an asset.
Liquidity:
I would like to start by showing what liquidity is and how it can be detected.
In our case, liquidity is the accumulation of buy or sell orders, and the more of them there are, the greater the opportunity to turn a currency into an asset and vice versa.
According to technical analysis, an asset has so-called price levels from which further downward or upward movement occurs. Exactly from these levels on the chart, which are seen by all traders without exception, trades are opened, and stop-losses are set for the nearest minimum or maximum. Thus, liquidity is accumulated behind the levels, which acts as a magnet for the price as it is of great interest for big players to fill their orders.
90 percent of traders' stop losses are very close to each other, therefore, with a significant force of price movement in one direction and subsequent interaction with the level of support or resistance, positions are liquidated and a sharp purchase or sale of an asset at stop losses occurs.
Please pay attention to the main point. Liquidity is a tool for price movement used by big players. Always keep this in mind.
Gap:
A gap is a result of low liquidity in the market and a high trading volume of the stock. Gaps are important for technical analysis because they signal shifts in the supply and demand equilibrium. Major gaps indicate a substantial imbalance between buyers and sellers, causing a swift repricing.
It is always important to remember that gaps are visible to every market participant and many people when a gap appears start opening trades directed towards its filling thus provoking the emergence of liquidity. In turn, this can lead the price in the opposite direction to the one where the gap is located in order to liquidate recently opened positions of cunning traders. But as a rule, the price eventually comes to the gap and fills it partially or completely removing inefficient pricing. You can think of it as a magnet for price.
Fair Volume Gap:
FVG (Fair Volume Gap) has the same meaning as a gap (i.e. a magnet for price) but not all traders are focused on this kind of inefficient pricing. In this case it is also significant that according to the common technical analysis the level of 0.5 major candles is used as a strong level of support and resistance and therefore liquidity will be near these levels. Thus FVG filling is achieved also at the expense of ordinary traders buying or selling from these levels.
Luquidity pools:
It is also worth mentioning the so-called liquidity pools. These are often staggered liquidity clasters combined with zones of inefficient pricing, which together lead to very significant and rapid price movements.
Let's look at the essence of this by the example of how a sharp upward growth occurs. Gradually, a major player moves the price down, leaving liquidity on top and not touching it at all, since we will still need it. When long positions are sufficiently liquidated, we can start collecting liquidity from above. And since this liquidity has not been affected at all, sharp liquidation of short positions level by level occurs. It is worth noting the significant impact of inefficient pricing zones through which the asset, as if accelerating faster, reaches clusters of liquidations and, accordingly, a very rapid growth of the asset occurs.
These are the basics that I hope will help you improve your trading.
I plan to continue developing the topics of liquidity, pricing and the principles of determining price movements. What do you think about it?
The TradingView Digest - March 19thHello everyone! Welcome back to the TradingView Weekly Digest. We’re thrilled to bring you even more reasons to stay connected with the TradingView account. As part of our commitment to constantly evolve and improve our offerings for you, our dedicated users, this edition includes a special “What’s New “ section. In it, we explore the latest enhancements and additions to our platform, ensuring you're always up-to-date with our most recent advancements.
In today’s roundup, we’re excited to showcase the top posts from our vibrant community. Highlights include an insightful article on the history of Bitcoin, a trading strategy based on the Fibonacci tool, a new script for visualizing your equity curve, along with all the latest headlines, earnings reports, and economic events.
We hope you find this week's edition informative and engaging. Let's dive in! 😀
💡 History of Bitcoin: The Underdog That Rewired Finance - by TradingView
Bitcoin, a phenomenon that emerged at the onset of the 2008 financial crisis, has changed the way we think about money. To celebrate the token’s $73,000 milestone, we trace its origin story and look ahead into the future. To infinity… and beyond?
💡 Fibonacci Trading Strategy For Beginners - by VasilyTrader
I am excited to reveal a powerful Fibonacci trading strategy that I learned many years ago. It integrates structural analysis, Fibonacci retracement and extension levels, and candlestick analysis. When applied correctly, this strategy has the potential to yield a winning rate of over 60%.
📰 Top Stories
Adobe Stock Crashes 12% on Weak Guidance, Net Income Slashed in Half to $620M
China's Central Bank Keeps Key Policy Rates Steady
SOL, BOME Trend on Social Media as Ether, Bitcoin Lag
Nissan, Honda Shares Rise Sharply After EV Tie-Up Plan
Apple in talks to let Google's Gemini power iPhone AI features, Bloomberg News says
💵 Earnings highlights from the previous week:
Dollar Tree's Fiscal Q4 Adjusted Earnings, Revenue Rise
Williams-Sonoma's (WSM) Stock Up on Q4 Earnings & Revenue Beat
UiPath (PATH) Q4 Earnings and Revenues Beat Estimates
KT reports record-high earnings in 2023
MorphoSys AG reports results for the quarter ended in December
💡 When will Bitcoin Reach the Cycle Top - by FieryTrading
In this analysis, I am providing an educated estimation for the timeframe within which Bitcoin may reach its peak during this cycle. You can observe Bitcoin's price movements spanning the past 13 years depicted on a 2-week chart. Essentially, it typically takes between 17 to 24 bars (equivalent to 34 to 48 weeks) before Bitcoin reaches its cycle peak, with an average duration of 20 bars.
💡 Help Shape the Future of TradingView Content - by TradingView
Hello, TradingView community! As we continue to grow and evolve, our commitment to providing value to our users remains paramount. At TradingView, we understand that our users are at the heart of everything we do. This is why we constantly strive to offer content that enriches your trading experience, empowers your decisions, and nurtures your growth as a trader.
📆 Economic Calendar
⚡️ 19th March (Japan) — BoJ Interest Rate Decision
⚡️ 19th March (Canada) — Inflation Rate YoY
⚡️ 20th March (United States) — Fed Interest Rate Decision
⚡️ 20th March (United States) — FOMC Economic Projections
⚡️ 21th March (United Kingdom) — BoE Interest Rate Decision
⚡️ 22nd March (Japan) — Inflation Rate YoY
🔥 What's New?
✅ JFX forex data — now accessible on TradingView
✅ Enhancing DeFi trading: TradingView partners with QuickSwap
✅ Improved data of BIST futures: make use of settlement prices, back-adjustment, and Open interest
✅ Chart view in Stock, ETF, and Crypto coins screeners
🌟 Script of the Week
📜 Risk Management Chart - by NoveltyTrade
This script simulates multiple equity curves based on user-defined win-loss and risk-reward parameters, allowing visualization and analysis of risk management strategies.
💭 Our Weekly Thought:
“ Plan the trade, see the trade, feel the trade. ”
We hope you found this helpful. Please share your feedback, thoughts, or suggestions with us in the comments below.
With 💖, TradingView Team
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Options Blueprint Series Strangles vs. StraddlesIntroduction
In the realm of options trading, the choice of strategy significantly impacts the trader's ability to navigate market uncertainties. Among the plethora of strategies, the Strangle holds a unique position, offering flexibility in unclear market conditions without the upfront costs associated with more conventional approaches like the Straddle. This article delves into the intricacies of the Strangle strategy, emphasizing its application in the volatile world of Gold Futures trading. For traders seeking a foundation in the Straddle strategy, refer to our earlier discussion in "Options Blueprint Series: Straddle Your Way Through The Unknown" -
In-Depth Look at the Strangle Strategy
The Strangle strategy involves purchasing a call option and a put option with the same expiration date but different strike prices. Typically, the call strike price is higher than the current market price, while the put strike price is lower. This approach is designed for situations where a significant price movement is anticipated, but the direction of the movement is uncertain. It's particularly effective in markets prone to sudden swings, making it a valuable strategy for Gold Futures traders who face volatile market conditions.
Advantages of the Strangle strategy include its lower upfront cost compared to the Straddle strategy, as options are bought out-of-the-money (OTM). This aspect makes it a more accessible strategy for traders with budget constraints. The potential for unlimited profits, should the market make a strong move in either direction, further adds to its appeal.
However, the risks include the total loss of the premium paid if the market does not move significantly and both options expire worthless. Therefore, timing and market analysis are critical when implementing a Strangle in the gold market.
Example: Consider a scenario where Gold Futures are trading at $1,800 per ounce. Anticipating volatility, a trader might purchase a call option with a strike price of $1,820 and a put option with a strike price of $1,780. If gold prices swing widely enough in either direction, the strategy could yield substantial profits.
Strangle vs. Straddle: Understanding the Key Differences
The Strangle and Straddle strategies are both designed to capitalize on market volatility, yet they differ significantly in execution and ideal market conditions. While the Straddle strategy involves buying a call and put option at the same strike price, the Strangle strategy opts for different strike prices. This fundamental difference impacts their cost, risk, and potential return.
