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Trading Success Through Journaling: Reflect, Learn & GrowHello traders, today we will talk about how journaling can be a really helpful tool for you in your trading journey. Journaling is a simple yet powerful tool that can help you gain insight into your mental and emotional state, identify patterns and triggers, and make more informed decisions. In this post, we'll explore how you can use journaling to improve your trading performance. 1. Reflect on your emotions: After each trade, take a moment to journal about your emotions during and after the trade. This can help you identify patterns in your emotional responses and provide insight into how certain emotions may affect your trading decisions. 2. Identify triggers: By journaling about specific events that preceded a trade, you can identify the triggers that lead to your emotional responses. This can help you take steps to manage your emotions before they affect your trading decisions. 3. Evaluate your decision-making: After each trade, take a moment to journal about the decision-making process you used. This can help you identify any biases or patterns in your decision-making that may be affecting your trading results. 4. Set goals and track progress: Use journaling to set goals for your trading and track your progress over time. This can help you stay motivated and focused on your long-term goals. 5. Increase self-awareness: Journaling can help you become more self-aware of your thoughts, feelings, and behaviors. This can help you identify any negative thought patterns and work to change them, which can lead to improved trading performance. To make the most of journaling, you should be honest with yourself and write down what you truly feel and think. Journaling is a powerful tool for reflection, learning and making adjustments for the future. It's important to note that journaling is not a standalone strategy, but rather it's a tool that can be used in conjunction with other analysis and indicators to inform trading decisions. Also, you don't need any specific equipment, just a pen and a notebook, and you can journal at any time. In conclusion, journaling can be a powerful tool for traders looking to improve their performance and manage stress. By gaining insight into their mental and emotional state, traders can make more informed decisions and improve their overall trading results. Give it a try and see how it can help you in your trading journey. I would love to hear about your own experiences with journaling in trading. Please feel free to share your thoughts, feedback, and tips in the comments section below. Your input and feedback is valuable to me and to the trading community!
Education
by m_maia14
40
❗️USE STOP LOSS AND BECOME A BETTER TRADER❗️ 🟩STOP LOSS IS:A stop-loss order is an order that automatically closes a losing position once the price hits the pre-specified level. We usually calculate SL in pips, but there can be many ways to set it. It can be time based, percentage based or volatility based. For some investors SL is some piece of critical news, which alters their perception of the value of the asset. Regular stop losses can be many and varied too, for example trailing stop. Also, we sometimes move SL to entry after the half close to protect the gains and make our position risk free.However, all situations I listed above have one thing in common and it is the fact that the SL was used! 🟥Honestly, I am amused by the massive number of people who send me screenshots of their MT4 with several open trades on the same pair all of them without SL and with 90% of account lost. And they ask me what should they do? A great illustration of what is would take to recover from such a loss, is on the drawing above. With the 90% loss, you have only one tenth of the original account left. That means you need to make ten times more money than you have left just to recover your losses. 999% gain needs to be made just to have your old account back. It took you a day to blow it, and might take months to recover the losses. This is the brutality of the trading. The market is unforgiving and will punish you if you treat is without respect. If you are careless or if you make mistakes. The market always comes back to collect, waiting for the moment you drop your guard and relax for a second. Please always use Stop Loss, because, as it happens, it stops you from losing too much! I Hope you guys learned something new today✅ Wish you all Best Of Luck👍 😇And may the odds be always in your favor😇 Do you like this post? Do you want more articles like that?
