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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?
Education
by glazirovaniysirok
101
Level breakdown. The most effective setupsWhat is a level breakout? A breakout is the price's consolidation above a certain level followed by further movement in the direction of the breakout. But the immediate question that should arise in your mind is about the consolidation of price, as it might be difficult for inexperienced individuals to understand. However, there is nothing overly complex about it either; consolidation refers to the candle closing above the level A breakdown can occur at a horizontal or inclined level. Bullish breakout: We observe a trending market encountering resistance at a horizontal level. After two unsuccessful attempts, the price breaks through the level. Bearish breakout: Why do level breakouts work? Imagine a scenario: a strong resistance level on the chart is heavily defended by bears, preventing the price from breaking through. Despite several attempts, the bears hold their ground until the bulls come to the rescue. They overpower the bears, but their strategy doesn't end there. Instead of retreating, they press forward, driving the opposition towards the next resistance level, where the cycle repeats. Breakouts occur when the price breaches a significant level. Observing price movements on a chart reveals that prices often consolidate and encounter specific levels. When the price reaches a level and swiftly reverses, it indicates the strength of that level. Upon a price retest of this level, careful monitoring is essential to anticipate a potential breakout. Repeated tests of the same level signify its strength, yet eventually, the price will break through any level. This is when traders should be prepared to initiate a breakout trade. Breakouts offer lucrative trading opportunities because they often mark the inception of new price movements and trends. By entering trades at the onset of emerging trends, traders position themselves for potential profits. Moreover, reliable breakouts typically occur during periods of robust price momentum when traders seek to capitalize on rapid price fluctuations. Breakouts occur at important price levels. It can be: Support or resistance levels. Patterns Market highs or lows. Trend lines. Price channels. Moving averages. Fibonacci levels. One reason breakouts can lead to rapid price movements is due to the attention they attract from market participants monitoring key levels. When one group of traders capitalizes on a breakout, another group is compelled to swiftly exit their losing positions, resulting in sharp price fluctuations post-breakout. There exist various types of breakouts, and as traders, our objective is to identify high-probability breakout opportunities and initiate trades. However, this task is not always straightforward. Consequently, levels marked at potential breakout points should be regarded as zones rather than rigid lines. Identifying Psychologically Important Levels: Repeated testing of a specific zone by the price often signifies its significance. Having reached a certain level, the price enters a sideways movement, forming a consolidation. Using a rectangle, we outline the area encompassing the lower wicks of the candles, delineating our support/resistance area. When trading breakouts, it is wise to wait until the candle closes outside the support or resistance area to confirm the breakout. Triangles are chart patterns indicating price compression, often culminating in a breakout. The direction of the breakout is typically uncertain. Within the circle, you can observe the precise location of a potential breakout. Notably, there is a robust breakout momentum evidenced by several full-bodied candles. Subsequent to breaching the upper level of the triangle, the price retraces to test the previously breached resistance, now acting as a support area. This pullback serves as a crucial confirmation signal. Breakouts and false breakouts: Typically, candlestick shadow breakouts are not considered true breakouts. A true breakout occurs only when the price finally closes outside the level. This approach provides a more secure entry point, making it easier to open positions in the appropriate direction. The upper rectangle constantly holds down the price, with the exception of some candles, characterized as a pin bar. This represents an initial false breakout as only one candle breaks the resistance area but fails to close, leaving its body above that area. Therefore, we classify this signal as false. However, the subsequent pin bar pushes the price higher, causing the candle to close above the resistance area. This is a genuine breakout signal, especially enhanced by the presence of a strong, saturated breakout candle. Trading Breakouts: Trading market breakouts carries inherent risks due to the prevalence of false breakouts, which are statistically more common. Therefore, it is extremely important to understand the market structure and monitor the movement of prices to the appropriate level. Markets operate in cycles, moving between trending phases and periods of consolidation. The duration of market consolidation correlates with the strength of subsequent breakouts and subsequent trends. Prolonged consolidation periods are not only observed by you, but by traders worldwide. Among them, some opt for trading bounces from levels, while others prefer trading breakouts. Extended consolidation behind a resistance level can trigger stop-loss orders for many bears and prompt numerous bulls to initiate new buying positions. Consequently, after prolonged periods of flat movement, prices frequently surge explosively following a breakout, ushering in a robust trend. The breakout trading strategy offers multiple entry approaches, allowing traders to select the one that aligns best with their preferences and objectives. Entering the breakout after the price has consolidated beyond the zone: One strategy assumes that the breakout occurred when the candle closed outside the level. While this pattern can be effective, I personally find it risky due to the many nuances associated with this strategy. Instead I prefer a different approach... Breakout entry with retest: This tactic is a bit more challenging as it requires patience and discipline. What particularly appeals to me in this strategy is that I rely on additional data during a potential retest (with a 60-70% likelihood after the zone is breached). Breakout of the symmetrical triangle pattern: As the market tightens its consolidation, it eventually breaches the support of the triangle, followed by a retest of this level as new resistance. For the stop-loss placement, it's advisable to position it inside the triangle above the breakout candle. Regarding take profit, we target the nearest level, ensuring the risk-to-reward ratio remains acceptable. Best Breakout Trading Method: Accumulation of positions/liquidations - consolidation. When a tight consolidation occurs near a resistance level, it tells us that buying pressure remains high for a long period of time and sellers do not have enough strength to reverse the price from the level. When the price breaks through a resistance level, traders with short positions cut their losses. At the same time, the pressure from buying traders who will open breakout transactions is increasing. All these factors cause the price to rapidly move up without significant pullbacks. __________________________________________________________________________________ I have only covered a portion of the basics. Of course, trading involves various elements such as price action, indicators (divergences), but that would make this post too long ;) If you enjoy my educational articles, please leave comments, and I'll continue writing them.
