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Power of compounding interest, but why do traders still fail ? Hello everyone: Welcome to this quick educational video on Compounding interest in trading. Today I want to break down the benefits of compounding a trading account while keeping good risk management at bay. The reason why compounding interest is so lucrative is due to investing interest on top of interest, and your trading account can grow much faster than traditional investment returns. The important note is that, by having strict risk management rules, proper trading plan, the account can grow over time. But why do many traders fail to do so ? Let's take a deeper look into this: Many new/beginner traders often get involved in trading due to its profitable potential. However, most of them do not learn about risk management, trading psychology on mindset and emotions. They tend to over trade, over leverage their accounts in hope to double it in a short period of time. This almost always leads to traders to blow their accounts, and re-deposit more money to “chase/revenge” their losses, and the cycle continues. The truth is, growing the account by compounding can eventually double a trading account, but only in time and with strict risk management rules. However, the greed, emotion and mindset often become the tread stone for the traders’ success. It's important to understand that having a consistent, sustainable approach in trading can lead to profits and growth over time, but it's not something that is instantaneous, which is what most new/beginner traders often misunderstood. This can be due to social media, and lots of typical trading “guru” out there promising guaranteed results and easy money. Take a step back and think about compounding interest in time and scale. 5-7.5% return per month may not seem much for a small trading account, but it is sustainable and consistent by not over-risking and over-trading. In time when the account is at a larger scale, a few % return with compound effect in a year can generate very sizable return and growth. In today’s trading industry, there are many prop firms out there that allow you to trade their funds, if you can be consistent and sustainable. Understand these firms are not looking for traders to double their larger capital, rather, to have consistent return and proper risk management. When you can prove you can be consistent to compound a small account, then when you actually do trade a larger account, the % return would be the same. Last Note: Build up the right habits from the start. Your job in the beginning of trading is not to make massive returns, rather to focus on risk management, control emotion, and understand trading psychology. Once all these are checked, then you will be miles ahead of other traders who are still struggling to understand the concept. Any questions, comments or feedback welcome to let me know. Thank you Jojo
BITSTAMP:BTCUSDEducation
by jojofang0901
149
Assigning Elliott Wave DegreesDid you know that you're able to change the labeling of the degree of a wave when drawing Elliott Waves? Elliott Wave Degree labels assist in the identification of the fractal patterns of Elliott Waves. These degrees are used for both motive and corrective waves (though only motive waves are labeled here). Each of the degrees have a standardized notation that indicates the degree of the wave, allowing the user to identify them more easily. While the different degrees of waves can be applied however someone would like on a chart, the order and length of time for degrees that are most often used from largest to smallest are: Grand supercycle: multi-century Supercycle: multi-decade Cycle: one to multiple years Primary: months to years Intermediate: weeks to months Minor: weeks Minute: days Minuette: hours Subminuette: minutes **Times associated with degrees are approximate** There are six more degrees that are used less often due to the extremely high and low time frames, they are: Supermillennium, Millennium, Submillenium, Micro, Submicro and Miniscule. In order to change the degree of the Elliott Wave, simply Double-click on the drawn wave, or select it and click the settings gear in the toolbar Go to Style Select desired degree from the dropdown Thats it! How often do you use Elliott Waves in your analysis?
BITSTAMP:ETHUSDEducation
by TradingView
95
DeGRAM | PHASES, MARKET BEHAVIORA Growing trend. Bull market CONSOLIDATION (ACCUMULATION) Large players risk unlocking the potential of the instrument, actively investing, although there is no clear picture of further growth. The market is full, big exchanges, big losses, someone manages to make money. Energy is accumulating STRONG BULLISH TREND The beginning of the excitement, news, speculative activity, brokers, sales departments, solid motivation for all speculators to purchase the instrument. Technical traders make a lot of money in these times of the market. Capturing liquidity and deceiving participants by a large player. They drag the price above the previous peaks, supposedly showing that we will move up, and then turn around and go down, collect everything that is needed and after accumulation continue to follow the trend. MADNESS STAGE The market is very active, the participants catch up with the departing train and try to drop in to earn money. A Falling trend. Bear market DISTRIBUTION Large players are exiting the market for high pitched reasons. There is unloading, distribution. Private traders are still active. High volumes. Decrease. PANIC PHASE More and more sellers appear, including large ones. The fall is accelerating, the sell-off is strong. Strong buyers change positions or leave the market. The third phase is a huge drawdown, a hopeless situation for buyers. The downward movement is gradually stopping, but there is still no major buyer in the market, everything is characterized by negative news or market sentiment. ------------------- Share your opinion in the comments and support the idea with likes. Thank you for your support!
Education
by DeGRAM
30
📚Trading Lesson. Triangle Types & How to Read Them📚 Triangle is a classic price action pattern that is applied by technical analysts to make predictions trading different financial markets. Depending on the shape of the triangle, there are three main variations of this pattern. Its meaning changes dramatically from one to another so it is crucially important for you to know the difference. 👉 The symmetrical triangle is determined by two contracting trend lines. The pattern is considered to be indecisive meaning that while the market is stuck within, the directional bias is unknown. Only the breakout of a boundary of a triangle clarifies the future direction. 👉 In contrast, the ascending triangle (also called a bullish accumulation) is a classic example of a bullish biased pattern. With a horizontal trend line serving as resistance and a rising trend line service as support, the market is accumulating volumes for a bullish breakout. Once the horizontal resistance is broken, bullish continuation follows. 👉 The descending triangle is a bearish biased pattern. Also called a bearish accumulation, the pattern indicates the preparation of the market participants to set a new low after consolidation and contraction within a triangle. Once the horizontal support is broken, bearish continuation follows. 🔔Please, support this educational post with a lovely comment and like. Also, subscribe to our page for more educational posts & signals.🔔
BITFINEX:BTCUSDEducation
by UnitedSignals
26
Understanding Inflation: Is it transitory or persistence? The velocity of money (M2V) is the rate at which consumers and businesses spend money and it’s calculated as the ratio of gross domestic product to the country’s money supply. MV = PY or V = PY/M M: Money growth. V: velocity of money (or the rate at which people spend money). P: the general price level or inflation Y: the number of goods and services produced or real GDP From the first equations we can also derive the following: delta M + delta V = delta P + delta Q Delta-M: Change in money growth Delta-V: Change in the velocity of money Delta-P: Change in prices Delta-Y: Change in real GDP According to Irving Fisher’s theory if the interest rates are fixed and people don’t hold their money, then the velocity of money is a constant. Changing our previous formula to: delta M = delta P + delta Q Money growth = real GDP + inflation Or delta P = delta M – delta Y Inflation = real GDP – Money growth So, if money growth exceeds real GDP, then we would see real inflation. But a fast-growing country would have a faster-growing GDP and the government must print money to prevent deflation in the long run. Since real GDP is also related to the development of economic resources and technologies, it’s considered to be constant short term making the argument that money growth is directly proportional to inflation. Therefore, when a huge amount of money was printed last year, we expected to see some inflation that we are seeing right now. Now the issue is that the Velocity of money is not constant, and hints about the economic strength and people’s wiliness to spend money. So, if there is a lot of money printed but people are too afraid to spend it then velocity should decline. One reason for people not spending money is the low-interest rates, making bonds less interesting for investors. But not only people did not spend their money, as usual, there were also fewer transactions and sharp decline in GDP due to lockdowns and the fact that some sectors were completely shut down during the pandemic. As you can see on the chart, with a reopening the GDP has been catching up and might exceed the money supply bringing the velocity back to its previous rates or higher. With the reopening, we also have more people spending their money causing a spike in demands for goods and services in a relatively short period while the economy is taking it's up to meet this demand. Therefore, many investors are considering inflation a threat that may lead to increased interest rates. Although the velocity of money is said to be too variable in the short term and is not a good indicator of inflation, it’s interesting to see its relationship with US Bond 10-year yield. Now the question is why some economists think inflation is transitory and not persistent? There are a few reasons: 1. As you may have noticed yesterday the commodities had a huge drop and should continue going down with the reopening reducing business costs and ultimately contributing to lower prices. 2. Employers have been forced to increase wages and that’s a permanent decision because they can’t reduce the wages once they increased them. However, with technological advancements, people are constantly being replaced with machines and robots, which could ultimately reduce the business costs over time. 3. There is more demand than supply because of increased money growth which could lead to inflation. However, with the reopening and by the time the unemployment benefits stop by September, people are forced to get back to work, and GDP would spike up. Since the government is going to stop or reduced the rate of money growth, higher real GDP would cause a relative deflation and bring our current state of inflation back to 2%. In conclusion, the inflation rate that we are seeing right now should go back to normal within a year or two. That would be a sign for rather a healthy economy making the case for tapering and the dot plot to be skewed toward even higher interest rates for 2023 and 2024. This is a simplified version of what's going on so please feel free to share your thoughts and analysis in the comment section. Also, if you are interested to see how bitcoin fits into our current economic cycle, check this out and let me know what you think:
FRED:CPIAUCSLEducation
by MarkitMaven
29
Fibonacci Fan Explained , Guide Part 20What is a Fibonacci fan? A Fibonacci fan is a chart construction technique used in technical study that uses the Fibonacci interaction to graphically predict support and resistance levels. The Fibonacci quantity can be used to explain the proportions in things, from the smallest building blocks of nature, such as atoms, to the most advanced patterns in the world, such as unimaginably monumental celestial bodies. Nature relies on this inborn proportion to preserve equality, but financial markets also seem to adapt to this "golden ratio." Understanding Fibonacci fans Fibonacci fans are sets of sequential trend lines drawn from a valley or peak by means of a group of views dictated by Fibonacci retracements. To create them, a trader draws a trend line from which to base the fan, which primarily covers the low and high costs of a cost over a defined period of time. To achieve the retracement levels, the trader divides the cost difference at the lower and preeminent end by the proportions determined by the Fibonacci series, commonly 23.6 percent, 38.2 percent, 50 percent, and 61.8. percent. The lines formed by connecting the starting point of the base trend line and each degree of retracement make up the Fibonacci fan. Traders have the ability to use the Fibonacci fan lines to guess key points of view of resistance or support, in which they could wait for cost trends to reverse. When a trader identifies patterns on a chart, he can use those patterns to foreshadow future cost movements and future levels of support and resistance. Traders use predictions to time their trades. Fibonacci Interaction Reversal Strategies The Fibonacci sequence begins with the digits zero and one, then is infinitely born with the next number in the sequence equal to the sum of both numbers that precede it (for example, 0, 1, 1, 2, 3, 5, 8, 13, 21, 35, etc.). The number of adjacent terms equates to about 1,618, represented in mathematics by the Greek letter phi (y) and, coincidentally, it underlies a huge proportion of naturally occurring patterns. For unknown reasons, activity costs also appear to act in patterns consistent with the Fibonacci index. There are technical studies based on the Fibonacci ratios for the cost and time axes of the charts. Analysts also have the ability to use retracements to generate arcs or fans using arithmetic or logarithmic scales. No one seems to know if these tools work as the stock markets display any kind of natural boss or as Fibonacci indices are used by various investors to forecast cost movements, making them a self-fulfilling prophecy. Be that as it may, key support and resistance levels often tend to happen at the 61.8 percent degree in both bullish and bearish trends. To derive the 3 key causes that are typically applied in technical research based on the Fibonacci series, simply discover the quantity of a number in the series to its neighbors. Adjacent numbers generate the inverse of phi, or 0.618, corresponding to a 61.8 percent retracement degree. Numbers separated by 2 places in succession provide a ratio of 38.2 percent, and numbers separated by 3 places provide a ratio of 23.6 percent. Fibonacci fans vs. Gann fans Gann fans are another form of technical study based on the initiative that the market is geometric and cyclical in nature. A Gann fan consists of a sequence of trend lines called Gann angles. These angles are superimposed on a cost chart to show probable support and resistance levels. It is implied that the resulting picture will help technical analysts to predict cost changes. Gann's admirers are named after their author W.D. Gann. Gann believed that his angles could herald future cost movements based on geometric angles of time versus cost. Gann has been a 20th century market theorist. However, instead of relying on the 1.618 Fibonacci Golden Ratio, Gann believed that the 45-degree angle was the most relevant. Later, Gann's fan draws extra angles at 82.5, 75, 71.25, 63.75, 26.25, 18.75, 15, and 7.5 degrees. Therefore, the Gann fan adds angles based on cost movements in time in the following proportions: 1: 8, 1: 4, 1: 3, 1: 2, 1: 1, 2: 1, 3: 1, 4 : 1 and 8: 1. Its use is personal. You can be based on 45 degree angle. Or Putting from Start of trend to End of trend, Like a Fibonacci Retracement, both are valid. 45 Degree Example: Modo Fibonacci:
Education
by UnknownUnicorn18500526
33
DeGRAM | Features of the MARKET STRUCTUREPrice action and market structure. Understand. Anticipate. Earn. As advocates of technical analysis of price, we recognize that price and its traces on a chart are everything. Nothing else is needed. Only one thing is important for us, we do not need to get away from everything and understand the price action and the structure of the market. Price is a trace. What buyers and sellers leave behind on the battlefield, we have the right to use this advantage. Thus, the price is the meeting point for decision-making by all market participants. It does not matter what traders, speculators use technical analysis , inside information or fundamental analysis . A careful analysis of price movements reveals areas of imbalance in market forces, which therefore offer interesting opportunities for profit - this is the main reason why we are fond of understanding price action and market structure. The essence and important points when building a chart of price action and market structure. The idea behind a chart is primarily to show where price has moved over time. Supply and demand determine the price of something, and a chart is a graphical representation of historical changes in supply and demand , i.e., historical changes in the overall attitude of buyers and sellers towards the viewed product. Clean charts: is a powerful tool that can facilitate this integration and promote the development of intuition. Focus on where it should be on price candles or bars and the evolving market structure. Opening price. How important is it? Annotate your charts with annual, monthly and weekly opening. Price changes anytime, anywhere, and our charts become volatile because human emotions are influenced by the news. You should always mark your schedules with annual, monthly, and weekly openings; and if you are an intraday trader, with a daily open. due to backorders and order flow. The price moves out of liquidity zones and returns to them. When the year, month and week come to an end, large speculators seek to cover, change or open new positions. Thus, there is a lot of "order changes", and at the same time, unfulfilled orders often remain: liquidity remains in the same place. Thus, "smart money" gradually enters the market and, thus, does not always fully fill its position. Hence, they have the choice to leave the order unfilled so that the price can raise it when / if the market returns. This: triggers a reaction at these levels in terms of order flow, partially responsible for price memory. Price. What is it? Every player. From retail to institutional money. But at the same time, who wins in the market: retail or institutions? If you want to make money in the marketplace, you must stop thinking like a retail trader and start trading like institutions do. Therefore, a good way to use these levels is to understand them in terms of accumulation / distribution . The accumulation stage is followed by the expansion stage and the distribution stage. You need to make sure that you are not a retail money, in other words, the “opposite side of smart money trading”. Candles. Structure. Each candlestick tells you a story about the structure of the market. At this point, the main thing to understand is that candles are a graphical representation of price movement and therefore show the mindset and sentiment of the market, as well as any changes in that thinking and sentiment that may unfold. This is why price tells you a story: because a candlestick can be broken down into its component parts to determine the direction of movement that it represents for price. Basic Principles of Psychology Through Price Action A green real body candlestick is created on the day the market closed higher than where it opened: In other words, the price moved up during the day. This means, if we use the basic principles of supply and demand , there were more buyers than sellers. In the market language I will use from now on, the bulls won. The red real body candle is the result of the day when the market closed below the level at which it opened. This means that sellers outweighed buyers or there was more supply than demand, causing the price to move lower. In market conditions, it was a bearish day. Output Many people believe that price changes are random and unpredictable. If this were true, the only logical course of action would be ... not to trade! A correct reading of price action will enable you to understand and extract market structure from your chart. Once you get this advantage, you can stay on the right side of the market. Then you can sit quietly. ------------------- Share your opinion in the comments and support the idea with likes. Thank you for your support!