Education
by ProSignalsFx
117
Our Trading ManifestoHello everyone! In this post we will present and explain our trading system. Our trading system condensates everything we have learned from hard work, study and even harder lessons received in these years of trading. It is constantly evolving and updating, we are always ready to question some aspects of our system and research tools and strategies that can improve it. We will distinguish and explain three different aspects of which the system is composed: Analysis, Execution and Research. Analysis The analytical part concerns all the tools and the strategies that we use to formulate an hypothesis on the direction of the market, and consequently develop a trading strategy. A trading strategy is composed by: -an Invalidation Level: a price level that, if crossed, proves our hypothesis wrong. This is the limit level at which stop losses can be set. -a set of Entry Points/Levels: composed by price levels of chart points that according to our analysis can trigger the move that we are hypothesizing. -a set of Target Points/Levels: composed by price levels of chart points where the move that we are hypothesizing can end. Once a trading strategy is determined, it will be implemented in the executive part. But on what is our analysis based? Elliott Wave Theory, Pattern Trading and Sentiment Analysis. We believe that the chart encodes all the information available. News and events are priced in the market instantaneously. The fundamentals are revealed simultaneously with the price action. Any news or fundamental consideration is just one piece of the puzzle. Price is the synthesis of the result. Price moves because of mass psychological dynamics inducing people to buy and sell. These dynamics are observable in the sentiment and in the fundamentals, and manifest themselves in chart patterns. The composition of chart patterns forms Elliott Waves structures. We don't use this approach as a mix of independent tools, but in a holistic and comprehensive approach. We analyze the wave structure of the market starting from higher timeframes, assessing probabilities of different scenarios by analyzing chart patterns and using different tools related to the sentiment, such as Smart Money Indicator, Volume Profiles, Order Blocks, etc. We use the same approach in smaller timeframes to set the trading strategy (Entries, Targets and Invalidation Level). Execution The executive part of our trading system involves risk management, placing orders in the market, and managing active trades. Once we have developed a trading strategy, we have a set of entries, a set of targets and an invalidation level. We have to use them to define a Trading Plan. Here is the first rule of risk management: we can not lose more than 1.5% of the trading capital for each trading plan. You don't have to depend on one trade. One trade should not be decisive. Trading must not be funny. This is the only way to decrease your biases and your emotional involvement. So in a Trading Plan we decide how many trades to open, how much risk to allocate on each trade (NOT MORE THAN 1.5% TOTAL), at what price execute the trade, and where to set stop losses. No stop loss can be set above the invalidation level. If prices reaches the invalidation level we are OUT. No matter if prices then follows the hypothesized direction, market will always provide other opportunities. We also plan where to take profits at the pre-determined Target Levels. Research The research part of our system is our constantly updating and challenging our knowledge studying new tools, approaches, strategies. Knowledge is dynamic and always updating. You never stop learning. We will post all our analysis and trades. Stay tuned and happy trading! :)
BLACKBULL:SPX500Education
by GMR-Capital
5
Leverage in Forex Trading | Your Main Tool “Leverage” means using a small amount of your own money in order to control a much larger amount of money. Typically, you borrow the remaining amount through your broker. For example, say you want to control a $50,000 position. Your broker might put aside $500 of your own money and borrow the remainder. You now have control over the $50,000 with just $500 from your own account, so your leverage ratio is 100:1. Now, let’s say the $50,000 investment rises by $500, so the full position is now worth $50,500. If you were liable for the full $50,000 (representing a 1:1 ratio), this is only a 1% return on your investment. However, since you only put in $500 of your own capital, the $500 increase represents a 100% return on your investment – that’s way more exciting! Now, it’s important to understand that this cuts both ways. If you lost $500 instead of gaining $500, you would see a -100% return on your investment. Yikes! If you had a 1:1 ratio and put in the full $50,000 you would only see a -1% return. How Much Can You Leverage in Forex? Before you open an account with a broker, you’ll want to check the maximum leverage ratio that you’ll be able to use. The higher the ratio, the bigger your potential gains or losses. Brokers will usually offer 50:1, 100:1, 200:1, or 400:1 ratios. A typical ratio on a standard lot account is 100:1, and a mini lot account will often offer a 200:1 ratio. If you start trading at 400:1, be wary of using small deposits to control large capital, as these can disappear quickly with the volatility of large sums. Lower leverage keeps you safer from mistakes, while higher leverage could bring in higher rewards. How Leverage Affects Your Trading ✅ As we’ve seen, leverage is a powerful tool that can help you win big in the forex market. You can use less capital to control greater positions, giving you flexibility and amplifying your profits. However, it can just as easily amplify your losses. At very high levels, leverage starts to damage your odds of success. Transaction costs represent a higher percentage of your margin the greater your position is. This means that transaction costs already put you at a disadvantage with excessively high leverage. Like, comment and subscribe to boost your trading! Hey traders, let me know what subject do you want to dive in in the next post?