Cost Implications: The Strangle strategy is generally less expensive than the Straddle due to the use of out-of-the-money options. This lower initial investment makes the Strangle appealing to traders with tighter budget constraints or those looking to manage risk more conservatively.
Risk Exposure and Profit Potential: Although both strategies offer unlimited profit potential, the Strangle requires a more significant price move to reach profitability due to its out-of-the-money positions. Consequently, the risk of total premium loss is higher with Strangles if the anticipated volatility does not materialize to a sufficient degree.
Market Conditions: Straddles are best suited for markets where significant price movement is expected but without clear directional bias. Strangles, given their lower cost, might be preferred in situations where substantial volatility is anticipated but with a slightly lower conviction level, allowing for larger market moves before profitability.
In the context of Gold Futures and Micro Gold Futures, traders might lean towards a Strangle strategy when expecting major market events or economic releases that could induce significant gold price fluctuations. The choice between a Strangle and a Straddle often comes down to the trader's market outlook, risk tolerance, and cost considerations.
Application to Gold Futures and Micro Gold Futures
Implementing a Strangle in the Gold Futures market requires a keen understanding of underlying market conditions and volatility. Given the precious metal's sensitivity to global economic indicators, political instability, and changes in demand, traders can leverage the Strangle strategy to capitalize on expected price swings without committing to a directional bet. When applying a Strangle to Gold Futures, selecting the appropriate strike prices becomes crucial. The goal is to position the OTM options in a way that balances the potential for significant price movements with the cost of premiums paid. This balance is critical in scenarios like central bank announcements or inflation reports, where gold prices can experience sharp movements, offering the potential for Strangle strategies to flourish.
Long Straddle Trade-Example
Underlying Asset: Gold Futures or Micro Gold Futures (Symbol: GC1! or MGC1!)
Strategy Components:
Buy Put Option: Strike Price 2275
Buy Call Option: Strike Price 2050
Net Premium Paid: 11.5 points = $1,150 ($115 with Micros)
Micro Contracts: Using MGC1! (Micro Gold Futures) reduces the exposure by 10 times
Maximum Profit: Unlimited
Maximum Loss: Net Premium paid
Risk Management
Effective risk management is paramount when employing options strategies like the Strangle, especially within the volatile realms of Gold Futures and Micro Gold Futures trading. Traders should be acutely aware of the expiration dates and the time decay (theta) of options, which can erode the potential profitability of a Strangle strategy as the expiration date approaches without significant price movement in the underlying asset. To mitigate such risks, it's common to set clear criteria for adjusting or exiting the positions. This could involve rolling out the options to a further expiration date or closing the position to limit losses once certain thresholds are met.
Additionally, the use of stop-loss orders or protective puts/calls as part of a broader trading plan can provide a safety net against unforeseen market reversals. Such techniques ensure that losses are capped at a predetermined level, allowing traders to preserve capital for future opportunities.
Conclusion
The Strangle and Straddle strategies each offer unique advantages for traders navigating the Gold Futures market's uncertainties. By understanding the distinct characteristics and application scenarios of each, traders can make informed decisions tailored to their market outlook and risk tolerance. While the Strangle strategy offers a cost-effective means to leverage expected volatility, it also necessitates a disciplined approach to risk management and an acute understanding of market dynamics.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
EURUSD InsightHello everyone, and welcome, subscribers.
Please share your personal opinions in the comments. Booster and subscription requests are appreciated.
Last week, the February inflation indicators for the United States were released, showing a higher level than expected. It indicated that contrary to market expectations, inflationary pressures are not abating. There's speculation that the Fed may adjust its dot plot at this week's FOMC meeting and concerns are rising that the rate cut may be postponed until the latter half of the year, not June.
March 18: Eurozone February Consumer Price Index will be released.
March 19: BOJ Interest Rate Decision. It's anticipated that BOJ will halt its negative interest rate policy at this meeting.
March 21: FOMC meeting is scheduled, with a rate hold expected. The dot plot will be released, and remarks on future monetary policy will be crucial.
March 22: Speech by Chairman Powell.
The euro has been forming a downward trend and has shown signs of rebounding after hitting the 1.07000 line recently. There's an expectation of a rise to the 1.10000 line, but there's some concern about potential abrupt changes in direction due to variables this week. Considering the upcoming releases, movement can be anticipated in two ways:
First, short-term rise followed by resistance at the 1.10000 line, leading to medium to long-term decline.
Second, breaking below the 1.07000 line, leading to short-term decline towards the 1.04500 line.
If movements deviate from expectations, we will analyze again and adjust the strategy.
Support and Resistance levelsSupport and resistance levels, the bedrock of technical analysis, are fundamental elements. They serve as critical points that delineate potential price movements and are pivotal in decision-making processes for traders and investors alike
The basis:
There are several fundamental concepts in trading that remain the same over a long period of time. Among them, the concepts of support and resistance levels stand out. When used correctly, support and resistance levels improve trading efficiency in financial markets.
Today we will delve deeper into these concepts.
Price behavior:
The fundamental principle of price behavior lies in the concept of supply and demand, governing the existence and operation of any market.
When demand outweighs supply, it prompts an upward push in prices, while in reverse circumstances, a decrease is observed. By identifying levels of supply and demand, traders significantly enhance their success rate.
A support level indicates a price range where strong buying positions are concentrated, typically defined by two minimum price points.
A resistance level, conversely, denotes a price range around which strong selling positions are clustered, often marked by two maximum price points.
It's important to note that support and resistance levels should not be viewed as precise lines. Prices may not necessarily adhere to these levels point by point; often, they may not even touch the level directly, sometimes piercing through it. This variability is normal, so these levels should be perceived more as zones of support and resistance. The width of these zones can vary, with the magnitude of dispersion dependent on the timeframe in which trading occurs. The higher the timeframe, the potentially broader the range of support and resistance levels.
Once again for strengthening:
Support and resistance levels represent specific price ranges on a chart (often represented by rectangles in my analysis) where the direction of price movement has historically changed. These ranges attract traders' attention because they provide clear points for setting stop losses and entering trades. In addition, these levels usually attract large buyers or sellers whose limit orders contribute to market dynamics.
Essentially, the level denotes the price area in the market where traders perceive the price to be either overpriced or underpriced, depending on the prevailing market conditions. Therefore, it is extremely important to closely monitor key levels where the role of support and resistance has changed or where significant price reversals have occurred.
Blending levels signify pivotal points on a price chart where price action can prompt a reversal in the opposite direction. In the presence of a robust trend, price movements may penetrate through these supply and demand levels, leading to potential shifts in direction. Such occurrences typically coincide with heightened transaction volumes. The interplay of price adjustments, heightened market activity, and trading volumes collectively influence market direction.
When resistance is breached and the price retraces to its previous level, there's a likelihood that bulls will once again push it upwards. Conversely, if the price retraces to the breached level after breaking through support, bears are likely to actively drive it downwards. Support and resistance levels can be identified as areas in the market where traders are more inclined to buy or sell, depending on current market conditions. This creates a zone of collision between buyers and sellers, often prompting the market to change its direction.
Retest:
A retest of a level refers to a brief return of the price to the breached support or resistance line for testing purposes. Following the retest, the price typically continues its movement in the direction of the breakout.
On higher time frames, support and resistance levels become more powerful:
It is important to observe the price action around levels:
If the price swiftly reverses from a level into the opposite trend, it indicates significant importance of that level.
If the price tests a specific area multiple times with minor retracements, it's likely that the level will eventually be breached.
Swing zones refer to areas where the price retraces to the previous pullback in either a downtrend or uptrend. In less robust trends, the price tends to return to the boundary of the previous correction before continuing its movement.
Of course, support and resistance are dynamic concepts that require constant attention and analysis as their meaning changes depending on prevailing market conditions. Moreover, it is critical to consider multiple confirmations such as volume analysis and breakouts to confirm the strength of these levels.
Thank you for your attention!
History of Bitcoin: The Underdog That Rewired FinanceBitcoin, a phenomenon that emerged at the onset of the 2008 financial crisis, has changed the way we think about money. To celebrate the token’s $73,000 milestone, we trace its origin story and look ahead into the future. To infinity… and beyond?
Table of Contents
A Financial Product Too Big to Ignore
Born in 2008 as the World’s First Cryptocurrency
The Very Early Days of Trading on Exchanges
The Volatile Phenomenon That Sparked a Change in Finance
A Place to Find Value in the Face of a Global Pandemic
Cryptocurrency Trading Lands on Wall Street
What’s Coming Next for BTC Price as We Move Deeper into 2024?
Bitcoin for Your Thoughts?
📍 A Financial Product Too Big to Ignore 📍
Bitcoin’s story is the story of an underdog that pushed through volatility and disbelief, but also dashed forward riding on hope and enthusiasm.
Bitcoin ( BTC/USD ), the world’s largest cryptocurrency, has so far managed to survive and overcome each one of its many pitfalls and obstacles thanks to its novelty, mystery, and investment appeal. Not only that, but the orange coin has progressed so remarkably, it has risen to rival the valuation of the world’s biggest companies.