Education
by truepersonal
9
WHAT IS THE BEST TRADER MINDSET?Optimism, pessimism and realism which trader's mindset is better? The answer seems obvious: optimism. Optimistic traders overestimate their strength and the situation, pessimists do not believe in their strength, so the best is common sense realism. The realistic version of the world perception implies assumption of both favorable and unfavorable variants of the event outcome. But on the other hand, realist traders miss the opportunities that optimists see and underestimate the risks. All three types of trader's thinking have their own strengths and weaknesses. WHICH TYPE OF TRADER'S MINDSET IS THE MOST PRODUCTIVE? 1. Optimism "Think positive", "Set yourself up only for success" such motivational mottos are in every trading book. An optimistic attitude has many advantages: Optimist traders are better motivated. They believe in success, so they set the bar higher. Optimist traders are better at dealing with negative emotions. Optimist traders are more confident in their abilities. Optimist traders' brains are programmed in advance for a positive outcome. All of this is good as long as it is within the bounds of common sense. And often the boundary between common sense and unhealthy thinking of a trader is not visible. And as soon as optimism crosses the boundaries of adequacy, problems begin: Ignoring danger. Imagine a person who confidently drives through a red light, thinking that nothing will happen to him. The only thing left to do is to convince other drivers of this. Overestimating possibilities. The set goals turn out to be unattainable. And trying to achieve them leads to burnout. Denial of the need to solve problems. The optimist believes in the best, but problems do not go anywhere. And someday their volume will become critical. Everything is good in moderation. An optimist is inclined to work harder, but he is also inclined to take unreasonable risks. 2. Pessimism The strength of pessimism is the ability to assess risks and minimize them. Pessimist traders are more cautious. They try to double-check everything 10 times, so they are less likely to take risky actions. However, they also earn less. A pessimist trader tries to diversify risks, thinks through several ways of retreat. Pessimism goes to the extreme, when a trader thinks that everything is bad and it will be even worse in the future. They blame others for failures, as they cannot find the strength to admit his mistakes. They have no motivation; they live in constant expectation. 3. Realism The sweet spot? Not a fact. The realist trader does have a sober assessment of the risks without going overboard. But they also have extremes: Fatalism. While optimistic traders believe in the best, realists follow the path of pessimistic traders. They accept reality, believing that this is fate. Realist traders do not fall into stress, but do not believe that the situation can be changed for the better. Pragmatism. Realist traders think that a bird in the hand is worth two in the bush. They effectively solve current problems, but trying to look at something bigger is out of the question. Rationalism. Algorithmic, schematic thinking of the trader is manifested in other aspects of life. Which type of trader's mindset is the most productive? All three types in one trader, from which the best is taken. Moderate optimism in achieving goals, moderate pessimism in assessing risks, moderate realism in building a system. And extremes are best avoided. In conclusion, each of these traits has its strengths and weaknesses, but when combined in moderation, they can create a well-rounded approach to trading. Optimism provides motivation, confidence, and a positive outlook, which can help traders set higher goals and persevere through challenges. Pessimism, on the other hand, can help traders assess and minimize risks, promoting caution and careful decision-making. Realism offers a sober assessment of situations and helps traders develop practical solutions to problems. Ultimately, the most constructive trader's mindset is one that leverages the strengths of each of these traits while avoiding their extremes. When you lose a trade, don't think too negatively. When you win, try not to get euphoric. Extreme emotional swings will push you into the abyss. Therefore, the most constructive trader's mindset is a balanced combination of optimism, pessimism, and realism. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
9
Exploring Renko Charts: Simple Trading Strategies for Success Today, I'm excited to introduce you to two effective trading strategies designed for Renko charts. Renko charts, unlike traditional Japanese candlestick charts, focus solely on price movements, offering traders a unique perspective on market trends and opportunities. Before diving into the strategies, let's first understand the basics of Renko charts and how they differ from Japanese candlestick charts. Renko charts are renowned for their: Absence of time: Renko charts disregard time intervals, concentrating solely on price movements. This feature helps filter out market noise, allowing traders to identify clear trends. Uniformity: Each brick on a Renko chart represents a fixed price movement, ensuring uniformity across the chart. This consistency aids in trend identification and reversal spotting. Trend identification: Renko charts excel at identifying trends due to their focus on price movements. Traders can swiftly discern trend reversals or continuations by analyzing brick patterns. Reduced noise: By filtering out minor price fluctuations, Renko charts offer cleaner data, making it easier for traders to identify significant price movements and trends. In contrast, Japanese candlestick charts focus on time intervals and include all price movements within the selected period. Both chart types have their advantages, but for our strategies, we'll be using Renko charts. Now, let's delve into the strategies: 1. Buy Green, Sell Red (with and without 13 EMA): This straightforward strategy involves buying when a green candle appears and selling when a red candle emerges. Option 1: Implement this strategy with a 13 EMA (Exponential Moving Average). Buy when a green candle closes above the 13 EMA line and sell when a red candle touches the 13 EMA line. Option 2: Execute the strategy without the 13 EMA. Simply buy on green and sell on red. While Option 1 may yield slightly delayed entries and exits, it provides additional confirmation, especially during volatile market conditions. Consider automating this strategy with an algorithmic trading bot for seamless execution. 2. Strategy that forecasts the market?: This strategy tells you if the market will go up or down after a important for example economic meeting! So, if you are interested in this strategy than write down in the comment and like (boost) this educational idea, if we get 100 likes (boosts) than I will make Part 2. Please note: When you have a basic plan, than you can just open Renko chart above 1 day time frame, you can also work good on 1 day, but if you want to see Renko chart on Intraday time frame than you need to have Premium plan. Upgrade now for intraday best experience using RENKO chart: Upgrade now
Education
by smarttrader012
4
WHAT PIVOT POINTS ARE IN SIMPLE TERMSLet's start with the fact that Pivot points are quite an old tool and have been used for a long time. The difference is that in the early days traders had to build Pivot points themselves, but today there are indicators that build these points. ✴️ BASIC CONCEPTS Pivot points are key points of price chart reversal, i.e. the place from which the price chart is most likely to reverse. Different pivot points have different calculation formulas. This is very similar to Fibonacci, as there are no clear criteria and several possible courses of action. The following is a list of the most popular calculation of data: 1. Traditional is the very first method of calculation, still popular in the stock exchange; 2. Classic derived from traditional, slight differences in calculations; 3. DeMark is the formula developed by the SAC Capital Advisors fund; 4. Woody the formula heavily references the previous day's closing price; 5. Camarilla derived from the classic one, slight differences in calculations; 6. Fibonacci is based on the Fibonacci formula. Of course, the points don't always work and they have false signals, but how to filter let's figure it out. There are also Pivot points like this, these are just the ones built using the traditional formula: ✴️ TRADING STRATEGIES We intentionally did not write each formula, as this information is fully available on the Internet and not everyone is interested in it. The most interesting thing is to learn how to use these indicators in practice, which we will do now. If we think logically, there can be only two strategies: Strategy for level breakout; Strategy for the level rebound. That's all, there is nothing else to think of. ✴️ LEVEL BREAKOUT STRATEGY For the breakout of any level, you need to take into account several details: 1. The quality of the breakout, i.e. the presence of an impulsive movement; 2. The trend moves in the direction in which the breakout occurred, i.e. the exclusion of a false breakout; If these factors are met, then we can say that the breakout is real and it is worth looking for an entry point. Ideally, it should be like this: Obvious consolidation above the control resistance by pivot points. Stop in this case is placed slightly below the breakout candle, take profits can be stretched by a grid between the Pivot points above. That is, if there was a trade, it would look like this: ✴️ LEVEL BREAKOUT STRATEGY The strategy for level breakout should also be accompanied by some additional model. For example, it can be a pinbar, RSI divergence and so on. That is, you can choose many variants, the main thing is the presence of a reversal level nearby. In the simplest form, it should look like this: As you might expect, there are 3 factors to enter the trade and not to buy here would be a much bigger risk than to stay on the sidelines. There is RSI divergence, there is double bottom by candlestick analysis, there is Pivot level, risk/profit ratio is very good. It looks like this: ✴️ CONCLUSION The pivot point indicator is a great way to find trend reversal points and corrections, for example, you can combine it with Fibonacci levels and find out the end of a correction more precisely. Try it, trade, the indicator is very easy to use and understand. Successful trading and good luck in the markets!