OANDA:XAUUSDEducation
by TopTradingSignals
61
The "So-Called" Psychology of a Market Cycle!Greetings Dear Investors and Traders, today CryptoQueens, an educational post regarding the so-called Psychology of a Market Cycle. When making investment decisions, investors have a wide variety of tools at their disposal. While these tools can form the basis of a sound investment thesis, their effectiveness is limited by one’s emotions. Allowing emotions to dictate decisions is a common mistake made by many investors, yet they may not even realize it. People experience different emotions during these market cycles ranging from fear to greed. Below we will analyze, as well as you will find attached in the chart image the different emotions experienced by investors during market cycles which overwhelms the majority of the traders: Disbelief: This phase happens after the bottom has been hit. There is a sense of disbelief among investors about the rally. They believe just like it happened in the past few months, the markets will fall again. Their fear of making another mistake causes them to miss the optimal window to re-enter the market. Optimism: During this phase, the realization dawns on most of the investors that the rally is real. Investing during this phase if stocks are chosen well can give good returns. Enthusiasm: This is the time when the majority of investors are convinced about the market rally, therefore market demand rise. They believe that now is the time to be fully invested. Some naysayers still don’t believe in the market rally and advise caution. Euphoria: This is the phase where there is irrational exuberance in the markets. Investors share a collective dopamine as they think that they are genius because they made a fortune. It is advisable to stay cautious during this phase. Overconfidence/Greed: Investors continue to increase their positions despite high volatility. If you buy during this phase, you are sure to lose money, whatever you buy. Anxiety: Fear sets in, as losses begin to mount. Investors believe that the dip is taking more time than expected. This is the the moment when people are notified with margin calls due to the recent market fall. Anxiety kicks in. Denial: The herd ignores the market signs as market demand weakens. They believe that since their investments are in great companies, they will bounce back. Panic: Herd mentality takes over and market participants rushes to sell leading to widespread selling even at losses. This is a good time to buy extremely selectively for the long term as it may be very difficult to know even for well-informed investors whether we are in the denial phase, panic phase or capitulation phase. Capitulation: Market Participants accepts their losses and completely exit the market. They are selling close to the bottom of the cycle. Agony/Anger: Steep losses take a psychological factor in many investors and they start to blame the government, or anything correlated, perceiving it as market manipulation. Depression: This is the period when investors believe that their retirement savings are gone and their financial security is affected. They even start blaming themselves for investing. However, markets inevitably starts to recover. Conclusion: As an investor, you need to recognize these signals and never lose sight of the bigger picture. It is like Warren Buffett once mentioned. Be scared when others are greedy and greedy when others are afraid. Therefore, keep an eye on the fundamentals and behavioral factors that influence the market and always remain ahead of the game. Make sure you include this in your trading plan before to take action on it. If you liked it, make sure to support with a like, follow and a comment! Best Regards, CryptoQueens.
Education
by Crypto_Queens_Official
38
Are you prepared to lose? (and what to do if you are not)A new trader, let's call her Sarah, has just started trading in the crypto market. She has been reading articles and watching videos about trading, but hasn't taken the time to develop a solid trading plan, or to gain a good understanding of the markets and underlying assets she is trading. Sarah sees bitcoin's value is going up, she doesn't do any further research or analysis, she doesn't set a stop loss or take profit level, she just buys bitcoin, with the expectation that she will make a quick profit. Unfortunately, the value of bitcoin doesn't perform as well as Sarah had hoped, and instead of going up, it starts to go down. Sarah gets anxious and starts checking the bitcoin's value frequently, and since she didn't set a stop loss, she watches as her position continues to lose value. Eventually, the bitcoin loses so much value that Sarah is forced to sell it at a large loss. Feeling disheartened, Sarah starts to second-guess herself and her abilities as a trader. She didn't have a plan or a strategy, didn't manage her risk properly, and didn't have a clear understanding of the markets and the underlying asset. She didn't prepare for the possibility of losses and didn't have a plan for exiting losing positions. 😭😖😞Unfortunately, the story above is very common in trading, so how can we prepare for losing trades? ☝🏽 Preparing for the possibility of losses is an important part of risk management and can help traders to minimize the impact of losses on their trading capital. Some ways to prepare for the possibility of losses include: 1️⃣ Setting realistic trading goals: Traders should set realistic goals that take into account the inherent risks of trading and the potential for losses. By setting realistic goals, traders will be better prepared to handle losses when they do occur. 2️⃣ Establishing a risk management plan: This includes determining the appropriate size of each trade, placing stop-loss orders, and evaluating the potential reward relative to the potential risk. This can help to limit potential losses and protect trading capital. 3️⃣ Maintaining a proper risk-reward ratio: This means that the potential reward of a trade should be greater than the potential loss. This helps ensure that the potential reward justifies the potential risk. 4️⃣ Diversifying the portfolio: By spreading capital across a variety of different markets and instruments, traders can reduce overall portfolio risk and minimize the impact of losses in any one market or instrument. 5️⃣ Building a trading cushion: This means keeping a reserve of capital that can be used to absorb losses and maintain the trader's ability to continue trading. This cushion should be large enough to withstand a series of losses, but not so large that it affects the trader's ability to trade effectively. 6️⃣ Emotionally preparing for losses: It's important to remember that losses are a normal part of trading and to not let them affect you emotionally. By preparing emotionally for the possibility of losses, traders will be better able to handle them when they occur. 7️⃣ Have a plan for exiting losing positions: Having a plan for exiting losing positions will help to minimize the impact of losses on the portfolio. This could include setting a stop loss or taking profits at predetermined targets. ⚠️ Remember, it's important to accept that losses are a normal part of trading and that they are not a reflection of the trader's ability. By preparing for the possibility of losses and implementing a solid risk management plan, traders can minimize the impact of losses and increase the chances of long-term success. I hope this has been informative to you, and if it was, please leave a like or a comment below. 👇🏽👇🏽👇🏽 Thanks for your visit!