Education
by DeGRAM
5
Why publish open-source indicators?█  OVERVIEW Curious or incredulous traders often ask me why I publish my indicators open-source. There are many reasons; this is the long version of the answer. █  WHY OPEN-SOURCE? I 💙 TV I love TradingView. I share and respect its co-founders' objectives to demystify trading and markets, to ​empower traders with powerful tools and provide an environment where traders can learn and share openly. It is an honor for me to try to contribute something to this fantastic and unparalleled community. Don't be a sucker Throughout the relatively short, few centuries-old history of markets, a constant influx of newcomers has tried their hand at trading. The vast majority of them make the costly mistake of underestimating how difficult it is to extract money out of markets. They erroneously assume that a few tricks from experts are all that is needed, which creates a permanent, ongoing rush for ready-made recipes for success. This pressure to fast-track the road to profits creates a need for products and services promising just that, which savvy entrepreneurs unsurprisingly cater to. The fact that wide-eyed suckers will find innumerable offerings promising to fulfill their futile quest​ reinforces this tragic dynamic, and the illusion that somewhere out there, some traders hold closely guarded, bullet-proof and mysterious tricks to magically identify and extract alpha by loading an indicator on a chart. Once that delusion takes hold, greedy newcomers work under the assumption that if only they can put their hands on those "professional" tools, they will replicate the more often than not fictional successes advertised by large numbers of shady vendors. I strive to publish tools that can hopefully be useful to some traders and show there is no mystery in the models that can be used to analyze markets and trade mechanically. I want to do my small part in expanding concepts on market analysis so that traders can readily see how simple models can be used as building blocks to assemble more complete trading techniques or systems. As in life in general, I believe there is lots of opportunity in the markets. I believe there is always alpha to be discovered in the sum of all markets at any given time, and an infinite variety of means to mine it. I cannot prove it, but it is the postulate I work from. Because of the sheer size of the combined markets and the large number of skills one must master to trade profitably, I don't think sharing open-source indicators will ever reduce my own chances of retrieving alpha out of markets. There can be no durable monopoly of alpha extraction; I think that greed, human ingenuity and the ever-morphing markets are powerful enough forces to prevent that from ever happening. Paying it forward I very much enjoy reading indicator code from others. I like to explore new ways to analyze markets, and just as I relish well-written and useful books by great authors, reading good, ingenious code by conscientious coders is a real treat for me. Like all curious coders, I have learned a great deal from other coders' open-source code. I feel immensely grateful to them; it is only natural that I try to repay some of that gratitude by also publishing open-source. Hopefully others, in turn, can now learn from my code. Repeatable models I do not believe that patterns manually drawn or intuitively identified on charts, which I mischievously call chartstrology , can be useful to my trading practice. My nature makes me more comfortable with mathematical or logical models that repeat reliably. Even if they are designed using my biases or errors in judgment, they are in the open, able to consistently recalculate their results for traders who choose to use them. I also like that by publishing open-source, traders interested in using my scripts can ascertain for themselves that they do what I say they do. They can vet my code and figure out for themselves if my models can be integrated to their trading practice. Moreover, publishing my indicators open-source allows attentive traders to identify errors or opportunities for improvement, so I can correct and refine my scripts. I think many traders, like good poker players, are people who have no qualms backing their opinions with money. They are the problematic type of people — I confess being among them — who will frequently ask you if you want to bet against them in an argument. By publishing my indicators, many of which are based on models I use to trade, I am putting my time and code where my mouth is, so to speak. Empowerment Learning — in trading or anything else — cannot be delegated. Learning sources can be purchased: universities, training providers and book authors all participate in that market, yet no escape exists from the reality that we must do the learning part ourselves. It is typically a long journey. Paying for the right to use indicators or trading systems that promise you profits is not purchasing a learning source; it is delegating the responsibility of applying knowledge you do not have — but should. By publishing good-quality open-source indicators, some of which, I like to think, rival the best indicators sold by vendors, I hope to help newcomers realize that powerful tools alone will not make them winners in the markets. Mastering tools and achieving success by trading actively requires years of effort and continuous adaptation. In the meantime, unmanaged, your bankroll is mere food for the sharks who have done and continue to do their homework every day they trade. While writing more complex scripts may not be trivial, by publishing them I hope that traders serious about learning to trade using mechanical models can see that it is not necessarily out of their reach. It is the reason why I published my Backtesting & Trading Engine from the PineCoders account. I wanted to share a framework that traders can use to build their own automated trading system right here on TradingView. I subscribe to the principles laid out in TradingView's Script Publishing Rules , which allow traders to freely reuse my code privately, while clearly defining requirements for those who want to reuse it publicly. Form and function As is the case for the majority of authors, and should for all, my published code represents a small portion of the Pine code I write — but it is the most polished. While I very much enjoy the rare occasions where I can come up with a somewhat original model, I think that providing flexible options and well-designed visuals to increase a model's usability is just as important. When I come up with what I think is a worthwhile combination, presenting it to others in a neat package that works well, can sustain scrutiny and be understood is always a stimulating challenge I look forward to. Showcasing Every day I have the immense privilege of sharing with members​ of PineCoders, a small group of exceptional coders and brilliant humans who share my drive to contribute to the at-large community on TradingView. These amazing programmers/traders are a constant source of inspiration that helps me continue to learn and code in Pine. My open-source scripts are a way of putting to use what I learn from these remarkable intellects who tolerate this old man and so generously share code, ideas and precious critique. I am also very lucky because PineCoders cooperate with the team of gifted developers from TradingView who have built the Pine Script™ programming language and who make the whole TradingView platform tick. These software engineers have taught me a lot, and their relentless professionalism provides me with constant motivation to honor their dedication. Publishing open-source is a way to showcase the masterpiece of a product that TradingView is. █  NOTES I know quite a few authors who share many of my views. While they may not express them publicly, their first-rate open-source scripts speak for them. Warm thanks to all of you, brothers in arms. Together​, script by script, we are building a legacy. 💙 What Is Good Code? describes the sort of code I strive to publish. You can see some of the authors I follow from my user profile . The PineCoders account follows an eclectic list of good authors of open-source scripts and publishes ideas and scripts to help Pine coders. The Pine Wizards are the authors who have contributed the most to the community of TradingViewers. The TradingView account also publishes open-source scripts, among many other publications.