Education
by DeGRAM
1
The Hidden Key --> Multi-Timeframe Analysis 🪀I begin by explaining the Video Idea--> Using Multi-Timeframe analysis to put together a trade idea. MTF analysis is absolutely crucial for running a profitable trading business... It's something that takes some experience but once you understand the way in which all timeframes move together it's like an Aha moment. We look at 3 timeframes.. the 1Hr, 4hr and the Daily timeframes. We observe an example from just a few days ago that outlines how it was very possible to catch a 20 pips after the Monday(3/25/24) daily candle closed bullish.. Give and rocket and leave a comment for similar content in the future!
Education
by ShrewdCatfx
2
March 24' Rejection of 1.09485 --EurUsd-- Fundamental Outlook🎬Since the March 8th touch into 1.09485 Weekly level, we have depreciated 146 Pips on Eur/Usd. In Today's analysis we break down the most important News events of March 24'. These include NFP, CPI, and Interest rates. All of these news events have played a significant role in the downside movement we can observe on EurUsd across the past 2-3 weeks. Leave a rocket and share for more similar analysis in the future. Safe Trading
by ShrewdCatfx
FAKE BREAKOUTS IN CRYPTO MARKETSHello traders! 👋 How often has it happened to you that you watch a certain level and wait for its breakout, and when the price breaks this significant level, the price does not tend in the direction of the breakout? After a while, it goes back down, putting your balance at risk of heavy losses. Now let's talk about what a fake breakout is in the crypto market in particular.. Definition And Types 📝 A fake breakout is a breakout of some horizontal or sloping level, after which the price immediately or gradually moves away in the opposite direction of the breakout. The candlestick that broke the level is called a breakout candlestick. The most common fake breakouts in trading: A fake breakout of a trendline. A fake breakout of support or resistance. A fake breakout of the borders of a technical pattern. Now that we have a complete layout of possible breakouts, let's take a closer look at them. In the description of the breakout, I will immediately describe the trading principle of this pattern. Fake Trend Breakout 📊 On the chart of BINANCE:ETHUSD I managed to find a great fake trend breakout during a bull run. The point was that the price started a great growth, then a trend line was formed, from which most traders bought the asset until all the buyers were dropped off the train. But for the others, who understood the principle of fake breakouts, it was, on the contrary, a great opportunity to enter the market. We see an excellent trend breakout, a well-defined breakout candle. Here any trader has two options: 1. Enter in the direction of the trend. And since we have broken the trend line, the trend has changed to a downtrend. 2. Wait for a possible rebound and return above the trend line. Let's start with the fact that it is not profitable to enter trades immediately after the trend breakout, as there is a high chance of such confusing cases. Therefore, it is advised to wait for a strong rebound and the continuation of the movement in the direction of the breakout. And what to do if the market has a situation as shown in the picture, i.e., the price breaks through and returns back above the trend line? Everything is even simpler here: You wait for the return above the trend line. As soon as it happens, you place a limit order on the upper or lower boundary (depends on the trend direction) of the breakout candle. You wait for the market to fill up your order. You place a stop-loss under or over the trend line (depending on the trend direction). A Fake Breakout of Support or Resistance 📈📉 This type of breakout is the most popular, but it has its own interesting trick. As a rule, in such situations, the price chart hints that it wants to break some significant level and all traders freeze waiting for the breakout. The breakout happens, but there is no profit. This is a classic in the current realities, at least in the cryptocurrency markets. The principle of trade entry is exactly the same. Only the nature of the breakout differs. By the way, as you can see from the post, and if you look at the charts of coins, the largest and strongest movements are usually accompanied by fake breakouts before them. This is due to the fact that thanks to a fake breakout, most panic traders or those who have extremely short stop loses are dropped off. Fake Breakout of A Pattern 🔎 This fake breakout is the most rare, but it still occurs. Its essence is that when you see one of the technical analysis figures and, according to its own rules, understand in which direction this figure is most likely to break, it breaks in the opposite direction. On the BINANCE:SOLUSDT chart, I managed to find a good example of this algorithm. A descending triangle with a flat bottom was clearly drawn on the chart, which, according to the classic technical analysis, should break towards the flat side, but they decided to give us a "haircut". The algorithm of entering the trade is exactly the same as in the other two cases. But here you can resort to one more variant of entry, in addition to overcoming the top or bottom of the breakout candle. Also, if it is pattern from the classic technical analysis, you can simply enter the trade on the crossing of the pattern. In cryptocurrency markets, the following picture often occurs: • An important level is formed. • The price breaks it and fixes itself above or below it. • There is a pullback to the previous zone with a small continuation of the reverse movement (fake breakout). • The price returns to this zone again and starts to consolidate. • A true breakout occurs. As a result, the stops of both those who did not earn on shorting and those who did not earn on the long position were accumulated. There is only one recommendation to avoid this case, just tighten the stops and do not be greedy. Remember the main rule, the more tests of the level, the more likely it is to break through. And here is another simple truth: levels are created in order to break them. In conclusion , fake breakouts are a common phenomenon in trading, particularly in the cryptocurrency markets. They can occur in various forms, such as fake trend breakouts, fake breakouts of support or resistance, and fake breakouts of technical patterns. Understanding these scenarios and adapting appropriate trading strategies can help potentially capitalize on market opportunities. Recognizing and managing fake breakouts can contribute to more successful trading experiences. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
10
WHAT IS SMART MONEY TECHNIQUE DIVERGENCE?✴️ WHAT DOES SMART MONEY DOING: ACCUMULATING OR DISTRIBUTING? SMT (Smart Money Technique) Divergence is the divergence of prices of correlated assets or the relationship to inversely correlated assets. Analyzing the SMT Divergence allows you to determine the institutional structure of the market to determine what the smart money is doing accumulating or distributing. Currency pairs are easy to analyze using the DXY US Dollar Index. Every price fluctuation must be confirmed by market symmetry. The occurrence of price asymmetry signals the formation of an SMT Divergence and a likely trend reversal. SMT DIVERGENCE IN ACCUMULATION SMT DIVERGENCE IN DISTRIBUTION ✴️ WHICH PAIR TO CHOOSE FOR TRADING? As traders, we need activity in the markets, volatility is what makes trading easier. The news background is the driver that drives this, which is why the trading day starts with a look at the economic calendar. If GBP news is scheduled to be released, it does not mean that, for example, GBPUSD will be preferred over EURUSD. The logic is that closely correlated pairs are likely to move symmetrically. But when SMT divergences are formed, one of the pairs will show strength or weakness, which signals the approaching high volatility on such a pair. GBPUSD updated the high, while EURUSD failed (showed weakness) which results in opening short positions on EURUSD. As a result, despite the important news on the GBP, EURUSD showed a higher amplitude of movement (volatility). In the following example, EURUSD updated the high, while GBPUSD failed (showed weakness) that as a result we open short positions on GBPUSD.