As we’re about to close the first-quarter chapter of 2024, we take a closer look at what has fueled Bitcoin’s price to record levels about $73,000 a pop.
To celebrate the token’s historical milestone of $73,000 , we go back to its creation, tracing major development milestones. From wiping out billions of dollars from its valuation to logging stratospheric gains, Bitcoin’s history is nothing short of a miracle.
Today, Bitcoin boasts a valuation of more than $1.4 trillion. In other words, more than double as electric carmaker Tesla (ticker: TSLA ), founded by the uber-rich eccentric engineer Elon Musk.
With great power, comes great interest from Wall Street. A bunch of spot Bitcoin ETFs are now strutting among asset managers, finding their way to ordinary (and some degen) investors and money-spinning professionals alike.
📍 Born in 2008 as the World’s First Cryptocurrency 📍
The history of Bitcoin is relatively short. But it can sting. Because we were all playing games or being 8 years old instead of buying Bitcoin at 4 cents.
Back in 2008, the financial system crumbled under the pressure of a global crisis. A collapse in the housing market led to millions of homeowners not being able to cover their mortgage payments.
About that time, an individual—or a group of people—called Satoshi Nakamoto, concluded the banking system was not reliable. A new asset class emerged—one that did not need the intervention of banks to function.
Bitcoin, as it was called in the white paper released in November 2008 , was born. Essentially, Bitcoin represented a new type of money. An innovative software system that intended to rewire the worldwide financial system.
Bitcoin sprouted to life as an open-source software running on a peer-to-peer network called blockchain. One way to think of Bitcoin is to see it as an electronic form of physical cash without gatekeepers such as banks. The participants in the decentralized network are responsible for the verification of transactions, and all transactions are visible for the public.
📍 The Very Early Days of Trading on Exchanges 📍
Once it was born, Bitcoin stayed confined to a small network of only a few computers (and the early adopter group of ultra-niche geeks). Then, mining Bitcoin was able to get you hundreds or even thousands of coins in a few days’ time due to the low level of computing power required. Safe to say, the first people to play around with Bitcoin had no idea the tiny orange-themed gig will turn into a fire-breathing $1.3 trillion dragon.
Instead, the squad of core developers would try and make the network operate as smoothly as possible. Once this was achieved, Bitcoin hit its first exchange in 2010. The first Bitcoin to be transacted on an exchange was worth zero dollars. Then at the peak of 2010, one Bitcoin reached a record high of 39 cents.
Since then, the price of Bitcoin has experienced a wild ride as millions of people have onboarded the crypto bandwagon. Hundreds of exchanges have opened and traders today reach daily volumes of tens of billions of dollars exchanged in Bitcoin.
Bitcoin's mind-blowing price increase from its first steps through March 12, 2024 - Source: TradingView
📍 The Volatile Phenomenon That Sparked a Change in Finance 📍
It did not take much for Bitcoin to be noticed as a wonder of technology and a catalyst for change. Once it landed for trading on its first cryptocurrency exchanges, Bitcoin quickly gained popularity purely from an investment perspective.
The first traders would buy and sell the token in a matter of hours only to realize a small profit and savor the rush of adrenaline. This same speculative behavior could still be found today even after the stratospheric gains that have made Bitcoin a heavyweight in terms of valuation.
The price gyrations have crushed many traders and investors who were found unprepared to stomach the aggressive swings. Along the way, Bitcoin has endured over 17 selloffs of more than 30%. It has been through six declines of more than 60%, and four of more than 80%.
Still, after all these spectacular drops, Bitcoin has clawed back its losses and returned stronger than ever. So strong, it crushed all doom-and gloom forecasters and permabears when it blasted through the $73,000 threshold in March of 2024. Not long before that, Bitcoin had a chance to prove its worth as a safe haven in troubled times.
📍 A Place to Find Value in the Face of a Global Pandemic 📍
It’s important to mention that the current record high in the price of Bitcoin arrived after BTC’s previous peak of $69,000 in November 2021. Back then, the coronavirus crisis, which hit in March 2020, turned out to be a key period of growth for crypto.
The original digital currency served as a safe haven and a store of value—digital gold, if you like, or better—amid lingering uncertainty in the broad financial markets. In numbers, during the pandemic’s low point in March 2020, one Bitcoin was worth about $3,900.
Presently, a single Bitcoin is up more than 1,700% from its coronavirus-fueled meltdown.
The pandemic helped shift investor focus on the crypto market as participants sought to find pent-up value. The search has led to millions of Bitcoin proponents flocking to the digital asset. In practice, the interest to invest in Bitcoin has been so big, the top cop on Wall Street—the Securities and Exchange Commission—finally gave its nod.
📍 Cryptocurrency Trading Lands on Wall Street 📍
The big dogs on Wall Street welcomed the first Bitcoin-centric products to trade alongside stocks , bonds , and forex . More specifically, there are now eleven exchange-traded funds (ETFs) offering spot Bitcoin, or the real deal, unlike Bitcoin futures, which don’t hold genuine BTC. The step is a monumental milestone in Bitcoin’s path toward mainstream adoption and acceptance in the financial markets.
The eleven Bitcoin ETFs , approved by the Securities and Exchange Commission, were greeted by investors with billions of dollars injected. Giant asset managers such as BlackRock and Fidelity are seeing overflowing demand for Bitcoin from both institutions and retail investors.
The positive thing about these spot BTC ETFs is that they’re backed by the physical asset. Whenever inflows start to outpace liquidity, the asset manager needs to purchase new Bitcoin and add it to its reserves. The more the net inflow, the more it needs to buy BTC. And that drives prices higher.
From inception in January to March 2024, BlackRock’s BTC ETF hit $10 billion—faster than any US ETF ever.
📍 What’s Coming Next for BTC Price as We Move Deeper into 2024? 📍
Looking ahead into 2024, there is no doubt that we are going to see new bouts of volatility. More than that, many are optimistic we will continue to see a string of fresh records in the price of Bitcoin. With this in mind, the risks will be there too.
Both new and old, market participants need to know that price swings may be stomach-churning as the market adjusts to shifting moods in the rarefied air of $70,000.
Buying at the top is scary.
📍 Bitcoin for Your Thoughts? 📍
How did you first get exposure to Bitcoin? When did you buy your first piece of the crypto and are you brave enough to buy again at the top? Let us know in the comments!
Liked this article 🚀? Give us a follow to get notified for any future releases!
With 💖, TradingView Team
XAU/USD Gold has potential..but could go wrongThis is a long analysis I made both for myself and to share it with you,
I have to say that, I don't usually trade Gold.
And I won't be able to comment on the current state of world and news.
So this analysis will be focusing only on the charts,
please consider the market data and news before taking any position.
I summarized everything at the end of the post...
Looking at the really long term picture of Gold, we can see that Gold tried to break higher several times before.
This time however, as shown, it has a sweet bounce above the trend. It managed to show much more bullish behaviour than before.
In my view, this can go both ways;
it can reach new highs which I expect and the first profit target would be 2400$
or second possibility It gets rejected really quick and falls down to levels such as 1850$
Market news and short-term movements will decide..
We can see that the price got rejected as it should at around 2200$
I will investigate Gold in separate parts, each time narrowing the timeframe.
on this frame, which is again a wide look to see the long term potential.
I see a strong bullish behavior rising within the pink trend.
this should be able to break through the 2200$ mentioned on the previous chart snapshot.
Unless a downtrend, that is much larger than the blue one, I expect the Gold to move within the trend, potentially reaching the 2400$ target.
Since we confirmed the long term behavior, now lets examine the short term behaviour,
because a drop to 1850$ would still make the long term viable but significantly extend the trade duration making it unfavorable
This time I will be looking within the pink trend in detail...
we are down to the last 3 years,
we can identify the bullish turn from this frame too.
the blue downtrend within the previously mentioned pink uptrend is broken.
If the price keeps rising above 2200$,
The more steep purple trend should be able to push the price a bit beyond the white trend to the 2250$ point.
After that, I expect the price to move with the strong bullish behaviour...
around 2250$ the price will stick above the upperband of the white trend and after some short consolidation, potentially create a much steeper version of the white trend making the old one insignificant and rise rapidly to 2400$.
Or If the price can't go pass 2200$ and starts falling,
Will probably retest the 2080$ and maybe even fall further...
a more detailed analysis will be necessary in that case, since the trade length will significantly increase..
Now I will be looking if the price will pass 2200$ and how am I going to keep track of it.
We are down to a month long frame,
the pink and purple lines are the trends more focused and carried from the previous frame to fit the short term approach, I use them as guides..
At 2200$ the really steep uptrend ended,
bearish movement started shown with the yellow trend,
If the down trend is broken and again another bullish move starts.