TVC:GOLDEducation
by LucF
78
Add Tweets To Your ChartYou can now add tweets to your chart! The process is simple and we'll walk you through each step: Step 1 - Find a tweet you're interested in and copy its link. The Twitter link will look something like this: twitter.com Step 2 - Open your chart and then paste the tweet. The tweet will automatically attach to the exact timestamp on the chart. You can sit back and let our platform do the work for you. Pro tip: this tool works on any time frame or chart type. So you can view it on a daily chart or a 30-minute chart, a candlestick chart or a line chart. Step 3 - Once you've copied and pasted the tweet to your chart, you can drag it up or down to place it where you need it to go. Pro tip: adjust your price scale or time scale by clicking, holding, and dragging the scales to extend them. This will help you fit the tweet to your chart. The chart in the example above shows the market cap of Dogecoin with four tweets from Elon Musk. Each tweet was copied and pasted on the chart using the steps outlined in this post. It's fast, easy, and snaps right to the exact timeframe where price and tweet meet. We hope you enjoy this new tool. Please let us know if you have any questions or comments. Thanks for being a member of TradingView.
CRYPTOCAP:DOGEEducation
by TradingView
102
A "Welcome to" Pinescript codingThis simple idea is an intro to @TradingView & @PineCoders Nothing fancy or complex, if you are already coding - you can skip this. simple MA build walk through & adding a second MA. If you want to get into coding, then here's the basic introduction. FYI - I am not a coder, 21 years trading experience and know a bit about the instruments - but new to actual coding, especially in Pine. Hope it helps someone! Disclaimer This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
COINBASE:BTCUSDEducation
by Mayfair_Ventures
49
Taproot upgrade: 1st major upgrade in 4 years for BTC| what now?Any feedback and suggestions would help in further improving the analysis! If you find the analysis useful, please like and share our ideas with the community. Keep supporting :) Quick glance: In our last tutorial, we discussed the use of MACD in different time frames in crypto-trading. In this tutorial, we will discuss the Taproot upgrade: the first major upgrade for BTC in 4 years! Let us delve deeper into the Taproot upgrade and why it was so badly needed! The Taproot upgrade for BTC would allow smart contracts to be run efficiently and cheaply! As of now, smart contracts are usually run on the Ethereum network because of the higher efficiency. However, with the Taproot upgrade, Bitcoin has the potential to elevate itself and integrate with mainstream finance. Taproot upgrade for Bitcoin would allow smart contracts to take up lesser space on the network. Technologically speaking the Bitcoin network currently uses the 'Elliptic Curve Digital Signature algorithm.,' which occupies more space. It will be switched over to the 'Schnorr signatures' that will make the simpler transactions potentially indistinguishable from complex transactions. It translates into greater anonymity in the network while maintaining transparency. Apart from the efficiency aspect, the ability to run smart contracts cheaper is what will be revolutionary. Currently, running smart contracts on Bitcoin's core protocol layer is not exactly feasible. It is quite expensive and time-consuming, thereby rendering it almost useless. Many experts suggest that smart contracts would be one of the key selling points for Taproot. To put things into perspective, smart contracts can be used for almost any trivial financial transaction such as paying utility bills to pay rent, among others. The impact on the investors would likely be huge. Any long-term investor knows that the true potential of their asset would come from practical use cases that are adopted by the masses. Bitcoin's taproot upgrade might just be the key element that would propel it into mainstream finance. The bottom line is the kind of revolution that the Taproot upgrade might bring for Bitcoin is phenomenal.
BITSTAMP:BTCUSDEducation
by Mudrex
56
Using Risk Management to Not Lose Money Risk Management In this article we are going to talk about the most exciting topic of risk management! Sarcasm aside, this is probably the single most important lesson that any trader or investor can ever learn. Warren Buffett famously said: "Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1." So, if it is good enough for the most successful investor of all time, it is good enough to write a post about. Now, this quote does not apply to every single trade; no one trades without taking losses. But this is more about mindset, how to strategize, and your performance overall. In fact, with what you are about to learn, you will see that it is actually possible to lose more trades than you win while STILL being a profitable trader. We will get to the actual math/strategy in a moment. First, a short word about psychology. Nothing makes a trader lose more money than not having a well thought out plan or not sticking to it. We need to make our strategy first so that we can do it logically, and without emotion. This is easier to do beforehand because we haven’t actually put any money in the market yet. So, what is it that we need to know? What is my total account size? What am I willing to lose per trade? What is my Stop Loss? What is my Position Size? What is my Risk to Reward Ratio? If you cannot answer these questions then it is not a good idea to click the “buy” button! Unless you just want to gamble and throw money away. Question 1 - What is my total account size? Probably the easiest question for you to answer. Account size is the amount of money that you have in the market. Personally, I like to split my total account size into two parts. One part for longer term HODLing. One part for short-mid term swing trading. For my calculations, I forget about the HODL account and only look at the money in the trading account. I personally do not day trade. If I get into a position, I expect to be in it for 1-4 weeks. Obviously, this rule is flexible based on market conditions. Question 2 - What am I willing to lose per trade? This one is a bit more subjective because it comes down to how risk averse you are. It is generally accepted that you should risk between 1-5% of your account per trade. For me, anything above 3% is higher than I like, so I stick to 1-2% and sometimes 3. So, if you have a trading account of $10,000 and you want to risk 1%, you are risking $100: $10,000 x .01 = $100 To be clear – Risking 1% of your account does NOT mean using 1% of your account each trade. You are not spending $100 on each trade. Risk =/= position size. Risking 1% means that if your Stop Loss gets hit you lose $100. Question 3 - What is my Stop Loss? Firstly, what is a Stop Loss? A Stop Loss is an order that is placed to automatically close you out of a position should the price be hit. You should place your Stop Loss order right after you open your position. This is also a good time to place another order to close out your position at your target price. But where do you put the Stop Loss? A Stop Loss is best placed at a price that invalidates the reason you got into the trade in the first place. Sometimes this is, very creatively, called the “Invalidation Level”. For example, if you are trading a breakout to the upside, and then the price of your crypto shoots down in the other direction past your support levels, it is no longer a breakout and you should exit the position. To restate this in a different way, this level should not be arbitrary. There is no reason to automatically put your Stop Loss at 6.7138%, or any other random number, of your entry. The level you chose should be based on Technical Indicators; like a base of support, a Fibonacci level, or a previous high. This is because the market does not care about your arbitrary values. The market is made up of people and whales (who, believe it or not, are also people), and they, the ‘Market’, care about TA. Here is another example of a more short term trade to the downside. You could be more aggressive with the Price Target considering the resistance was so weak, but this is just an example to illustrate my point. (MACD looks nice there too. Learn more about that HERE ) Question 4 - What is my position size? In order to calculate position size we need to know a two different things: Risk Per Trade - 1 to 5% Distance from entry to the Stop Loss in percentage terms So the equation is Position Size = (Total Trading Account Size X Risk Percentage)/Distance to Stop Loss from entry For example, if you have a $10,000 account and you want to risk 2% while your Stop Loss is 10% away from your entry: ($10,000 X .02)/.1 = $2,000 Position Size while only risking $200. One thing to note here is that the closer your Stop Loss is to your entry, the larger Position Size