Education
by DeGRAM
2
THE PSYCHOLOGY OF CHART ANALYSIS:THE ILLUSION OF CONTROLThe psychology of chart analysis is the ability to quickly find patterns and key levels on a chart. It is the ability to quickly switch timeframes and see the main trend. But traders often fall into the other side of the equation. They turn into hypnotized people who do not take their eyes off the magic of charts. The trader hypnotizes the chart and the chart hypnotizes the trader. And it is difficult to break this vicious circle, but it is necessary. Psychological Dependence On The Price Chart 📉🧠 Chart hypnosis has a major problem when it comes to graphical hypnosis constant monitoring of charts takes away time that could be used more productively. It drains the trader's energy: eyes get tired, attention gets tired. The trader takes wishful thinking for reality and makes mistakes. PSYCHOLOGICAL PITFALLS OF GRAPHICAL ANALYSIS: 📊 Constant Monitoring 👀 The chart is captivating, especially when a trade is open. You can follow the price movement for hours, enjoying inwardly when it goes in the right direction and worrying when it reverses. The brain is switched off. A person does not think, does not even analyze the meaning of the changing pictures. This is the most real hypnosis. You can watch water flow forever, fire burn forever. And you can watch price charts forever. Remember how much time you spend watching essentially useless shorts on YouTube? And how much time uselessly watching charts? The only difference is that video relaxes you, while constant price monitoring leads to stress, because your money is at stake. The Nervous Chef Phenomenon 😓 Another psychological trap of chart analysis is constant checking of price changes. It would seem that a trade has been opened within the framework of risk management, stops have been set, take profit has been set. Why do you need to look at the chart every five minutes? But a trader persistently checks every 5 minutes "is the water boiling?" or "are the potatoes boiled?". Such dependence is not only in trading. Similarly, every 5 minutes we check social networks and phone: "What if someone wrote a comment under my photo?", "What if someone sent me a new message?". It is logical that after checking the chart every minute extra money will not appear on the account. But there will be a false sense of control, not counting the loss of time. The more often you open the lid of the pot, checking the boiling of water, the longer the water takes to boil. Emotional Mistakes 📌 Statistics show that 70% of the time the price moves chaotically. Trying to constantly look for a trend or pattern on the chart, you fall into the trap of emotions. Under the emotional influence you open a trade in a bad time zone or close it prematurely, although initially there was a clear direction; to strictly follow the risk management, the established rules of the trading system. Illusion Of Control 💡 According to statistics, a person has a much higher chance of losing their life in a traffic accident than flying in an airplane. But people continue to fear airplanes more than cars. To the person behind the steering wheel, it's like: "I'm buckled up, I know the traffic regulations, I'm in control." This is called the illusion of control. There is a classic experiment in psychology. One group of participants is asked to choose a lottery ticket, the second group is given one. Then they are offered to exchange tickets. The second group goes to the exchange without questions, while the first group is less willing to exchange. The experiment shows that people who made an independent decision feel responsible for it and therefore are more confident in winning. There is a similar trap in trading. The trader thinks that she/he has mastered technical analysis, has considered all the risks, and therefore opened the trade correctly. And now she/he watches the chart every 5 minutes to make sure that she/he is right. In psychology, this is called "thirst for control". How to Overcome It? ✅ Catch yourself thinking that you've already fallen into one of these traps. And if so, force yourself to simply turn off the screen. Convince yourself that all the rules of risk management have been followed, which means you don't need to spend time on constant monitoring. Force yourself away from the monitor. Watch TV, take care of the garden, do some repairs, go for a bike ride. In other words, there is a temptation to constantly sit at the monitor - try to be as far away from it as possible. In summary, the psychology of chart analysis in trading is crucial for identifying patterns and key levels and understanding the overall trend. However, overdependence on charts can lead to psychological pitfalls like constant monitoring, causing mental fatigue and mistakes. To overcome these challenges, we should recognize when we fall into these traps, trust our risk management strategies, and engage in other activities to maintain a balanced life. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
21
WHAT IS THE POWER OF THREE (PO3)?Lets look at the basic model of manipulation for the purpose of accumulation and distribution within separately taken time periods the power of three. Understanding this model is a fundamental skill for working through the methodology of trading disciplines such as swing, short-term and intraday trading. ✴️ WHAT IS THE POWER OF 3? The power of three is a candlestick/bar formation stages relevant for all timeframes, especially applied within daily and weekly trading ranges, where the opening price is considered to be the beginning of the period. For intraday trading, we only need to apply the weekly and daily powers of three, but we should also pay attention to the monthly candle, as the zones of interest on the higher timeframes increase the chances of success. ✴️ WEEKLY POWER OF 3 The logic of the weekly PO3 is useful for constructing a trading bias. Bullish Bias. Expect a move below the opening price early in the week, which would be a weekly manipulation (Judos Swing). The low of the week is usually formed between Monday and Wednesday, most often on Tuesday or Wednesday. If the price moves back above the opening level after leaving it, a reversal scenario is possible. Bearish Bias. We expect a move above the opening price at the beginning of the week, which will be a weekly manipulation (Judos Swing). The high of the week is usually formed in the interval between Monday and Wednesday, most often on Tuesday or Wednesday. If the price moves back above the opening level after leaving it, a reversal scenario is possible. ✴️ DAILY POWER OF 3 The opening price level is used to determine a favorable opening zone to take a trade. Manipulation (Judas Swing). We wait for the completion of the liquidity grab before making a decision. Expansion is a price action that traders capitalize on. Distribution is an area in which we take profits.