I expect another trend to be formed, in place of the older steep white trend,
marked with bold white stripes.
the price should be staying close to 2180$-2190$ marks and we will see if it can get past 2200$
If it does, the price should continue rising as I mentioned on the previous frame.
If bearish movement continues and yellow trend can't be broken yet,
price should fall back to around 2145$-2150$.
And further failure to break above will result in prices such as 2080$
but I will be investigating the short term again if that happens.
In summary,
Long term approach Bullish no matter what.
Price Target 2400$ for now...
but for a more detailed entry idea
the timing of the trade however will change depending on two conditions;
1- If it can break above 2200$ I expect to reach price target in 2-3 months.
2- If it falls below 2150$ the trade will be postponed until a more solid level is reached possibly around 2080$
In either case, market news will play a big part on this...
And I would appreciate any different ideas on the comments
I will be updating this from time to time.
🔥 When Will Bitcoin Reach The Cycle Top? In this analysis I'm going to take an attempt at making an educated guesss at when Bitcoin will top, purely based on price action.
On the chart you can see Bitcoin's price action over the last 13 years on the 2-week chart. The arrows are drawn from the first candle close above the previous all-time high (purple lines).
In short, it takes between 17 - 24 bars (34 - 48 weeks) before Bitcoin reaches it's cycle top, 20 bars on average. Seeing that we're currently at the first candle close above the last ATH, we can extrapolate previous data and reach the conclusion that Bitcoin will top in December 2024.
When do you think that Bitcoin will top? Share your thoughts!
Powerful Fibonacci Trading Strategy For Beginners
I am going to reveal a powerful fibonacci trading strategy that I learned many years ago. It combines structure analysis, fibonacci retracement and extension levels and candlestick analysis.
Step 1
Find a trending market - the market that is trading in a bullish or in a bearish trend on a daily time frame.
AUDUSD is trading in a bullish trend on a daily.
Step 2
Execute structure analysis - identify key horizontal and vertical structures on a daily time frame.
Take a look at key structures that I spotted on AUDUSD.
Step 3
Draw fibonacci retracement levels.
Here are the important ratios you should look for: 382, 50, 618, 786.
In a bearish trend,
draw fibonacci retracement levels from the high of the trend to current low based on wicks.
In a bullish trend,
You should apply fibonacci retracement from the low of the trend to a current high based on wicks.
Take a look how I draw the retracement levels,
I took the low of the trend and the high of the trend.
Step 4
Find confluence.
Look for fibonacci numbers that match - lie within key structures that you identified.
Support 1 matches with 382 retracement.
Support 2 matches with 786 retracement.
Remove other ratios from the chart.
Step 5
Wait for a test of one of the fibonacci levels that match with key structure
The price perfectly tested 382 retracement level.
Step 6
Wait for a confirmation on a 4h time frame.
Our confirmation will be a formation of an engulfing candle - a strong candle that completely engulfs the entire range of a previous candle with its body.
In a bearish trend, we will look for a formation of a bearish engulfing candle. Bearish engulfing candle indicates a strong selling pressure and the strength of the sellers.
In a bullish trend, we will look for a bullish engulfing candle. It indicates a strong buying reaction and imbalance.
Have a look at a bullish engulfing candle that was formed on AUDUSD on a 4H time frame after a test of 382 retracement.
Step 7
Open a trading position, set stop loss and choose the target.
After you spotted an engulfing candle, open a trading position.
Open short after a formation of a bearish engulfing candle and open long after a formation of a bullish engulfing candle.
If you sell, your safest stop loss will be 1.272 extension of the last bullish impulse on a 4H.
If you buy, your stop loss will be 1.272 extension of the last bearish impulse on a 4H.
In our example, our stop loss will be 1.272 extension of a bearish impulse leg on a 4H time frame. The extension is based on high and low of the impulse.
If you short, your take profit will be the closest key structure support on a daily.
If you buy, your take profit will be the closes key structure resistance on a daily.
Here is our take profit level.
Being applied properly, the strategy should generate 60%+ winning rate.
Always remember to check your reward to risk ratio before you open the trade. It should be at least 1.1/1.
Also, before you place a trade, always make sure that you trade WITH the trend and take only trend-following trades.
The strategy works perfectly on Forex, Gold, Silver, Oil, Indexes.
Good luck in your trading.
❤️Please, support my work with like, thank you!❤️
GOLD stopped its decline and rebounded strongly againToday's world gold price is listed on Kitco at 2,175 USD/ounce, up 17 USD/ounce compared to early yesterday morning. World gold prices rebounded due to the weakening of the USD as investors still hope that the US Federal Reserve (Fed) will cut interest rates in June despite high inflation in the US.
Meanwhile, escalating geopolitical tensions cause safe-haven demand for gold bars to remain. World gold prices rebounded due to the weakening of the USD as investors still hope that the US Federal Reserve (Fed) will cut interest rates in June despite high inflation in the US. Meanwhile, escalating geopolitical tensions cause safe-haven demand for gold bars to remain.
Currently, there will be 2 scenarios for bullish gold speculators. If the Fed cuts interest rates, gold will skyrocket. If the interest rate cut scenario does not take place, concerns about inflation could also push gold higher.
As of March 13, market indicators based on signals from the CME Fedwatch tool showed that there was a 64.7% chance that the Fed would lower interest rates at its meeting on June 12 with a cut of 25 to 50 points. percent, slightly lower than the 68.7% recorded on March 6.
The possibility that the Fed will keep interest rates unchanged at the March 21 meeting is up to 99%, while the possibility of not reducing interest rates at the May meeting is 89.6%.
In the second half of the year, the Fed is forecast to enter a cycle of interest rate cuts and precious metals will be strongly supported. Gold is forecast to reach 2,200-2,400 USD/ounce in 2024.
Resistance: 2184 - 2192 - 2200 - 2210
Support: 2166 - 2157 - 2147 - 2137
Breakout: 2178 waiting for BUY test point
Breakout: 2172 waiting for SELL test point
The Gap Between What Is and What Will BeThere are 5 basic ways to trade a Gap or any line. In this video, I discuss two ways to enter the market using a Gap before I make the trade plan. The Gap entry techniques by themselves are of little use, but if we make a few distinctions in market structure and the process of a swing cycle, they can become functional.
Swing cycles have a process that they go through. As long as we understand that process we can view Gaps in the light of where they happen in that process. I'm going to focus these two Gap entry techniques in the lower portion of the reaction leg at the bottom pivot of a swing. The Gaps are what make up the pivot portion of the swing.
If you observe markets and swings you will often see this distinct pivot portion of a swing, it looks like a U at the bottom of a reaction leg as the buyers wrestle control back from the sellers.
Shane
Help Shape the Future of TradingView ContentHello, TradingView community! 👋🏽
As we continue to grow and evolve, our commitment to providing value to our users remains paramount. At TradingView, we understand that our users are at the heart of everything we do. This is why we constantly strive to offer content that enriches your trading experience, empowers your decisions, and nurtures your growth as a trader.
TradingView is not just a platform; it's a community. And it's your voice, your needs, and your insights that make us who we are. That's why we're reaching out to ask you: What type of publications do you want to see more published by TradingView?
We're all ears and eager to tailor our content to better suit your interests and help you achieve your trading goals. Here are just a few examples of what we can offer, but we're excited to hear your ideas too:
📚 Educational ideas : Learn from comprehensive ideas on various tools and features, trading concepts, and other informative content.
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The TradingView Digest - March 12thHey everyone! Welcome back to the TradingView Weekly Digest. In today’s edition, we’re highlighting the top posts from our community, which includes a video tutorial on our newly revamped screener tool, an informative post about portfolio diversification, a hot script on tick data, and all the latest headlines, earnings, and economic events.
💡 Diversification: What It Is, Why It Matters & How to Do It - by TradingView
Portfolio diversification is the strategy of spreading your money across diverse investments in order to mitigate risk, hedge and balance your exposure in pursuit of uncorrelated returns. While it may sound complex at first, portfolio diversification could be your greatest strength when you set out to trade and invest in the financial markets.
💡🎥 TradingView Screener 2.0 - by zAngus
The TradingView Screener was what initially led me to use TradingView. It allows me to quickly and easily filter thousands of stocks down to just a handful that meet my criteria. No matter your preferred trading style - whether it's based on technicals, fundamentals, indicators, price action, RSI, MACD, volume, etc. - the TradingView Screener can quickly help you narrow down any stocks that meet your criteria.
📰 Top Stories
U.S. Feb Nonfarm Payrolls +275K; Unemployment Rate 3.9%
SMCI: Super Micro Stock Jumps 3% on Upgrade. Here’s Why Shares are Up 10X in One Year.