you can trade with. So if you move the stop up to 5% away from your entry: ($10,000 X .02)/.05 = $4,000 Position Size while still only risking $200. Naturally, a larger position gives you more potential profit. (Don’t take this to mean use margin. I personally don’t use margin for Crypto and would recommend that most people don’t either.) Now that we have the position size, we should determine if the trade is worth getting into by finding your Risk to Reward Ratio. Question 5 - What is My Risk to Reward Ratio? The Risk Reward Ratio, sometimes simply known as R, is the ratio between your potential profit and potential loss. Reward/Risk = R So if you open a position where you can potentially lose $100, and you can potentially profit $300, then your trade has an R of 3. If you click on the Long or Short Position button in TradingView, you can move the sliders up and down and see what your R will be in real time. Double clicking on this will take you to the settings where you can input exact values. Since you set your Stop Loss at a logical point, one based on TA and not a whim, you should do the same with your Price Target. So why is having a high and, more importantly, realistic R a good thing? Because then you can actually lose MORE trades than you win and STILL be profitable. If you know your average R you can easily calculate the minimum win rate you must have to stay profitable over the long term: (1 / (1+R)) X 100 Let’s say your average R per trade is 2.5: (1/(1+2.5)) X 100 = 28.5% Meaning that you only need to win 28.5% of the time to not lose money overall. Because of the nature of this equation as your R increases, your required winrate to stay profitable decreases. Final Thoughts So, now that you have asked yourself, and have answered, the five big questions you are ready to open a trade. Remember why we do this. We should not expect to win every trade. But you must set yourself up so that when you do lose there is minimal damage to your account. Understanding the basics of Risk Management is the tool you need to keep your losses small, and account intact. Please let me know if you have any questions and if you like it, please hit the thumbs up and be sure to follow for more! Links to my Fibonacci Retracement, RSI, and MACD guides are below. Give them a read for more information!
BITSTAMP:BTCUSDEducation
by zsamochin
52
All About The Trendline.Hi, Trendlines: if you do not have any rules to draw the trendline (TL) then this is the most subjective technical analysis criterion of all. Without any rules, you can draw it basically as you want to see it. It is a perfect criterion to talk yourself into the trade or to talk to stay in the bad trade, always there is a new "support" coming. If you do not have any rules to draw it then basically all the time you can find some dots to connect which can seems "perfect" for you. In this post, I'll talk about buying opportunities from the trendline analyzing crypto and stocks. Some rules to draw it and some typical mistakes you should avoid. Let's start from the basics. Obviously, you know that to draw a trendline we have to connect two points and waiting for the third one to reject from it. Easy yes!? NB: For me, the third and the fourth touch are the most reliable touches to wait for. The strongest trendline comes from the points which are easily recognizable - a blink of an eye. If you start looking deeply from where to draw a trendline then keep in mind that it is not the strongest! One second and you will know from where I should draw it! There are some "experts" who say: you cannot draw a trendline without three touching points. Phh...as you see on the image above, I can, and as said if I have a correct lineup the third touching point is the strongest. The second myth for me: the more touches you have on the trendline the stronger it is. Yes, the trend is probably stronger, but for me, every next touch increases the odds for a break/trend change. Sure, I have done great trades from fifth or form the seventh touch but in general, the criteria crossing area has to be quite strong and it has to consists of many strong criteria to do that. Why I don't like to trade for example fifth or sixth touch? Firstly, the trend is your friend until its end. The market moves up and down, as said the more touching points you have, the odds will go higher for the trend change. Think like that, basically TL works as a support and the support is hmm...like the 5cm ice on the lake. You cannot break it with one hit, you cannot break it with second or third (ok If you are strong then you can :P). Fourth, fifth it starts to crack, and the sixth...booom...you are in the water. I don't know was it a good parallel but for me, it works the best - the more touches you have the lower chance for sustainable further growth it is. RULE nr. 1 It is true, that you can draw it in many many ways but let's talk about the first rule. If there aren't any anomalies then the trendline should be drawn "always" from wick to wick (image above) or from body to body. "Always" because there are some cases from where you should draw a bit wider trendline but in general it should be like the prementioned rule. If you start from the wick and the second point is from the body then this is a mistake. The mistake can lead you into quite an ugly trade/investment. If you trade breakouts then it will be misleading for you, if you trade rejections from TL then it will put you in a thought situation - do I should close it if it falls lower or whatever, simply don't do it. If you don't have any significant large wicks then go from wicks. Usually, it will give you the most precise price zones from where to grab something. If you can draw the trendline but one touching point consists of large/huge wick (selling panic or whatever it was) but on other hand, it is quite a normal price action then use candle bodies to draw the trendline. This panic-wick can mislead you. Drawing from the bodies just widening the buying area a bit but still, it gives you a good zone to keep an eye on. If there are a lot of wicks, then there is also a good way to go with a line chart instead candlestick. Candlestick chart Line chart As you see the line chart removes the market noise and you can simply see the closing prices. I use it quite a lot because some altcoins or stocks are quite jumpy and to remove the noise I use a line chart to determine the strongest areas. Stora Enso Idea Let's jump into rule number two. If we will wait for that third touch then there are quite a lot of small rules to keep an eye on. We want to be perfect so let's find a perfect trendline. RULE nr. 2 It increases the odds of rejection from TL if the price has made a new higher high (HH) after the previous rejection. As you see, after the third touch of the trendline, the price has made a new HH and the fourth worked perfectly. - two touching points, we can draw the trendline, waiting for the third touch and if it comes the market has made a new HH after the second touch and we are ready to take it. Summary: After the price prints the second point from where to draw the trendline we have to see a new higher highs formation after every touch. This is a great sign that the trend is strong and if everything lines up perfectly we can step in. RULE nr. 3 It increases the odds of rejection from TL if the touching point timings/length are pretty much equal. After the price has printed a new higher high and coming back down to make the third one it is great to see symmetric between touching points. At the moment, we have a great symmetric and trendline as a criterion is in place! This simple rule shows you that the market is healthy, moves on decent cycles as it should be, no pumps, no dumps just a simple and clean one. The second example: As you see gaps are quite similar and the 4th touch worked almost perfectly. Waited for rejection and stepped in after I saw a decent volume from the trendline. They cannot be the embarrassingly accurate length, otherwise, they would be extremely few, but they cannot be as in the picture below. Uuuh...this is ugly and actually, I see it quite often. The first and second points are too-too close considering the third touch. The third touch comes in the middle of nowhere but as said, it is a perfect way to talk you into the trade/investment. This is ugly, it is with a very low success rate so try to avoid it. The most important rules are in place and now it's a good time to talk about mistakes. I cannot say that they are 100% wrong but in general, these mistakes can be with a very low hit rate. Sometimes looks like we have all set and ready. We can draw perfectly from wick to wick, we have new higher highs after touches, we have an equal length between touching points but it just doesn't work. Obviously, from time to time it happens but most of the time there are some reasons behind that and one of them can be the angle of the trendline. It is a bit