BITSTAMP:BTCUSDEducation
by Profit_Through_Patience
34
Managing risk while day trading Hey everyone! Haven't done a tutorial in a while so I thought I would do one on how I personally manage risk while day trading. These are my own experiences and my own rules, but hopefully you can take something away from them. I generally trade shares more often than options, but I do talk about the special considerations when day trading options. Remember, its not about the P&L, it is about risk management and executing well planned trades! Let me know if you have questions and as always, trade safe everyone!
AMEX:SPYEducation
by Steversteves
17
Micro Drift Patterns One of the more powerful but under-appreciated categories of patterns are very short term drift patterns in strongly trending markets. Flags, pennants and small lateral trading ranges can all fall into this category. The patterns are fractal, that is, they appear across all time frames. I find small multi drift patterns invaluable. First, they are ubiquitous. They appear in virtually all trends and time frames. Second, their completion affirms that underlying trend remains intact. Finally, the manner in which they develop, for instance, the slope, extent and volume of the counter trend move can all offer clues as to the underlying strength of the trend. Most strong trends unfold in a push - drift - push pattern, sprinting quickly in the direction of the trend, accruing a short term overbought or oversold, and then drifting counter to the sprint. As these patterns "drift" against the prevailing trend, they alleviate the short term overbought or oversold condition that accrued during the sprint. You can think of the drift as a "pause that refreshes." It is important that the market DRIFT. The best examples contain overlapping price ranges (in whatever perspective you are working in) and don't typically retrace much of the prior sprint. Volume should generally decline throughout the pattern, particularly if the pattern builds over 5-10 periods. The best examples have substantial range overlap from day to day. The classic literature requires a sharp move, or a flag pole, for these patterns to fly from, a decline in volume as the pattern builds and that the pattern last no more than 10-15 bars. In my experience, finding drift patterns that fill all these "requirements'' is difficult. My personal approach minimizes the requirements. As long as the pattern occurs after a decent thrust (I prefer the thrust to go to new high or low ground) and then drifts against the prevailing trend, I can use it to develop either a fresh entry to the prevailing trend or simply as a validation of the underlying trend. Importantly, the pattern is typically better defined in the chart of one perspective lower. For instance, drift patterns in the weekly chart can be better seen on the daily chart, and drift patterns on the daily, in the hourly. And finally, many of the topics and techniques discussed in this post are part of the CMT Associations Chartered Market Technician’s curriculum. Good Trading: Stewart Taylor, CMT Chartered Market Technician Taylor Financial Communications Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
TVC:US30YEducation
by CMT_Association
29
False Profits $$$I decided to see what all the fuss about prop trading firms were. I never really got caught up in the crypto craze. I bought a few meme coins and had some fun learning to trade with 5x margin. But it wasn't good enough. I wanted to experience what the real money traders were gaming. Futures! Instead of losing tens of thousands in real money, I decided to see if I can learn futures trading by losing someone else's money first. After all, these prop trading firms are all over twitter and youtube advertising a life changing experience by earning a "Funded Account" Earn a real funded account by Trading Futures in a simulated account. All you have to do is pass.. THE TRADING COMBINE!!!! It sounds more intense than it is. They promote strict trading plans and rules, a limited drawdown and a 2 step simulated trading combine that if you don't break any rules, you will earn a "Funded Level Account" Sounded promising. I quote "Funded Level Account" for a reason. All the advertising from influencers and furus on youtube, facebook, and twitter all tell their followers to pass the trading combine and you will earn a "Funded Account" So I set out on a mission to complete the combine and earn my funded account. First, It's expensive. You need to pay for a monthly subscription while you attempt to complete the 2 step process. Second, Should you break any rule for the related step, your account is disabled until your subscription is renewed, or you buy an account reset. After a few months of trying, I finally completed Step 2 and got excited to get my hands on a real money futures trading account. BUT YOU DON'T GET ONE! A real money futures trading account that is. I got some bad certificate that reminds me of the ones you get from online college course. I got a lot of congratulations, but 1 thing I didn't get, was what all the furu's were telling me I would get. Instead, they wrap a bunch of words around other words to make it seem like you earned a real money account. "Funded Level Account" is the one that makes me