XAU/USD: Gold Shines Bright to Record High of $2,160 as Central Banks Stack Up
BTC/USD: Bitcoin Cools Off After Knocking Out Fresh All-Time High Above $69,000, Smashing 2021 Record
CPI, Rates and Other Key Things to Watch This Week
💵 Earnings highlights from the previous week:
America's Car-Mart (CRMT) Reports Q3 Loss, Misses Revenue Estimates
Silvercrest Asset Management Group Inc. Reports Q4 and Year-End 2023 Results
Amplify Energy (AMPY) Q4 Earnings and Revenues Surpass Estimates
Algonquin Powers Up In Q4 But Skips Guidance On Uncertainty Over Renewables Sale
Paysafe Shares Slip 14% on Surprise 4Q Loss
💡 A Simplified Model for Bubbles - by holeyprofit
Understanding the phases of a bubble and crash is not as grandiose a claim as it's made out to be. My idea that bubbles and pops can be understood is based on my opinion that various TA methods do a good job of explaining trend development. When major bubbles and pops are viewed in hindsight, they exhibit obvious fingerprints of bull/bear trend development.
💡 Bitcoin is Still Behaving like a Risk Asset - by Tradersweekly
After reaching a new all-time high last week, Bitcoin underwent a mini flash crash, erasing more than 14% within a few hours but soon recovered. The number of Bitcoin addresses with balances exceeding 1,000 BTC slightly increased, while those with balances exceeding 100 BTC dropped slightly.
🌟 Script of the Week
📜 Order Chain - by Kioseff Trading
This indicator utilizes live tick data to visualize volume dynamics in real-time.
💭 Our Weekly Thought:
“ The trend is your friend. ”
We hope you found this helpful. Please share your feedback, comments, or suggestions with us in the comments below.
TradingView Team
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Nvidia and the Midcap BreakoutMegacap growth stocks like Nvidia have outperformed for years. But traders looking for the trend to change may see more evidence of a shift.
Today’s idea considers three charts. The first shows how Nvidia (NVDA) rallied 93 percent this year above its previous record high. It also highlights the big price swing on Friday as the chip giant made a new record high before reversing lower. In the process it engulfed prices over the two previous sessions. That’s a potential reversal pattern, especially considering the heavy volume. Is it a top for now?
We next turn to the SP:MID S&P 400 midcap index, which ended last week above its previous weekly closing high from November 2021. That pattern of higher weekly closes in December anticipated January breakouts in the Nasdaq-100 and S&P 500. Will midcaps follow?
MID is potentially important because it mostly focuses on traditional groups like industrials, retailers and financial services. It roughly tracks “value” stocks.
Speaking of value stocks, the final chart shows a ratio between the SP:SVX S&P 500 Value Index and the Nasdaq-100 on a monthly time frame. Value outperformed as the dotcom bubble deflated, but then growth stocks regained leadership in 2009. However the ratio has stabilized since August 2020.
Finally, the AI trend is about one year old. (It began with the spread of ChatGPT in February 2023 and NVDA’s GTC conference one month later.) Will investors start taking profits on long-term gains? Conditions are also changing as the economy skirts recession and the Federal Reserve prepares for a potential rate cut in June.
In conclusion, traders looking for a rotation away from megacap growth stocks have been frustrated for a long time. But now there could be increasing signs that some rotation has finally begun – at least for the time being.
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Bitcoin: Failed High Or 80K?Bitcoin first pushes all time highs earlier in the week, followed by a 10K point retrace, only the climb back to the top and push the highs again. Wild price action for sure, but what does this mean in terms of the probability of continuing higher?
The fact that price retraced 10K points in one day is very telling and demonstrates the amount of risk one faces at these levels. It is also impressive that it recovered the 10K points and now flirting with all time highs again. Certainly an argument for strength.
There are two important things to consider here from a technical perspective. You can argue all you want about "halving" and whatever, but I am only interested in probabilities. The question I ask is "what is the probability this continues higher?". To answer that, I look at two technical elements: the wave count and the support/resistance levels.
The fact that 5 waves are complete and there was a sell off attempt tells me this market can sell at a moments notice. 5th waves usually signify that the potential for this move to continue is VERY limited. While anything is possible, I like to lean on the side of probability and 5th waves often precede corrective structures. As we have seen a 10K adverse move is very easy, so what will a legitimate correction look like? The point is the risk is very high on the long side, particularly for investors.
The second factor I am watching is the FAILED HIGH scenario (see arrow on chart). The blue rectangle represents a proportional area where price is HIGHLY likely to reverse. It has reversed once on the smaller time frames in this area. IF a bearish reversal pattern appears in this area AGAIN, it can be the start of the broader pull back. Keep in mind a price probe into this area can push into new highs, getting the herd all excited before turning.
The bullish continuation scenario would be IF prices pushes through the blue rectangle effortlessly and closes above it. That would signify continued strength which could take prices into the mid to high 70Ks. This type of price action is ideal for day and swing trades, while too risky for investing in my opinion.
I am not able to put a hard probability on this situation, but IF you had a clue that there was an 80% chance of retrace and a 20% chance to continue to 80K, which side would you lean on?
Thank you for considering my analysis and perspective.
A Simplified Model for Bubbles. This post is to test a hypothesis we can break bubble moves down into five main stages and with these we can have a reasonable idea where we might be in that move.
Here I've marked up the phases on Cocoa and I'll also show some others that have similar phases.
Broadly understanding the phases of a bubble and crash is not as grandiose a claim as it's made out to be. My idea that bubbles and pops can be understood is based on my opinion that various TA methods do a good job of explaining trend development. When major bubbles and pops of the are viewed in hindsight, they have obvious finger prints of bull/bear trend development.
Trend development models and theories are something we can develop and test trading over smaller timeframes. On 5 minute charts little bubbles and crashes happened daily. On hourly charts they happen weekly. Daily charts you see them over months. If you can test thing to work on these timeframes, it's perfectly valid to scale that to weekly/monthly.
My premise is the overall rules of trend development are not significantly different from the rules of intraday/week/month development.
Through the last years I've tested models I have for bull trend reversals with varying effects. I could tout various instances of forecasting major reversals in 2021/2022 and show a very timely switch to bull in 2023. The models have had many successes. They've also had many misses. I've learned a lot about the limitations of various things.
This is an attempt to combine the original trend development ideas I had with real experience of attempting to establish the major swings in moves over the last years and apply that to some current charts that have people's attention. Charts that as per this bubble template would be in heading into the reversal swings.
First let's expand on the five stages;
Stage one:
During stage one there will be an obvious uptrend. The trend won't be of an exceptional angel but it will be progressively heading higher. It will probably look like it's going up quickly in real time, but when viewed later this was a very slow section of the trend. Lots of pullbacks likely in this phase.
Stage one has an uptrend but it does not have a lot of people believing in it. In fact, what's most common is stage one is people pointing out the reasons the trend is unsustainable.
Stage two :
Stage 2 is a crash section of the move. The bull trend breaks. At this time there are not a lot of calls for dip buying, a more popular tone is "Told you so". People have been expecting the rally to fail and are vindicated. During this time is the best possible time to buy but it'd be a highly unpopular opinion to defend in the public arena.
Stage three:
The doubling. A magnificent trend. It defies doubters time and time again until few people dare to doubt and those who do are subject of mockery. There's been a full shift from those being bullish being the outcasts to those being bearish being the outcasts. By this time the asset in question should be the darling of market related forums.
Note - I've called this the doubling phase but it can be a bit more/less. What's important is it a massive advance of the trend. Which massively changes sentiment.
Stage 4
Stage 4 is a false reversal. Heading into stage 4 it's unpopular to be a bear. Usually by this stage we're seeing people buying the asset with no previous investing background (Or nothing of a speculative nature like this). It not only has public acceptance but it's shrouded in eternal optimism.
Note: It is possible the optimism around the asset in question is long term valid. This does not remove the risk of 70 - 90% drawdowns. A standard part of trend development is to make a first trend leg. Correct almost all of that trend leg. Then head into a far larger and longer trend. An example would be the 1920's rally and crash. Was going higher, late 20's was bad time to buy.
Stage 5
In stage 5 bulls become geniuses and bears become stupid. Stage 5 is where an unshakable belief in the trend is formed by bulls and even the most staunch of bears is having trouble shorting it. If they're not shy about when they're short, they do not have money to short any more. Stage 5 is a tough time to be a bear.
Stage 5 is a really strong spike out. Coming off the stage 4 bear trap it really solidifies the idea this trend can overcome anything. It is the strongest section of the trend. Brief, but aggressive.
NVDA
Maybe the the most loved/hated stock in the world. Lot of strong opinions on NVDA. I personally think AI is cool and AI stocks have a great future. But remember that thing I said about big corrections. Just because something will be awesome in 30 years does not make it a good buy now (Looking at you, Nasdaq 1999!).
Here's the stages.
SMCI
SMCI is tricky because when you look at the rally close up you can see there are 10% drops which could be considered fitting for stage 4. That would imply a top being in now we have the big break candle. However, it's also equally valid to make a case for this being stage 4 and there to be a final spike out.