Education
by DeGRAM
1
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. 👀 Market Insights and News : Stay informed with the latest market developments, trends, and news via the TradingView Digest. 🆕 New Features Announcements : Discover and learn about the latest features and tools available on TradingView. 🎦 Educational Videos : Short, insightful videos demonstrating how to effectively utilize various features and tools on our platform. 🧙🏽‍♂️ Trading Wisdom : Gain wisdom and insights from seasoned traders and industry experts to refine your trading skills. www.tradingview.com 🤔 Something we missed ? These are just a few examples, but we want to know what resonates most with you. We want to make sure that every piece of content we publish is something you find useful, informative, and enriching. ❔So, how can you contribute? It's simple: Share your thoughts in the comments below! Tell us about the types of content you're interested in, any specific features you'd love to learn more about, or anything else you believe would enhance your TradingView experience. We're listening, and we can't wait to hear from you. With 💖, Team TradingView
INDEX:BTCUSD
by TradingView
80
WHAT ARE FRACTALS IN FOREX TRADING?👋 Hello forex traders! It is unlikely that you will find a single beginner in the Forex market who would not know what a fractal is. And even outside the market, many people have heard about this concept. Fractals have been known for almost a century, are well studied and have numerous applications in life. Fractals have been used on financial markets for quite a long time - even classic trading strategies contain references to them. For example, the famous trading strategy of Bill Williams Profitunity uses fractals as one of the elements of the system. To begin studying this method of analysis, we need to define what a Fractal is. Here is the most complete and understandable definition: "A fractal is a set that has the property of self-similarity. An object that exactly or approximately coincides with a part of itself, i.e. the whole has the same shape as it or more parts. In our familiar markets, this concept is slightly modified, but the concept remains the same." Transferring this definition to price charts, we can get approximately the following: "A fractal is a constantly repeating pattern that is not included in any list of common patterns. In other words, if you watch the chart of a certain instrument for a very long time, you will start to notice the fact that its movements in a certain period of time are constantly repeating. This pattern was discovered by the well-known Bill Williams. This trader claimed that the whole market is chaotic and only sometimes it changes into a stable and bright trend." Why Fractal Analysis Is Necessary 📊 In fact, the trader himself determines the necessity of this kind of analysis. If you have a perfectly working and profitable strategy, then probably this post is not for you, but if you have some problems with finding a profitable trading strategy, then you can read to the end so that this post will give you an idea. I have not been able to find any clear information as to why it has been noticed only now, but I personally believe that it is due to the fact that more and more traders started to spend a long time at the monitor and notice some patterns and features of each currency pair. Translating all of the above into simple language, fractal analysis is needed to find the biggest patterns in the market and apply on. “Once is a fluke, twice is a coincidence, and three times is a pattern”. How To Apply In Trading 📈📉 Now that we have sufficiently understood the general concepts of Fractal, it is time to understand how this technique is applied in the financial markets and learn how to trade using it. Let's start with the fact that fractal structures were originally found with the help of machine running of charts and finding certain patterns. That is why it may be difficult to find fractals with your own eye. But we are glad that we live in the 21st century and all developed platforms have such indicators for a long time. Immediately after applying this indicator, the chart will look like this: Fractal Start A fractal start is a situation in which after a fractal in one direction, a fractal in the opposite direction is formed. Fractal Signal After the fractal start, on its reverse side, the appearance of the fractal signal takes place Fractal Stop The fractal stop is located behind the farthest of the two extreme fractals. Using this technique allows you to minimize the number of stop-losses. The Practical Use Of Fractals 💡 1. Method of breakouts, often indicating the continuation of the existing trend. To enter a trade, a pending stop order is set at the breakout point of the nearest fractal to the price. 2. It is not always possible to determine how accurately these levels were built. Bill Williams' fractals are a tool to effectively identify significant support and resistance levels. 3. Fractals can also be used as a useful method of identifying reference points when plotting trend lines. These anchor points can serve as important indicators of market behavior. 4. Fractals can help traders identify the prevailing trend in the market. Identifying a trend is a simple process if you take into account the definition of an uptrend as a sequence of increasing local highs and lows, while a downtrend is characterized by a series of decreasing extremes. 5. If the price does not overcome the previous fractal, it may indicate the emergence of a sideways movement. To confirm this signal, it is necessary to wait for the formation of the opposite fractal. Advantages And Disadvantages Of Fractal Analysis ↕️ Like other techniques, fractal analysis has both disadvantages and advantages. For its effective use it is necessary to be able to analyze several timeframes and synthesize the overall picture. Market entry should be determined by the trend on the higher timeframe, because the Bill Williams system is trending. In conclusion, the fractals provide numerous potential entry points on the chart, catering to different preferences and often appearing quite reliable. However, it is essential to recognize that this method of analysis is not simple or unambiguous. Consequently, it is not recommended for beginner traders to use it as the sole factor in decision-making. The Fractal indicator's effectiveness is dependent on its use in conjunction with other indicators on time intervals from an hour and above. Strategies that incorporate the Fractals indicator must analyze several timeframes. Despite these considerations, the indicator should not be dismissed, as it can provide valuable support when used in combined strategies. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
11
HOW TO $1k to $12.4mil in 83 trades on BTCUSD1D BITFINEX w/ NSV4Through an analysis of 83 trades, NSV4 ('Ninja Signals V4' by BitcoinNinjas.org) has demonstrated its ability to turn a modest $1,000 investment into an impressive $12.4 million, showcasing remarkable potential. In this particular configuration, NSV4 massively outperformed almost any other strategy including the traditional 'buy and hold' in the backtesting of this example. This chart specifically provides insights and a deeper understanding of the effectiveness and potential of this indicator. It is one of the single best charts ever backtested for Ninja Signals. We have spent years receiving feedback from users and cultivating our script while backtesting different charts and timeframes to achieve this level of success. The reliability and continual profit over time for 10+ years is astounding in this particular case! This configuration is unique to this exchange, although is likely to achieve similar results on other exchanges (trading the same pair and the same time interval), perhaps needing only a few minor tweaks. Let us dissect NSV4's performance and discover the principles that have made it a game-changer. How is it possible to turn 1k into 12.4m in 83 trades? First of all, you can see that the first trade was in 2013, so these settings are backtested for over 10 years. This didn't happen over night. Also, this configuration adds the profit of the previous trade to the next trade. On a bot, this would equate to using the entire balance of the account with each trade, and continually increasing the trade amount as profit accrues. Here, we are 'compounding the interest' and using 100% of the trade balance for each trade. This is referred to as "Compounding". We always make sure that a configuration is highly profitable with compounding OFF before we turn it on. In this case, the results are magical. When we are backtesting for the best configurations, there are a few things to keep in mind, these principles are true for any Alerts generating indicator: 1) Has it traded recently, within the last few months? (Yes) 2) Has it been profitable each year if only traded for that year? (Yes) 3) Has it broke even or performed well in a bear market? (Yes) As you can see, this configuration has traded recently, It also meets all of the other criteria. Therefore, this would suffice as a tradeable config in our eyes. In short, why is this pack so successful? 