subjective but for me, the best angle of the trendline stays between +-20 to +-35 degrees (in TradingView you can use it). Then I can trust it the most. I remember that the most common mistake for me I tried to buy too sharp angles 45+ degrees. To long below 20 or above 35 degrees you should have a lot of criteria to match with the trendline to determine the strong setup otherways try to be cautious if it doesn't fit inside my given numbers. Next common mistakes: As you see in the image above, after the third touch, we haven't seen a new higher high but the price already touching the trendline. It isn't a good sign for further growth. Does the bulls have lost their momentum or for whatever reasons the market didn't print the new higher high. This can be simply one of the trend reversal signs, bulls have lost their momentum and cannot print new ATH for example. Read between the lines and do not consider buying from the trendline if the market hasn't made a new higher high. Obviously, you can but as said, it can be a bit lower hit rate. Here is also a second mistake, another no-go criterion for me. Do you know it already? Go and look... Yes, correct! ;) Firstly, we haven't seen new highs and secondly, the trendline touching points (1 to 2, 2 to 3, 3 to 4) are not at a similar length. The fourth touch comes too early/fast. Another rule which can ruin your "perfect" trade from the trendline. So, two simple mistakes to avoid. To get a better success rate from the trendline you should wait for a new higher high formation and the market cycles should be quite similar between touching points. Breakout trades. If the trendline looks strong but cannot get any support from other criteria then I'll start to look at selling opportunities after the breakout. As you can assume, this isn't as simple as some guys on YouTube will sharing with you. I have also some rules here to make breakout trades. Firstly, the price should come from an all-time high or from a mid-term high, print a short-term lower high, and then breaks. This is a good scenario because then there are some FOMO retailers who bought from the top, got a little hope for a bounce upwards, and as you should know, really often they get punished who bought the top. Secondly, and most importantly, the break must occur with a strong and powerful candle without any significant lower wick. Basically, if you have clean touches from the trendline then it has shown its strength and the strong candle break confirms it even more. How? If the price falls below the trendline just simply with small candles then it doesn't show the strength enough to trust it on the retest. A strong and powerful candle needed! We need to see that power because after the break we start to wait for a retest of it. The strong candle shows that the trendline is still valid but in vice-versa before it acted as support now it starts to act as a resistance. Another example. Let's talk a little bit about the timeframes. Obviously, the higher is the timeframe the stronger TL is. If I analyze stocks then I trust the most monthly and weekly timeframe. Considering crypto, there I use Daily and 4H but most likely Daily. To be said, 1H is the minimum. That's about it. The post got quite a big one. uuh...simple trendline yes?! ;) A lot of left unspoken (minor trendlines, how fast it can come to touch it and etc.) but in general you should get at least something from here to add to your analysis. Was fun to write it but this is just the beginning. I have 15 criteria to analyze the charts. Maybe I should write an e-book about technical analysis what you think!? :) Trendline is just one of them and it isn't even the strongest criterion on my list. Doing the analysis I have 15 criteria and depending on the timeframe 3 to 7 of these 15 must be in one strong area together! So don't just go for a trade/investment if you only have one criterion, the trendline. Hopefully, you like it, all the best! Vaido
COINBASE:BTCUSDEducation
by VaidoVeek
199
Are you a champion hopper? 😬🙈Morning traders. I started yesterday morning by posting an idea with the phrase below. 'Lets start the morning with everyone's favourite! Gold' Well I'm kinda doing the same again this morning but this time it so we can all have some more food for thought at the breakfast table instead! Now here me out, I have drawn the two graphs in this mornings idea on the same gold H1 strategy chart I shared yesterdays idea from. The comment section was a good mix of feedback, some miffed at the stop out possibly and others very realistic in the reality that stop losses occur in trading. For this strategy yesterdays stop loss means we now have 5 losses in a row. But I wont be hopping off to another method or style either. 90% of traders get spooked at the first sign of a losing run and jump to the next strategy. Why will I stick with this strategy for gold on H1? Because of probability being factored in from the back tested data available. Hand on heart how many people out there actually back test a strategy? You can't plan for probability in your risk management if you have no data for your strategy. Transparency when sharing ideas has always been key for me and strategy test data is always included in my ideas just as the H1 gold data is at the bottom of this idea. This leads me back on to the graph drawings in this idea. The one on the left is the last two weeks of data for this strategy the one on the right is the last two years! Growing capital takes time. Losing runs are part of trading the growing capital part comes from trading a strategy with a proven edge. If you have a proven system why hop on to another one? I'll end this idea with a great quote from Steve Burns. '10% of successful trading is creating a system with an edge. The other 90% is following it' Enjoy your day traders. ------------------------------------------ Please hit the 👍 LIKE button if you like my ideas🙏 Also follow my profile, then you will receive a notification whenever I post a trading idea - so you don't miss them. 🙌 No one likes missing out, do they? Also, see my 'related ideas' below to see more just like this. Thank you. Darren
OANDA:XAUUSDEducation
by pow_removetheguesswork
7
📚SPOT A MARKET REVERSAL WITH CANDLESTICK PATTERNS📚 Candlestick patterns are frequently applied for the identification of early trend reversal signs . Here are the three most common reversal formations that you may encounter trading different markets: 1️⃣ - Equal inside bar formation Once the price reaches some important pivot point quite often it tends to form a weak candle with a long rejection wick (long in comparison to the buddy of the candle). In case if the consequent candle's body has the same range, we call that the equal inside bar . It can be treated as the reversal formation ONLY with additional confirmation. Without an additional trigger, chances will be high that the market will start a sideways movement instead . 2️⃣ - Engulfing candle Once the price reaches some important pivot point quite often it tends to form a weak candle with a long rejection wick (long in comparison to the buddy of the candle). In case if the consequent candle's body engulfs (has a bigger range) the previous candle, we call that the engulfing candle . By itself, it is a quite strong reversal signal and can be applied as a trigger for opening a trading position. 3️⃣ - Engulfing candle (2X) Sometimes, the engulfing candle engulfs not only the previous candle but also one more preceding one . We also can call such a candle a high momentum candle . It is considered to be the strongest reversal formation (among these 3) and can be applied as a signal for a trade entry. ❗️ Remember that candlestick patterns work only on strong pivots/structure levels. Being formed on random levels, the performance of these formations is relatively low. ❤️Please, support this idea with a like and comment!❤️
FOREXCOM:XAUUSDEducation
by VasilyTrader
27