The model would have SMCI either at a classic bull trap reversal level or due to spike the high before the real turn.
Click below for the case for high being in.
AAPL
Here's the phases in AAPL looking at from inception.
The usefulness of the model (So far) for AAPL can be supported with an accurate forecast of the rally to a new high forming.
All of which would be well explained with Elliot Wave theory.
Here's an example of what happens when all of these phases hit and there is a strong and complete reversal.
Mindfulness : The Zen approach to Trading SuccessMindfulness is a practice that involves being fully present and engaged in the moment, aware of your thoughts and feelings without judgment. It originates from ancient Buddhist meditation practices but has been adopted widely in various forms across the world for its mental health benefits. In this post, we'll dive a bit deeper into what it is, where it comes from, and how it can help you when trading. Some practical tips and where to start are included as well, so keep on reading till the end.
❔ What is mindfulness?
Mindfulness is like having a special tool that helps you pay close attention to what's happening right now, in this very moment, without wishing it was different. It's about noticing the little things - how your breath feels going in and out, the way your body feels sitting or standing, or even the sounds around you. It's all about being fully present and aware, like watching a movie and noticing every detail on the screen without getting distracted by thoughts of what you will do later.
When you practice mindfulness, you're training your brain to focus on the present moment. It's like when you use a magnifying glass to look at something closely; you see a lot more detail than you would if you were glancing at it. Mindfulness works the same way, but instead of looking at something outside, you're paying close attention to your thoughts, feelings, and sensations.
By practicing mindfulness, you learn to respond to situations with more calmness and less knee-jerk reactions. Instead of getting immediately upset or stressed by something, you give yourself a moment to decide how you want to react. It's like pressing a "pause" button, giving you the chance to choose your response.
In simple terms, mindfulness changes your mindset by helping you live more in the "now," handle your emotions better and be kinder to yourself. It's like having a secret garden inside your mind where you can go to find peace, no matter what's happening around you.
❔ Where does it come from?
Mindfulness, originating over 2,500 years ago within Buddhist meditation practices, transcends its ancient spiritual roots to address a universal human need: the desire to be fully present and aware in our lives. This practice, once cultivated in the serene landscapes of ancient India, has evolved beyond its religious confines, finding a place in various Eastern traditions such as Taoism and Zen Buddhism . Each culture enriched the concept, emphasizing awareness, intention, and compassion, and highlighting mindfulness's universal appeal and applicability.
The late 20th century witnessed a significant cultural bridge as mindfulness made its way into the Western world, largely thanks to pioneers like Jon Kabat-Zinn . His approach through the Mindfulness-Based Stress Reduction (MBSR) program at the University of Massachusetts Medical School showcased mindfulness as a powerful tool for psychological well-being, stress reduction, and enhanced quality of life, irrespective of its religious origins. Today, mindfulness is embraced across diverse fields for its profound benefits, embodying a timeless practice that enhances the human experience by promoting a deeper connection with the present moment.
❔ Why Mindfulness for Trading?
Why is mindfulness important for trading? Think of trading like a big room full of buttons. Each button can make you feel something different – happy when you win, sad or scared when you lose. Mindfulness is like having a special guide in this room. This guide helps you walk through without hitting every button by accident. It teaches you to notice the buttons (your feelings) without having to press them all. This way, you can feel happy about the good things and not feel too bad about the not-so-good things, keeping your mind steady no matter what happens.
Mindfulness helps you stay calm and clear-headed. When you're trading, it's easy to get caught up in the excitement or worry a lot. Mindfulness is like putting on a pair of glasses that helps you see everything more clearly. You learn to pay attention to what's happening right now, instead of getting lost in thoughts about what might happen next or what happened before. This can help you make better decisions because you're thinking clearly and not just reacting to your feelings. It's like having a secret weapon that keeps you feeling good and thinking smart, no matter how wild the trading world gets.
❔ How does it help in trading?
Emotional Regulation : Trading can be an emotionally charged activity, with the potential for high stress, anxiety, and strong emotional reactions to wins and losses. Mindfulness helps traders recognize their emotional states without becoming overwhelmed by them, promoting a balanced approach to decision-making.
Improved Focus and Concentration : Mindfulness enhances the ability to concentrate on the task at hand. For traders, this means being able to focus on analyzing markets, monitoring trades, and making decisions without being distracted by irrelevant information or internal chatter.
Reducing Impulsive Behavior : By fostering an increased awareness of thoughts and feelings, mindfulness can help traders avoid impulsive decisions driven by short-term emotions such as fear, greed, or frustration. This can lead to more disciplined and considered trading strategies.
Stress Management : The practice of mindfulness has been shown to reduce stress levels. Given that trading can be a high-stress occupation, particularly during volatile market conditions, mindfulness can help traders manage stress, maintain clarity, and avoid burnout.
Enhancing Decision Making : Mindfulness promotes a state of calm and clarity, allowing traders to evaluate situations more objectively. This can improve decision-making by reducing the likelihood of decisions being clouded by emotions or cognitive biases.
Learning from Mistakes : Mindfulness encourages an attitude of non-judgmental observation. This perspective can help traders view losses or mistakes as learning opportunities rather than personal failures, cultivating a growth mindset that is crucial for long-term success.
Incorporating Mindfulness into Your Trading Routine
Here are a few things you can do to build in mindfulness routines in your trading day.
🧘🏽♀️Daily Meditation : Start with just 5 minutes a day. There's a plethora of apps like Headspace or Calm to guide you.
🤯Setting Intentions : Each morning, remind yourself of your trading goals and how you want to approach the day mindfully.
😤Mindful Breathing : Feeling overwhelmed? Pause and take ten deep breaths to reset your mental state.
⏸️Mindful Pauses : Before you click that trade button, take a moment to ensure this decision feels right in the gut.
✍🏽Reflective Journaling : End your day by jotting down your emotional journey alongside your trades. You might be surprised by the patterns you find.
📚 Get started:
Interested in expanding your mindfulness repertoire? Here are some resources to get you started:
Jon Kabat-Zinn's " Wherever You Go, There You Are " for mindfulness 101. ISBN 978-0-7868-8070-6
The Headspace Guide to Meditation and Mindfulness by Andy Puddicombe for those looking to integrate mindfulness into everyday life. ISBN-10 1250104904
10% Happier for meditation skeptics who want practical insights. ISBN-10 0062265423
✅ Takeaway
Who knew that the path to trading success could involve a bit of Zen? By embracing mindfulness, you're not just becoming a better trader; you're investing in your overall well-being. So, here's to trading mindfully and finding that inner peace amidst the market's chaos. Remember, in the world of trading, the best investment you can make is in yourself.
📣 Join the Conversation!
Now, it's your turn! Have you tried integrating mindfulness into your trading routine? Notice any shifts in your decision-making or emotional resilience? Or maybe you've got some mindfulness tips and tricks of your own to share. Drop your stories, insights, or even your skepticism in the comments below. Let's build a community of mindful traders, learning and growing together. Can't wait to hear about your experience!
Diversification: What It Is, Why It Matters & How to Do ItDiversification is a market strategy that enables you to spread your money across a variety of assets and investments in pursuit of uncorrelated returns, hedging, and risk control.
Table of Contents
What is portfolio diversification?
Brief history of the modern portfolio theory
Why is diversification important?
An example of diversification at work
How to diversify your portfolio
Components of a diversified portfolio
Build wealth through diversification
Diversification vs concentration
Summary
📍 What is portfolio diversification?
Portfolio diversification is the strategy of spreading your money across diverse investments in order to mitigate risk, hedge and balance your exposure in pursuit of uncorrelated returns. While it may sound complex at first, portfolio diversification could be your greatest strength when you set out to trade and invest in the financial markets.
As a matter of fact, once you immerse yourself into the markets, you will be overwhelmed by the wide horizons waiting for you. That’s when you’ll need to know about diversification.
There are thousands of stocks available for trading, dozens of indices, and a sea of cryptocurrencies. Choosing your investments will invariably lead to relying on diversification in order to protect and grow your money.
Diversifying well will enable you to go into different sectors, markets and asset classes. Together, all of these will build up your diversified portfolio.
📍 Brief history of the modern portfolio theory
“ Diversification is both observed and sensible; a rule of behavior which does not imply the superiority of diversification must be rejected both as a hypothesis and as a maxim. ” These are the words of the father of the modern portfolio theory, Harry Markowitz.
His paper on diversification called “Portfolio Selection” was published in The Journal of Finance in 1952. The theory, which helped Mr. Markowitz win a Nobel prize in 1990, posits that a rational investor should aim to maximize their returns relative to risk.
The most significant feature from the modern portfolio theory was the discovery that you can reduce volatility without sacrificing returns. In other words, Mr. Markowitz argued that a well-diverse portfolio would still hold volatile assets. But relative to each other, their volatility would balance out because they all comprise one portfolio.