1) Compounding. 2) Long trading history (10yr+). 3) Low SL (Stop Loss) of 6 prevents losing large amounts and keeps trades tight. 4) The results without compounding are stellar to begin with, good start, good finish. 5) Years of backtesting experience from our team culminates in epic configurations. The 1D chart equates to a longer period of time between trades than most people are used to, which results in approx 1 trade per 1-2 months. Most people are looking for quick scalping trades but as you can see here, NSV4 has steadily outperformed almost any strategy using complex combinations of basic trading principles and trading for a long period of time. The tortoise wins the race, in this case. We generally like to use NSV4 between 60m and 1D, anywhere in between. Sometime obscure timeframes such as 177m or 431min seem to do well. It takes time backtesting to find the best results, as with any script. Do you know of any other Alerts generating indicators on TradingView that have achieved this level of success? I haven't found any yet! I am anxious to try these settings and to keep testing! -spiftheninja PROFIT WHILE YOU SLEEP
BITFINEX:BTCUSDEducation
by Bitcoin_Ninjas
2
High Volume Times to Trade / Part 2 🔢Hello Traders welcome back to another concept video. This is the second video in our series -- High Volume Times to Trade -- We talk about 1) 4Hr Candle Opens/Closes 2) New York Stock Exchnage Open 3) London Close Scalping/Intra-day trading during these times, in my experience, can provide unique opportunities to profit on Eur/Usd. Similar to Part 1 of our series, these additional times to trade can provide that extra volume for 1) a nice continuation of the preceding trend 2) a short-term reversal of the preceding trend and 3) act as a catalyst for the beginning of a higher timeframe trend
Education
by ShrewdCatfx
XAU - Understanding how to analyze Multiple Time FramesYes - This way of seeing price action works on any time frame and in any market - Why? - Because it's using basic understanding of how the market works and utilizing these channels as a way to see the strength of buyers and sellers at any given price. In a way, it's a third eye (Price, Volume, Strength). Utilizing this alongside any indicators you'd like to add can lead you to real vision in the crazy and "unpredictable" world of trading. I personally don't use any additional indicators aside from straight up Volume - and that's what works best for me. But if you can find confluence with any of the thousands of indicators out there, that's amazing and i'm sure you'll be able to find real success. Hope this was helpful! And as always, Happy Trading!
CITYINDEX:XAUUSDEducation
by ReigningTrades
4
COST OF BREAKING TRADING RULESJesse Livermore is one of the most famous and successful traders of the last century. During his lifetime he was nicknamed "The Great Bear" because he actively sold stock assets during the Great Depression and managed to make a multimillion-dollar fortune. Wikipedia mentions that Livermore made and lost significant sums on the stock market more than once during his lifetime. He was distinguished from his contemporaries by his aggressive manner of intraday trading. Today we want to tell you about Livermore's life and his own rules of trading on financial markets. ✴️ THE BEGINNING OF HIS CAREER The ascent of the trading legend began with the stock exchange offices in Boston. Livermore did not take part in trading, but only recorded constantly updated asset prices on a special board. It is important to realize that at the beginning of the 20th century, prices on stock exchanges were transmitted by telegraph. Having a good capacity for exact knowledge and impeccable memory for numbers, Livermore was the first to discover patterns in trend reversal models. Contemporaries note that Livermore was not sociable. All the young trader's attention was focused on price changes of liquid assets. It is noteworthy that he used only numerical sequences to make trading decisions, especially not being interested in the reasons for rising or falling prices. Having gained a little experience in exchange offices in Boston, Livermore began to keep a notebook in which he recorded all the identified patterns in the dynamics of asset pricing. Biographical literature notes that at that time he was not interested in trades with large sums. The young trader was fascinated by the patterns in the behavior of prices, confirmations of which he was constantly looking for in practice. Some time later, his friend offered to buy a share of the company "Burlington". Having checked his records and convinced that the price would rise in the near future, Livermore invested 5$ in the mentioned brand, earning more than 3$ in a couple of days. This was Livermore's first and highly successful trade. ✴️ WALL STREET CAREER At the age of 21, the talented trader moved to New York with the aim of conquering the stock market, having $2500 earned in small stock exchange offices in Boston. Livermore could not open an account with any of these companies because his name was on the rumor. Even then, he claimed to close a trade with a profit 7 times out of 10. No small brokerage firm wanted him among their clients, as he could easily bankrupt it. Eventually he was able to open an account on Wall Street, investing all the money he had into the trade. To everyone's surprise, it ended with a complete loss of deposit. The reason is as follows: Livermore was a hardened proponent of short-term trading, capitalizing on minor price fluctuations. Information about the actual value of assets was transmitted by liquidity providers to Wall Street with significant delays, which led to inaccurate short-term trading. While in Boston, small firms used telephone tape orders and processed customer orders almost instantaneously, this was impossible in the real market conditions of the time. The manager of a Wall Street brokerage house was kind to the young trader and saw potential in him. When Livermore lost his capital due to technical reasons, he lent him $500 to disperse his deposit in illegal brokerage houses. Livermore then heads to St. Louis, where he makes $2,800 in a matter of days. The company removes him from the number of clients, and also notifies all brokerage houses in the vicinity about the appearance of an overly successful participant of trades. Back in New York, Livermore managed to earn another $5,000 while trading at one of the illegal brokerage houses in New York, and then reopened an account on Wall Street. Livermore managed to make good money on the global growth of the US stock market in 1901. On his account was the sum of 50 000$. However, later, against the background of high volatility, Livermore lost all his money and was forced to go to his hometown to earn money. After some time, Livermore again started to ruin brokerage houses in Boston, acting through his friends. He managed to save the necessary amount for a third return to New York and open another account on Wall Street. ✴️ THE 1907 MARKET CRASH AND THE GREAT DEPRESSION In 1906 Livermore foresaw a global decline in the prices of railroad company stocks under the influence of natural disasters. In 1907, there was indeed a decline in prices, but not as rapid as the trader saw it. Then big banks managed to support the value of shares of industrial companies. Trying to sell in a growing market, Livermore again lost almost all of his fortune. He decided to stop trading and wait for a signal to enter the sell-off with all his remaining funds. Just as Livermore had