laugh the most. Now that I completed the 2 step combine, they are only offering one of two options for a "Funded Level Account". Pro Account - Which is just another simulated environment in which you need to earn 5k in a simulated account before you can get a real money account. Express Funded Account - Which is just another simulated environment in which you need to earn 5k in a simulated account before you can get a real money account AND you have a liaison who apparently will monitor you risk and trades to determine if you qualify for a real money account. They don't even give me an option for the "Funded Account" which is what I was promoted for joining. Sorry If I sound like I'm venting, its because I am pissed. This is more a ponzi scheme than all of crypto put together. So I have 3 choices now, which do you think I should pursue. A) Pro Account. No resets, If I fail, you lose the funded level. B) Express Funded Account. Try to impress them with my charm. No resets, if I fail, you lose the funded level. C) Get Loud. Get Legal. Get a Refund. Let me know what you think I should do in the comments below.
AMEX:SPYEducation
by SPYvsGME
37
January EffectHello guys! Have you ever heard of the "January effect"? It's a pattern that has been observed in financial markets where the prices of small cap stocks tend to go up in the month of January. Some people think this happens because of tax-loss selling (when investors sell stocks that aren't doing well in order to reduce their tax burden) or because more people are interested in buying small cap stocks at the start of a new year. It's important to remember that the January effect isn't a sure thing and shouldn't be the only reason you make investment decisions. What do you think about this effect?
BLACKBULL:US30Education
by m_maia14
10
Let's talk spreadHi guys, it's the team at SpreadEx here. Ironically, we wanted our first post to be about our name... 'spread'. So what is it, and how does it work in trading? Let's dive in... The Impact of Spread in Trading Brokers advertise the lowest spread. Everyone cares about it. But… why? Well, firstly let’s define the spread in and trading. In the most simple terms, it’s just the difference between the bid and ask price. You buy an asset at the best price the broker (hopefully) can ASK for an asset or security, and you sell at the best price a broker can BID it from you at. Simple! But what determines the spread? Again, in very simple terms, it is information, and information = liquidity. If the spread is increasing, there is less information from flow (other participants’ orders) and so less willingness for market makers to be involved in the market, which means market makers quote wider until more information returns. This is why at news events you might see extremely wide quotes - no one wants to risk capital to the same extent when there is a rise in uncertainty from economic news. The role of market makers Many participants think market makers are some sort of all powerful being that controls how the market moves. This is very much not the case - all market makers do is quote prices both ways depending on the information they can collect from what’s going on. They then make money from the spread and aim to be flat by the end of the day (carrying overnight inventory is a risk!). They operate in a delta-neutral manner, which simply means they don’t care about which way the market is necessarily going, they simply want people to be trading so they can make profit from the spread. In fact, they’d probably love it if a market constantly traded in a completely flat range with a tonne of volume so they could quote without there being much directional risk! Example of importance of information for market makers In the US (not the UK, we are far more sensible!), there is a type of business called payment for order flow. You’ve probably heard of this over the pandemic discussions about markets where Citadel was apparently the big baddie and Robinhood traders were getting picked off by the big bad market maker. Yes, it is true that Citadel received retail trades, but no it’s not true they were being picked off. See, the reason Citadel wanted Robinhood’s orders is because their users are classed as ‘uninformed’ - yes, the designation is as simple as that. If you have uninformed flow, it means you can quote a tighter spread (more information) which means you are providing best price. Best price = more flow and more revenue. Simple! But what is ‘informed flow’? Informed flow is, well, flow that is generated by those who have superior strategies, larger size, fast execution and whatever else that your typical institutional firm might have. It’s likely that this contributed to the Covid-19 crash back in March 2020. It was found there was a lot of informed flow in the market just before the crash, which likely meant market makers stopped providing liquidity since it is not their preference to make a market against this informed (also known as ‘toxic’) flow. And if there is no liquidity, we get a lovely collapse! Bottom line: The spread is very important - as a trader you should be analysing your transaction costs and seeing how you can optimise (evident fix here is to see whether your execution times are at quiet parts of the day).