Therefore, the volatility of a single asset, Mr. Markowitz discovered, is not as significant as the contribution it makes to the volatility of the entire portfolio.
Let’s dive in and see how this works.
📍 Why is diversification important?
Diversification is important for any trader and investor because it builds out a mix of assets working together to yield returns. In practice, all assets contained in your portfolio will play a role in shaping the total performance of your portfolio.
However, these same assets out there in the market may or may not be correlated. The interrelationship of those assets within your portfolio is what will allow you to reduce your overall risk profile.
With this in mind, the total return of your investments will depend on the performance of all assets in your portfolio. Let’s give an example.
📍 An example of diversification at work
Say you want to own two different stocks, Apple (ticker: AAPL ) and Coca-Cola (ticker: KO ). In order to easily track your performance, you invest an equal amount of funds into each one—$500.
While you expect to reap handsome profits from both investments, Coca-Cola happens to deliver a disappointing earnings report and shares go down 5%. Your investment is now worth $475, provided no leverage is used.
Apple, on the other hand, posts a blowout report for the last quarter and its stock soars 10%. This move would propel your investment to a valuation of $550 thanks to $50 added as profits.
So, how does your portfolio look now? In total, your investment of $1000 is now $1,025, or a gain of 2.5% to your capital. You have taken a loss in Coca-Cola but your profit in Apple has compensated for it.
The more assets you add to your portfolio, the more complex the correlation would be between them. In practice, you could be diversifying to infinity. But beyond a certain point, diversification would be more likely to water down your portfolio instead of helping you get more returns.
📍 How to diversify your portfolio
The way to diversify your portfolio is to add a variety of different assets from different markets and see how they perform relative to one another. A single asset in your portfolio would mean that you rely on it entirely and how it performs will define your total investment result.
If you diversify, however, you will have a broader exposure to financial markets and ultimately enjoy more probabilities for winning trades, increased returns and decreased overall risks.
You can optimize your asset choices by going into different asset classes. Let’s check some of the most popular ones.
📍 Components of a diversified portfolio
Stocks
A great way to add diversification to your portfolio is to include world stocks , also called equities. You can look virtually anywhere—US stocks such as technology giants , the world’s biggest car manufacturers , and even Reddit’s favorite meme darlings .
Stock selection is among the most difficult and demanding tasks in trading and investing. But if you do it well, you will reap hefty profits.
Every stock sector is fashionable in different times. Your job as an investor (or day trader) is to analyze market sentiment and increase your probabilities of being in the right stock at the right time.
Currencies
The forex market , short for foreign exchange, is the market for currency pairs floating against each other. Trading currencies and having them sit in your portfolio is another way to add diversification to your market exposure.
Forex is the world’s biggest marketplace with more than $7.5 trillion in daily volume traded between participants.
Unlike stock markets that have specific trading hours, the forex market operates 24 hours a day, five days a week. Continuous trading allows for more opportunities for price fluctuations as events occurring in different time zones can impact currency values at any given moment.
Cryptocurrencies
A relatively new (but booming) market, the cryptocurrency space is quickly gaining traction. As digital assets become increasingly more mainstream, newcomers enter the space and the Big Dogs on Wall Street join too , improving the odds of growth and adoption.
Adding crypto assets to your portfolio is a great way to diversify and shoot for long-term returns. There’s incentive in there for day traders as well. Crypto coins are notorious for their aggressive swings even on a daily basis. It’s not unusual for a crypto asset to skyrocket 20% or even double in size in a matter of hours.
But that inherent volatility holds sharpened risks, so make sure to always do your research before you decide to YOLO in any particular token.
Commodities
Commodities, the likes of gold ( XAU/USD ) and silver ( XAG/USD ) bring technicolor to any portfolio in need of diversification. Unlike traditional stocks, commodities provide a hedge against inflation as their values tend to rise with increasing prices.
Commodities exhibit low correlation with other asset classes, too, thereby enhancing portfolio diversification and reducing overall risk.
Incorporating commodities into a diversified portfolio can help mitigate risk, enhance returns, and preserve purchasing power in the face of inflationary pressures, geopolitical uncertainty and other macroeconomic risks.
ETFs
ETFs , short for exchange-traded funds, are investment vehicles which offer a convenient and cost-effective way to gain exposure to a number of assets all packaged in the same instrument. These funds pull a bunch of similar stocks, commodities and—more recently— crypto assets , into the same bundle and launch it out there in the public markets. Owning an ETF means owning everything inside it, or whatever it’s made of.
ETFs typically have lower expense ratios compared to mutual funds, making them affordable investment options.
Whether you seek broad market exposure, niche sectors, or thematic investing opportunities, ETFs are a convenient way to build a diversified portfolio tailored to your investment objectives and risk preferences.
Bonds
Bonds are fixed-income investments available through various issuers with the most common one being the US government. Bonds are a fairly complex financial product but at the same time are considered a no-brainer for investors pursuing the path of least risk.
Bonds have different rates of creditworthiness and maturity terms, allowing investors to pick what fits their style best. Bonds with longer maturity—10 to 30 years—generally offer a better yield than short-term bonds.
Government bonds offer stability and low risk because they’re backed by the government and the risk of bankruptcy is low.
Cash
Cash may seem like a strange allocation asset but it’s actually a relatively safe bet when it comes to managing your own money. Sitting in cash is among the best things you can do when stocks are falling and valuations are coming down to earth.
And vice versa—when you have cash on-hand, you can be ready to scoop up attractive shares when they’ve bottomed out and are ready to fire up again (if only it was that easy, right?).
Finally, cash on its own is a risk-free investment in a high interest-rate environment. If you shove it into a high-yield savings account, you can easily generate passive income (yield) and withdraw if you need cash quickly.
📍 Build wealth through diversification
In the current context of market events, elevated interest rates and looming uncertainty, you need to be careful in your market approach. To this end, many experts advise that the best strategy you could go with in order to build wealth is to have a well-diversified portfolio.
“ Diversifying well is the most important thing you need to do in order to invest well ,” says Ray Dalio , founder of the world’s biggest hedge fund Bridgewater Associates.
“ This is true because 1) in the markets, that which is unknown is much greater than that which can be known (relative to what is already discounted in the markets), and 2) diversification can improve your expected return-to-risk ratio by more than anything else you can do. ”
📍 Diversification vs concentration
The opposite of portfolio diversification is portfolio concentration. Think about diversification as “ don’t put your eggs in one basket. ” Concentration, on the flip side, is “ put all your eggs in one basket, and watch it carefully. ”
In practice, concentration is focusing your investment into a single financial asset. Or having a few large bets that would assume higher risk but higher, or quicker, return.
While diversification is a recommended investment strategy for all seasons, concentration comes with bigger risks and is not always the right approach. Still, at times when you have a high conviction on a trade and have thoroughly analyzed the market, you may decide to bet heavily, thus concentrating your investment.
However, you need to be careful with concentrated bets as they can turn against your portfolio and wreck it if you’re overexposed and underprepared. Diversification, however, promises to cushion your overall risk by a carefully balanced approach to various financial assets.
📍 Summary
A diversified portfolio is essentially your best bet for coordinated and sustainable returns over the long term. Choosing a mix of various types of investments, such as stocks, ETFs, currencies, and crypto assets, would spread your exposure and provide different avenues for growth potential. Not only that, but it would also protect you from outsized risks, sudden economic shocks, or unforeseen events.
While you decrease your risk tolerance, you raise your probability of having winning positions. Regardless of your style and approach to markets, diversifying well will increase your chances of being right. You can be a trader and bet on currencies and gold for the short term. Or you can be an investor and allocate funds to stocks and crypto assets for years ahead.
Potential sources of diversification are everywhere in the financial markets. Ultimately, diversifying gives you thousands of opportunities to balance your portfolio and position yourself for risk-adjusted returns.
🙋🏾♂️ FAQ
❔ What is portfolio diversification?
► Portfolio diversification is the strategy of spreading your money across diverse investments in order to mitigate risk, hedge and balance your exposure in pursuit of uncorrelated returns.
❔ Why is diversification important?
► Diversification is important for any trader and investor because it creates a mix of assets working together to yield high, uncorrelated returns.
❔ How to diversify your portfolio?
► The way to diversify your portfolio is to add a variety of different assets and see how they perform relative to one another. If you diversify, you will have a broader exposure to financial markets and ultimately enjoy more probabilities for winning trades, increased returns, and decreased overall risks.
Do you diversify? What is your strategy? Do you rebalance? Let us know in the comments.
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XRP: Bull Market VibesXRP, like many other cryptocurrencies, has experienced significant fluctuations over the past few years. In this article, we will analyze XRP's behavior from 2018 to the present, focusing on the bull market that started in December 2020.