anticipated, the railroad companies were going through a tough time and the stock rushed downward. The economic situation in the country was so critical that the companies were ready to sell their shares to investors in installments with the participation of banks, but the latter were not sure that investors would be able to fulfill their financial obligations in the near future. As a result, in 1907 there was a global collapse of the stock market in the U.S., and Livermore managed to earn 250,000$. In October of the same year, the panic of businesses reached its peak and banks started sending their representatives to Livermore asking him to stop selling stocks as it could lead to global economic problems in the US. Under this influence Livermore closed short positions, opening all capital to buy at the point of trend reversal. This trade brought him 3,000,000$ net profit in 9 months. During the period from 1907 to 1929, trading volumes on the U.S. stock market increased significantly. Almost every resident of the country invested in stocks. The reason for the growth of financial literacy of the population and popularity of the stock market was the large-scale advertising campaigns of private brokerage firms. Nevertheless, in 1929 there was a large-scale market crash. The reason for the downtrend, among other things, was a multimillion sell trade, which was conducted by dozens of brokers under the leadership of Livermore. This trade brought him more than 100,000,000$ of profit, which by today's standards can be compared to a billion. ✴️ JESSE LIVERMORE'S TRADING RULES Today the following Livermore's rules of capital management in financial markets may sound cliché, but at the beginning of the last century every trader was familiar with them. Let us pay attention to them too: 1. Don't average losses. It is important to realize that the principles of pricing liquid assets have changed significantly since the beginning of the last century. 2. Do not exceed risk tolerance. Livermore used to set the maximum risk per trade at about 10% of capital. 3. There is no need to quickly secure in profits if the trend is moving in your direction. The reason for closing an order can only be objective factors that indicate a correction or reversal. 4. Withdraw 50% of profits after each trade. Livermore had an unwavering rule to withdraw part of the profit. The investor himself explained it by the unpredictability of the market. 5. One should enter the market only when there are appropriate signals. ✴️ CONCLUSION Perhaps it is worth mentioning that in 1930, Livermore broke his own rule by investing all his funds in one trade, after which he became bankrupt. In those years, he no longer had the strength to start over, and he decided to write a book on stock trading with the simple title "How to Trade Stocks?" He hoped that the work would become a bestseller, which would give him recognition and wealth. However, this did not happen, and in 1940, Livermore shot himself in one of the hotels in New York. The official reason for the shooting, if Wikipedia is to be believed, was depression. Livermore was a truly great trader who, during his lifetime, had a significant impact on both the decline and growth of the U.S. economy.
Education
by DeGRAM
3
BTT/USDT Psychology. Reversible evolution of hamster thinkingLogarithm. Time frame 4 hours. 1️⃣ Exit from the long accumulation by pump the price using the “stick” method +135%. From the average price of the accumulation +200%. CODE 237 (pump time) 2️⃣ Formation of bullish (ascending triangle). Not returning the price after the pampa by a significant percentage to cause bewilderment and regret about the sale of those who sold with profit). 3️⃣ Breaking through its resistance and fixing the price. Special clamping of the price with orders to "compress the spring". Launch of positive “news” (background to accompany the price movement). Expectations for the majority to see the “connection”. 4️⃣ Further development of the game with a round dance of those connected to the "money egregor", without antivirus (knowledge and experience). Pulling their strings in thinking using greed and low intelligence. Waves of trend development and position resetting.
by SpartaBTC
6
RUMINATION IN TRADING👋 Hello, Forex traders! Let's talk about rumination in trading. What is rumination? Rumination in trading is the process of going over previous trades and market situations in your head. Trying to understand what went wrong and to think of a better way of doing things. In "moderate doses" it is analysis. But when a person thinks about it all the time and in a negative way, analysis turns into mania and "self-beating" for mistakes made. Differences Between Rumination and Analysis ❓ Analysis is an essential part of learning to trade. It involves fixing all actions in a table editor, on paper, or uploading history from the platform. Traders analyze their best and worst moments, identify mistakes, changes in risk level, and successful trades. They also look for ways to optimize their trading system. Rumination, on the other hand, is obsessive thinking with an emphasis on the negative. It involves constant "chewing" of negative moments without searching for a solution. A stock or crypto you bought went down sharply, and all your thoughts are occupied with why it happened and how to fix it. Rumination in trading is the habit of endlessly worrying about and analyzing your trades, mistakes, losses or missed opportunities. It can lead to negative thinking, pessimism, depression, anxiety, impulsiveness and inactivity. Rumination prevents a trader from focusing on the present and the future and following his trading strategy and discipline. Rumination, instead of analyzing, improving and solving a problem, only makes the situation worse. Causes of Rumination in Trading 📋 • Lack of confidence. A trader who is insecure is constantly trying to look for mistakes in his previous trades to justify his failures. • Fear of failure. A trader who is afraid of losing money is constantly running through possible failure scenarios in his head to try to avoid them. • Striving for perfection. A trader who strives for perfection is constantly trying to find ways to improve his or her results, even if they are already quite consistent with expectations. Consequences of Rumination in Trading ⭕️ • Decreased trading efficiency. A trader who is constantly replaying past trades in his head cannot focus on the present and make the right decisions. • Loss of money. Rumination can lead to impulsive trading decisions that can lead to losses. • Mental Distress. Constantly running negative thoughts through your head can lead to stress, anxiety, and even depression. How To Avoid Rumination In Trading ✅ 1. Set limits on the time you spend analyzing past trades. 2. Focus on what you can control. 3. Develop positive thinking and self-esteem. 4. Determine your trading goals, rules, risks, and plans in advance and stick to them. 5. Keep a trading diary where you record your trades, results, mistakes, lessons learned, and emotions. 6. Limit the time spent analyzing charts, news, and forums. 7. Take time away from trading, pursue other interests, hobbies, friends, and family. 8. Find ways to relax and de-stress: meditation, sports, music, reading, etc. 9. Mentally prepare yourself for the worst-case scenario before entering a trade. 10. Every night before you go to bed, think of three good things that happened to you during the day. Example ✍️ You buy EURUSD with the expectation of growth. But there is a downside risk. Prepare yourself mentally for the fact that there are all the prerequisites for the fall of the pair, and you are ready to accept losses. If the price has reached the stop loss, take it with the thought "It is good that it is so, otherwise you could have lost even more" and go to rest. Ask yourself: what is the worst that can happen and how can I deal with it? In conclusion , rumination in trading can be detrimental to a trader's success. By understanding the differences between rumination and analysis, identifying causes, and implementing strategies to avoid rumination, we can improve our mental well-being and trading performance. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
16