An intuitive way of understanding the nature of PRICE DISCOVERYThis is an idea that I have an probably will keep working on for a long time. I haven't shared any ideas in a while, and this idea will be a detailed and one of my best ones so far. The aim is to provide the guidelines on how to improve the decision making of your next trade or investments. I will try to keep it as simple and short as possible. As the chart above is mostly explained, I will focus on other complementary explanations. The idea is based on well known decision tree methods, however what most textbooks do not state is how should they be effectively applied in practice. The diagram is a visual representation of the methodology. A snapshot of the idea that is not altered by the tradingview frame dimensions. The most essential rule or the truth is that almost all of asset pricing is based on guess work, as markets are forward looking. However, guesses can differ by the amount of information that they hold. Consequently, the aim is to come to the most educated guess about the paths that the future prices could take, which may not simple be the most probable outcome (i.e optimization doesn't work as intended, because markets are not always rational). To come up to the best guesses, an understanding of the price discovery process is essential. Price discovery is related to the timing and efficiency of updating of investors expectations, which in theory should be immediately reflected by the ensuing price action. Following this train of thought, I decided to formalize the ideas that I already had from my experience of following the markets. The best way to understand new ideas is always with the help of examples: To further explain the steps, few complementary things must be elaborated: 1. Firstly, are you investing or trading? For trading purposes only trade(speculate or bet) based on your beliefs of the probability of an event. Whereas, for investments consideration of a multitude of events that are usually codependent is almost always required. For a more refined investment process, see CFA's investment policy statement (IPS) guidelines. Generally, more complex decision trees are required for investments, and only simple trees are required for trading. For options this is a relatively given due to the option maturity, although such a choice of a timeline is actually contained in the choice of maturity and strike. 2. When you are distinguishing the timeline of the events, it is of crucial importance that the events are likely to occur in your holding period horizon. For instance, there are all these talking heads such as Peter Schiff and the likes that have been blabbering about the collapse of the monetary system for the past 10 years, which is obviously inevitable (at least from a historical stand point). However, if you are planning to hold gold or bitcoin in the next year, there is almost zero percent that such an event would take place, in which case there is a mismatch between your holding period and the event that you are trading(speculating) on. The idea here is, do not come too early to the party. 3. Catalysts hold the same meaning as in a chemical context, but only now instead of substances, they are events that can speed up the pricing of certain events. They are usually unanticipated by the broad market players, hence the swiftness of the corresponding market reaction. Catalysts are in a sense hitting the jackpot, the fastness and easiest money can be made if the trade is based on such catalytic events. Given that catalysts are by default unanticipated events they are to be separately considered and not part of the diagram above. Catalysts are similar to the concept of swans from Taleb, although he focuses on events of high impact magnitude. 4. Here is a simple example of other slightly more complex variation of decision trees. The basic idea here is to consider the timeline of the price discovery process of each event, it's conditionality to other events and whether it is a part of a cycle. To conclude this idea, it is important to know the timelines of events and their conditionality to other events. The probability and values of their outcomes are mostly a guess work, where probabilities are usually extracted from the observed prices. So in this respect just have an idea of potential targets outcomes in each scenario which usually can be done from a historical perspective, other comparable transactions, or using technical/trend patterns. By knowing the targets, you can estimate whether the trade or investment is worthy according to your risk appetite. Likewise, if you reckon that the probability of an event is different than the priced in probabilities of the market, you are also in a position to earn nearly riskless profits, assuming the market is wrong and you are right. Each market has its own specific price dynamics, stocks are valued using different methods (DCF, comparable ratios, etc..) to commodities, bonds or currencies, but overall it is best to focus on a particular segment. The eternal problem here is that you might miss out on opportunities that arise in other markets, especially in periods that are not volatile. Overall, all methods are based on certain set of unavoidable assumptions, even quantitative methods such as simulating price paths (media.springernature.com) are at least based on an assumed drift or the distribution parameter of the residual term (depending on the model used, which is by itself a biased choice). An additional disadvantage to such methods and the use of technical patterns is that they do not consider other "soft" public or private information that is an integral part of discretionary fundamental strategy. This is why a combination of methods with choices that are rightly justified is the most consistent way to break out of the zero sum game. Clearly many books have been written on this subject and this idea can go on in extreme details, however for now I reckon that all the principal points are covered in this idea. Thank you for taking the time to read! -Step_ahead_ofthemarket ________________________________________________________________________________________ >>I do not share my ideas for the likes or the views. This channel is only dedicated to well-informed research and other noteworthy and interesting market stories.>> However, if you'd like to support me and get informed in the greatest of details, every thumbs up and follow is greatly appreciated! Disclosure: This is just an opinion, you decide what to do with your own money. For any further references or use of my content- contact me through any of my social media channels.
Education
by step_ahead_ofthemarket
61
Deleting All Drawings Past a Certain DateIf you ever receive the error, "You should delete drawings to improve performance" , how can you bulk delete old drawings, say "All drawings older than 60 days" without manually going back into all your charts and deleting them one-by-one? This video will show you how to quickly delete all drawings in a layout older than a certain date. Hope you enjoy it! Trade well... --- Here's a quick checklist on running through your watchlist to delete all drawings older than "X" days: Pull up your Layout that's giving you the performance warning Click on the first symbol in your watchlist Press Alt-G to bring up the GoToDate dialog Select a date "x" days in the past you want to delete older items from and press Go to Right-click the nearest object to that date Select Object Tree from the menu Scroll all the way to the bottom of the Object Tree pane Hold Shift and click the last drawing in the list Right-click the highlighted section and choose Remove
Education
by ocaptain
33
How to detect the active cycle length?This is a short tutorial on how to use the Detrended Rhythm Oscillator (DRO) to identify the current dominant cycle. The Detrended Rhythm Oscillator is an advanced Detrended Price Oscillator DPO which helps to spot the key market rhythm or beat for any symbol on any timeframe. It automatically labels the length of current market high-high and low-low pivots which helps to see cycle harmonics and relations. The output should be used as input setting for almost all technical indicators which require and "length" settings for the calculation. Using this length setting based on the dominant market rhythm will help to ensure better accuracy to your indicators at turning points. The indicators get synced to the beat of the market. The indicator is available as Public Open Source Script for your own usage:
BEducation
by StockMarketCycles
89
When Can I Become a Full Time Trader?One question that constantly comes up, and understandably so is, When Can I Become a Full Time Trader? Being a trader is like running a business. You are the manager / owner / operator of "You, Inc." How much capital does it take to run your business? What's your monthly P&L? How much money do you need to have in "float" in case of emergencies (like, oh, I don't know, a global pandemic that sends the price of everyday items skyrocketing?) If your goal is to become a full time trader, where trading is your primary source of income and provides you with all of your material needs for now AND the foreseeable future, do you have a PLAN on how to get there? Do you know how much capital you need and / or what rate of return you need from your trading system and / or how many trades on average you need to generate your income target? Let's figure out how much Monthly income you need. First, take your monthly expenses. Include things like rent or a mortgage, a car payment, utilities, gas expenses for your car, etc. and total them up. Second, take all expenses that might be annual or irregular and put an amortized amount each month into a separate checking account for when they come up. For instance, HOA fees may be billed semi-annually. You may plan on a vacation every year. You may have to replace a major appliance every 3 years. Factor all those expenses and what it may cost as a monthly savings plan and put them into that account. These expenses would come out of that account without touching your monthly income. For example, it's easier to pay $69/month in expectation you will have to replace your fridge, stove, or set of tires every 3 years than to have to come up with an unexpected $2,500 when the fridge dies on you. With these initial stats, you know how much you need to make a living trading... just to break even. So, what does the responsible business owner (trader) need to do? DOUBLE that number so you are putting an equal amount in savings (for a rainy day / a down month / or the "nest egg") and factor in taxes, say an additional $35% in the United States - the top tax bracket. This final number is what you should comfortably want to make to consider yourself financially free – not dependent on ANY source of income except for your efforts in trading. Now, given how much money you want / need to live on, what type of trading performance against what amount of capital do you need to achieve this monthly desired income?  