Descending Channel (2018-2020)
From the summer of 2018 to December 2020, XRP was in a descending channel. This period was characterized by low volatility and a gradual decrease in price.
Sharp Pump and Bull Market (December 2020 - May 2022)
In December 2020, XRP surged sharply, breaking out of the descending channel. This pamp marked the beginning of a bull market that lasted until May 2022.
Ascending Channel (May 2022 - Present)
Since May 2022, XRP has been trading in an ascending channel. This channel is characterized by clear support and resistance lines, as well as XRP constantly testing the upper channel boundary.
Pump Expectation
On the daily timeframe, XRP shows a decrease in volatility. This pattern often precedes a sharp rise in price, so it can be expected that XRP is about to make a new pamp.
Bullish Sentiment Confirmation:
XRP has been holding in an ascending channel for 7 months, without breaking the support line.
The price is constantly testing the upper boundary of the channel, which indicates the bulls' pressure.
Decreased volatility on the daily timeframe is a typical pattern before a pamp.
Important Caveats:
It is important to conduct your own research and assess the risks before investing
TradingView Screener Update - Now with CHART views !!!This has to be one of the best updates on TradingView in a while - certainly from my perspective.
The TradingView Screener was what initially brought me to using TradingView to be able to quickly and easily filter thousands of stocks down to just the handful that met my criteria and that I wanted to research further to look at investing in.
If you have ever had to rely on signal services or other people to tell you what and when to buy and sell, I would STRONGLY recommend you spend some time on the screener.
No matter how you like to trade - technicals, fundamentals, indicators, price action, RSI, MACD, volume etc etc, the TradingView Screener can quickly help you narrow down any stocks that meet your criteria.
Well worth exploring.
Great update by the team!
Bitcoin is still behaving like a risk assetAfter reaching a new all-time high yesterday, Bitcoin underwent a mini flash crash, erasing more than 14% in less than five hours and falling below $60,000. Nevertheless, it took only a few more hours for Bitcoin to recover and get back above the $66,000 handle, where it currently trades. The number of Bitcoin addresses with balances exceeding 1,000 BTC slightly increased, while those with balances exceeding 100 BTC dropped by a small margin. In our opinion, yesterday’s price action is a prime example of Bitcoin remaining a risk asset rather than a safe haven that many people consider it to be. Consequently, we remain highly vigilant in this euphoric state of the market.
Illustration 1.01
The image above shows the 1-minute chart of BTCUSD and yesterday’s mini crash.
Technical analysis gauge
Daily time frame = Bullish
Weekly time frame = Bullish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of multiple indicators.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor or any other entity. Your own due diligence is highly advised before entering a trade.
What Are Cryptocurrency Bear and Bull Traps?What Are Cryptocurrency Bear and Bull Traps?
In volatile crypto markets, traders must contend with many challenges. One of the most common is the bear and bull trap, which can quickly catch traders off-guard if they aren’t careful. In this FXOpen article, we’ll explore how these traps work, provide examples to illustrate their characteristics, and tell about practical ways to avoid them.
What Is a Bear Trap in Crypto?
In cryptocurrency trading, a bear trap is a signal indicating that a crypto asset is declining, luring in short sellers to position themselves for a price drop. However, this signal is false; after reaching a new low, the asset rebounds sharply. On a chart, this may look like a breakout below a support level, then a quick reversal, usually leaving a long wick.
The term ‘bear trap’ comes from the way it ‘traps’ bearish traders. They are almost instantly at a loss and psychologically vulnerable – they have to either realise a loss or risk further losses by holding their position.
Typically, covering these shorts (i.e. closing the short by buying back the position) fuels the bear trap, driving prices higher as traders rush to get out of the market to avoid further pain. It’s also worth noting that long traders expecting the reversal are also often stopped out during a bear trap – after all, it’s commonly repeated advice to set stop-losses beyond a support or resistance level.
It's essential to understand that bear traps are primarily psychological. They often occur when market sentiment is overwhelmingly negative, with traders expecting further price decreases. Institutional players in the market use this negativity to their advantage. They take long positions and briefly push prices down to trap many short traders and trigger long stop-losses. When shorts begin covering, and other traders start to buy, prices rise and put these players in profit.
Example
In the example above, we see Bitcoin dropping heavily on the left, continuing a larger downtrend off-screen. Price finds a bottom, creating an area of support that is held throughout the day. It’s reasonable to expect lower prices, given that BTC has been in a long downtrend.
As a result, when the price begins to break down with a sizable candle, breakout traders begin entering short positions. Those who took a long position, anticipating a broader trend reversal, are stopped out.
When the price begins to reverse as buying pressure picks up, short traders are trapped, likely at a small loss; stopped-out long traders are looking for a re-entry. As shorts began closing their positions and long traders rushed to enter again, Bitcoin surged higher.
What Is a Bull Trap in Crypto?
A bull trap is effectively the opposite of a bear trap: prices rise, encouraging traders to buy a cryptocurrency. It makes a new high and shortly reverses, putting traders who bought the breakout at a loss. This is the primary difference between a bull trap vs a bear trap.
Likewise, bull traps are all about emotion. Bulls are trapped, realising that they will likely take a loss. Bears that are correct in predicting an impending downtrend are stopped out and look for another entry. The fear and frustration of both types of traders add selling pressure to the market, driving prices lower.
Example
In the chart above, Bitcoin drops after an extended uptrend off-screen. It forms a low, retraces, and reacts at an area of resistance. Price continues higher, breaking through the resistance and forming a long wick. Traders buying the breakout see their position move to a loss as the long wick forms, while many short traders’ stops are triggered.
As it moves lower, a bear trap on the lower timeframe forces prices higher once more to form the real bull trap. Breakout traders think it’s for real this time as the high is broken and open long positions, while some short traders that found a reentry are stopped out again. When the price begins to decline sharply, the realisation of the market’s true direction forces the price even lower as traders pile in short.
This example is interesting in that it demonstrates that bull traps can occur repeatedly in the same area. While we won’t cover it in this article, learning the Wyckoff methodology can help you deal with and understand why you may see multiple bear and bull traps in a given area.
Want to mark up charts like we’ve done here? Head over to FXOpen’s free TickTrader platform, where you’ll find each of the tools used to create the examples in this article.
How to Avoid Bear and Bull Traps
It can be tricky to avoid falling into bear and bull traps in crypto, meaning traders should take precautionary steps to prevent frustration and potential losses. Here are four ways that may help traders sidestep these traps.
Understand Where Liquidity Lies
Bear and bull traps serve two purposes: to play on the emotions of traders and to tap into liquidity. Liquidity allows traders to take large positions without significantly affecting an asset’s price, reducing slippage/transaction costs. The deepest areas of liquidity are often found just beyond support or resistance levels, where stop losses are placed, and breakout traders are waiting and are usually tapped into before a considerable move occurs (as seen in the examples).
Liquidity builds up in areas with roughly equal highs and lows, along seemingly-strong trendlines, and at round numbers (e.g. $24,000), but is also present beyond every key high and low. In setups where the obvious place to set a stop-loss is one of these areas, you can consider using a wider stop-loss. Beyond the next significant support/resistance level is a good place to start.
Trade With the Trend
The phrase 'trend is your friend' is popular among traders for a reason. More often than not, these traps push the price in the direction of the broader trend. Understanding this can help avoid such traps. If the broader market trend is clearly bearish, for example, traders might want to reconsider taking a long position based on a potential breakout. Similarly, if the trend is bullish, it might be wiser to hold off on initiating short positions. This doesn't mean that counter-trend opportunities should be completely ignored, but rather that they should be approached with caution.
Check Volume
Trading volume often provides valuable clues about market activity. A sudden price movement accompanied by high trading volume can indicate a genuine breakout, while low volume may suggest a trap. This isn’t always the case since bear and bull traps can generate significant volume themselves, so it’s worth comparing a recent breakout’s volume with a potential trap’s volume to gauge strength.
RSI Divergences
Lastly, traders can use the relative strength index (RSI), a popular momentum indicator, to find early warning signs of reversals where traps often occur. Divergences between the RSI and price suggest weakening momentum and the possibility of a bull/bear trap. For instance, if the price reaches a new high but RSI does not, a reversal could be due. Conversely, if the price makes a new low without the RSI confirming, it could be a sign of a potential bull trap.
The Bottom Line
In conclusion, bear and bull traps are just one of the many challenges traders face when navigating the crypto markets. Understanding how they work and how to avoid them can significantly reduce the losses a trader takes and may even present opportunities for profit if taken advantage of correctly.
In fact, these traps occur across all types of markets, not just crypto. If you want to put your newfound knowledge to the test across over 600 stock, forex, and commodities markets, you can open an FXOpen account. You’ll be able to take advantage of the advanced TickTrader platform, low-cost trading, and blazing-fast execution speeds. Good luck!
At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules, respectively. They are not available for trading by Retail clients.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.