SWAP ZONES IN FOREX MARKET👋 Hello, Forex traders! In a market situation, swap zones in trading are formed as a result of a change in market direction. When the trend changes, the price often returns to the previous support or resistance line. This is due to the fact that participants often use the lines as reference points for trading decisions. Swap zones can be used by traders to identify optimal entry-exit points for trades. For example, a trader can open a long position when the price is approaching support or a short position when the price is heading towards resistance. What is a Swap Zone? 🧐 Swap zone in trading is a price level that was previously a support and then became a resistance, or vice versa. It represents a part of the chart where the price pauses or rolls back. It is formed as a result of a change in the trend direction. Swap zone is easy to use to identify reversal points. For example, if a price is in a rising market and is pulling back to support, it is a signal that the trend may resume. In order to increase the accuracy of swap zone, it is important to use it in combination with other tools of technical analysis. Swap zone is suitable for deciding whether to open a position. For example, if a price is in a sideways movement and approaches swap zone resistance, it is a signal that the price may break through the level and start a new trend. We can open a long position if the price breaks the resistance, or a short position if the support level is broken. The assistant is useful in various trading systems, including price action and volume analysis systems. In price action strategies, it is suitable for determining potential support and resistance, and in volume analysis it is suitable for determining trend strength. Here Are A Few Strategies To Give You An Example ✍️ Level Breakout. It consists in entering the trade after the price breaks through the swap zone. This is a signal that the trend will continue, you can open a long or short position. Rebound from the level. Entry into the trade after the price bounces off the level. For example, if the price is in a falling market and bounces off the resistance swap zone, this is a reversal signal and you can open a short position. Double Test Level. Opening a position after the price tests the swap zone twice and you can open a short or long position. Pullback after a level breakout. Entry after the price rolls back after a breakdown of the level. It can be a sign that the trend is slowing down. When using the tool, it is important to consider the market direction, trend strength and trading volume. Advantages And Disadvantages Of Swap Zone 📈📉 Before using a pattern, it is important to consider its strengths and weaknesses. Pros: • An effective tool for identifying support and resistance, as well as moments of opening and closing a position; • use together with other tools of technical analysis to improve trading accuracy; • easy to use and understand; • possibility of earning with different tools and in many strategies. Cons: • They are not completely reliable and the market can go in a different direction; • It can be influenced by other factors: news, fundamental data or changes in the mood of market participants; • They do not always provide effectiveness. In summary, swap zones are perhaps the simplest and most effective tool in a trader's arsenal. Levels are the most reliable piece of information you could possibly get about an asset and its price. No amount of analysis will ever tell you more truth than levels can. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
1
HARMONIC PATTERN BUTTERFLY ✴️ Harmonic patterns are prevalent in consolidation markets. These patterns can be used as additional confirmation to enter a trade. Today let's study the Butterfly Pattern. The Butterfly Pattern in trading is a 5-point trend reversal pattern, which consists of two corrections that form the shape of a butterfly. The pattern can be formed on any timeframe, but most often occurs on daily and hourly charts. It has high accuracy, but like any other indicator, it does not guarantee profit. To increase the probability of success, it is necessary to use the pattern in combination with other indicators and methods of market analysis. ✴️ WHAT IS A BUTTERFLY PATTERN? Butterfly pattern in trading is a reversal trend pattern, which is formed from two corrections with the formation of a corresponding shape. It is used to determine a possible market reversal. The formation was first described by Harold Gartley in his book New Wave Theory (1932). He is an American trader and analyst who developed several harmonic patterns, including the Butterfly, Delta and Harmonic Triangle. The Butterfly pattern in trading can appear on any timeframe, but is often caught on daily and hourly charts. For the formation of the pattern, it is necessary that the following point conditions are met: X - the start of an bullish or bearish movement; A - the end of a bullish or bearish movement and it's a start of correction; B - maximum decrease or increase of the price during the market change; 61.8 - 0.786 retracement. C - end of correction (retest of the A point area) and start of a new movement; as long as it does not exceed the A point. D - 127% - 161.8% fibo extension of the XA distance. Gartley's butterfly in trading can have two directions. To determine the Butterfly pattern, you need to find all five points of the formation. X and C are the beginning and the end of the basic movement, and A and B are the top and the lowest point of the correction. Point D is at 127% of the XA distance. If all five elements are present and meet the specified conditions, we can talk about a probable trend reversal. At the same time, it is desirable to use an indicator that would confirm the entry. The butterfly shape does not always have to be perfect. Sometimes the AB correction can be steeper than the BC. The formation conditions are not always perfectly met. Often the XA distance can be slightly more or less than 127%. Stop-loss can be placed not only below point D. The Butterfly pattern is considered a powerful tool that helps traders improve results. But it is important to use it in combination with other market analysis techniques to increase the probability of success. ✴️ HOW TO TRADE A BULLISH BUTTERFLY This is a 5-wave trend reversal pattern that represents two corrections that form a butterfly shape. Features of the design by points: X - start of a rising movement; A - end of growth and correction; B - fall of the price during the correction; C - the end of the process and the start of a new movement; D - 127% - distance of the XA. Entry into the trade is made at the level of point D, and stop-loss is set below point D. The target price is within A-D distance. ✴️ HOW TO TRADE THE BEARISH BUTTERFLY Exit is made after reaching the target price or when trend reversal signals appear. This is a 5-wave market reversal pattern that represents two corrections in the shape of a butterfly. To create it, the following requirements must be met: X - start of a falling movement; A - end of growth and correction; B - increase of the price during the correction; C - the end of the process and the start of a new movement; D - 127% - XA distance. The entry in the bearish butterfly is made at the level of point D, and stop-loss is set above point D. The target price for the pattern is within the Fibonacci levels 38.2% and 61.8% of the A-D distance. Exit is performed after reaching the target price or when there are signals of trend reversal. In both cases discussed above, it is important to combine the pattern with other methods of market analysis, such support and resistance levels, to increase success. You should not enter a trade if the pattern does not meet all conditions. Set a stop loss at a level that will limit losses in case of a failed trade. Also, you can move stop loss to break even once the price hits 38.2% Fibonacci level. ✴️ CONCLUSION The experience of using the Butterfly Pattern has shown that it is quite accurate when trading in a sideways movement or opening trades with a trend. It can be used on any timeframe, but it is more effective in combination with other methods of market analysis. At the same time, the pattern does not always correspond to the conditions and can give false signals. For this reason, it is recommended to check it with the help of indicators. Harmonic patterns should follow the basics of technical analysis. In the first place, of course, is the market structure.
Education
by DeGRAM
2