How much capital do you have in your trading account? What is the Win Rate of your current trading system? How much money do you earn on each winning trade and how much do you give back to the market on every losing trade? Finally, how many trades on average does your trading system find for you each day given the hours you work your trading business? Let's assume you have a $20K trading account, and you trade using the 1% Rule of Risk Management and the 3R rule of expectation – your Reward-to-Risk Ratio. Let's also say that your trading system is able to locate two trades per day during the timeframe that you are "working" the markets and your Win Rate is 50%. So, if you you win one trade and lose one trade each day, winning $600 and losing $200, you are netting $400 for the day. Multiply this by 20 (the average number of trading days in a month) and you will have an estimate of what monthly income you can generate from your trading account. An important question is then, "How many trades might you take per day?" For example, during one backtesting period I found that my trading system, Sabre, generates an average of 11.7 trades per day in the Futures Market on the 1-hour timeframe. If you decided that you would be trading Sabre for four hours per day, say from 5-7 in the morning and 8-10 at night, it would pull up an average of 2 trades per day.  Once you are armed with all this information: Your trading account size, your trading system win rate, your trading hours and trade frequency, you can calculate how much income you may be able to generate from your trading system given that all things go according to plan. And as Hannibal Smith liked to say, "I love it when a plan comes together!" Once you run the calculations, if you run short of what you would like to earn, you can now determine what action(s) you might want to take to get you closer to your goal in a quicker timeframe. For example, if your win rate is 30% with your current trading system what would it take to get it up to 60%? Do you need to check your psychology? Are you constantly leaving money on the table? Are you fearful of entering trades that you should have logically had no problem getting into? Should you join a trading group that is experiencing a level of success you want to achieve to help you overcome any technical or psychological hurdles? Mechanically, if your trading system is not giving you the number of trades necessary to reach your income goals, what can you do? Perhaps you can go down a timeframe. Theoretically, if you are finding 2 opportunities per day on the 60 minute timeframe, you may be able to find as many as 8 opportunities per day by going down to the 15 minute timeframe. Maybe it's about capital: If you have a $5,000 account you might find a way to  put another $10,000 in there and instead of having a $50/$150 Risk:Reward ratio with a $5,000 account you could have a $150/$450 Risk:Reward ratio with a $15,000 account.  One way to grow your account is to never 'withdraw' by keeping all profits until your account reaches the 'critical mass' necessary to generate the required income. That's the beauty of exponential growth! Additionally, perhaps you can add a second trade strategy to your mix. If you are a Supply-and-Demand trader maybe you can find a breakout strategy to take advantage of additional opportunities. After developing Sabre, my trend-trading strategy, I developed what we call the Clubhaul: a counter-trend strategy. Now I had 2 different strategies, increasing my daily number of opportunities to find successful trades. Having access to multiple trading strategies is like the handyman with three different hammers or multiple sets of screwdrivers: They each do a specific job under specific conditions, and it's not always the case that "one size fits all." What goes for the handyman's toolbox, is also applicable for your trading toolbox. To get to where you want to go you need to know where you are starting from. As G.I. Joe says, "Knowing is half the battle." So hopefully you can create yourself a spreadsheet and crunch the numbers and you can see (1) where you currently are in your trading journey (how viable is my trading plan, how much capital do I have, what hours will I be working the markets) (2) where you want to be ultimately (how much income do I want to generate on a monthly basis, how much capital do I need to consistently generate that income, and which strategy(ies) will get me there? and (3) what I need to DO to get from where I am to where I want to be. Trade Well!
Education
by ocaptain
146
EW FIBONACCI Ratios, FIB Retracement and Extension application !In this post, I'm going to focus on Fib Retracement and Fib Extension Ratios by Elliott Wave, and show you how to best use these tools. Fibonacci ratios are mathematical ratios derived from the Fibonacci sequence.The Fibonacci sequence is the work of Leonardo Fibonacci. Fibonacci sequence is used in many applications, movies and photography, space studies, stock market actions, and many other fields. Fibonacci is a proven approach for measure price movement relationships. For Elliott heads, it means Fibonacci numbers are tools to help guide us in our interpretation where we think price movements will go. The most common Fibonacci ratios used in the stock markets are: 1 - 1,272 - 1,618 - 2,618 -3,618- 4.23 (extension) 0.236 - 0.382 - 0.5 - 0.618 - 0.786 (retracement) Let's start with Elliott Impulsive Wave rules ! Wave 1: the beginning of each wave and retracet with Wave 2: may never retrace deeper than the beginning of wave 1 Wave 3: often the longest, but never the shortest Wave 4: may never retrace below the top of wave 1 Wave 5: x Fibonacci ratios : Wave 2 The most common retracements we look for in a Wave 2 pullback are either a 0.5 or 0.618 retracement of Wave 1 We expect only 12% of Wave 2 to hold 0,382 retracements of Wave 1 We anticipate 73% of Wave 2 retracements between 0,5 to 0,618 We anticipate 15% of Wave 2 to retrace below the 62% Wave 3 Wave 3 is related to Wave 1 Fibonacci relationships: Wave 3 is either 1,618 length of Wave 1 or 2,618 the length of Wave 1 or 4,236 the length of Wave 1 The most common multiples of Wave 1 to Wave 3 are the 1,618 and 2,618 If Wave 3 is extending, we typically look for 4,236 or higher Only approximately 2% will a Wave 3 be less than Wave 1 We anticipate 15% of Wave 3 trade between 1 and 1,618 of Wave 1 We can anticipate 45% of the time Wave 3 will push to between 1,618 and 1,75 We can anticipate 8% of Wave 3 will extend beyond 2,618 or higher Wave 4 Wave 4 is related to Wave 3 0,236 of Wave 3 or 0,382 of Wave 3 or 0,50 of Wave 3 or 0,618 of Wave 3 We can anticipate only 15% of the time Wave 4 to retrace between 0,236 to 0,382 We can anticipate 60% of the time Wave 4 to retrace between 0,382 and 0,5 We can anticipate 15% of the time Wave 4 to retrace between 0,5 and 0,618 We can anticipate 10% of the time Wave 4 retrace 0,618 or greater Wave 5 Wave 5 has two relationships. Wave 5 has a direct correlation to the Fibonacci relationship of Wave 3 1. If Wave 3 is greater than 1.62, or extended Wave 5 is a 1 to 1 or 1.618 of Wave 1 or 2,618 of Wave 1 I don't know any statistics, but in my experience a 1.618 or 1 to 1 is the most likely 2. If Wave 3 is less than 1,618. Wave 5 will often overextend.The ratio of Wave 5 will be based on the length from the beginning of Wave 1 to the top of Wave 3 Extended Wave 5 is either 0,618 from the beginning of Wave 1 to top of Wave 3 or 1,618 Unfortunately, my english is not so good and I work with google translate, but if you have any questions I will be happy to answer them . ➡️If you like my posts smash the like👍👍 button, comment or follow me. It helps me to publish more free education, also on request ⬅️ Fib retracement and Extension application follow 📚
Education
by TR7z
114