SPREADEX:DJIEducation
by Spreadex
8
📈 4 Common Bullish Patterns🟢 RISING THREE "Rising three methods" is a bullish continuation candlestick pattern that occurs in an uptrend and whose conclusion sees a resumption of that trend. This can be contrasted with a falling three method. The first bar of the pattern is a bullish candlestick with a large real body within a well-defined uptrend. 🟢 FALLING WEDGE The falling wedge pattern occurs when the asset’s price is moving in an overall bullish trend before the price action corrects lower. Within this pull back, two converging trend lines are drawn. The consolidation part ends when the price action bursts through the upper trend line, or wedge’s resistance. 🟢 BULL PENNANT A pennant is a type of continuation pattern formed when there is a large movement in a security, known as the flagpole, followed by a consolidation period with converging trend line. Pennants, which are similar to flags in terms of structure, have converging trend lines during their consolidation period and last from one to three weeks. 🟢 ASCENDING TRIANGLE An ascending triangle is a chart pattern used in technical analysis. It is created by price moves that allow for a horizontal line to be drawn along the swing highs and a rising trendline to be drawn along the swing lows. The two lines form a triangle. Traders often watch for breakouts from triangle patterns. The breakout can occur to the upside or downside 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work , Please like, comment and follow ❤️
Education
by QuantVue
30
Valuation is truth: stocks vs gold and stocks + goldWe live in a dollar matrix, a world we can feel but have trouble understanding. We have learned that things go up over time, but we don't know why. Why do things go up and sometimes also go down. Valuation is a lie detector. We should seek truth. Stocks dont always go straight up. Gold is just scare shiny rock. Dollars are debt instruments and promises for money. GLD PSLV GOLD CBOE:SPX SP:SPX TVC:SPX FRED:CPIAUCSL FRED:M2SL FRED:PCE FRED:GDP
SP:SPXEducation
by ValuePig
16
Best investing advice to myself if the financial panic comesIve seen this movie before, and I love thats its playing again. The economy goes through cycles and its rhyming like other times. Its never the same, lets be clear about that. But expensive things get cheaper when the economy slows down because people will need their money for the hard times that may come. Its that simple. Learning to read financial statements and metrics is like learning your ABCs but for investing. Trading off a chart is good, but learning what is behind the chart will help in uncertainty. "deep faith eliminates fear". The chart wont tell you if a company is losing money or if there are more assets than the marketcap is reflecting. Buy decade growers for the best deal you can, and let them work. Best advice to myself. see you in 20 years.
NASDAQ:AAPLEducation
by ValuePig
34
Visualizing Business and Market Cycles Through Market Momentum 5Visualizing Business and Market Cycles Through Market Momentum 5: Conclusions: In installments 1 - 4 we built a market momentum matrix and plotted the information onto a stylized business cycle. In this installment we will make final observations and thoughts around the current cycle. Capital flows into and out of commodities, sectors and equities have historically provided a direct reflection of the markets view of the business cycle. But, over the last two decades the tsunami of fiscal and monetary liquidity distorted business and market cycles. As the liquidity lifted all asset classes analysis that depended upon normal intermarket relationships became less useful. Now that the reemergence of inflation as a threat is likely to constrain central banks. In other words, markets will again become properly anticipatory to the business cycle. As a reminder, this is the distilled version of the momentum matrix we built in the first 3 installments. This is the momentum stylized market and economic cycle sine curves. If markets (dark blue curve) are correctly anticipating the business cycle (grey curve) the business cycle is moderatly past peak, and should be expected to steadily deteriorate over coming quarters. Observations: The matrix is entirely consistent with an weakening business cycle that has yet to trough. Over the last two years rising short and long rates led the cycle lower. Equities, responding to higher rates, turned lower this year and both industrial and aggricultural commodities are now weakening as economic demand wanes. The outlier is the Dollar. It has benefited from global flight to quality, carry and the aggresiveness of our central bank verses other central banks. But, of the asset classes, the Dollars relationship to the business cycle is the least consistent. Rates clearly led this cycle lower and it is likely that they will lead the next cycle higher. It is important to note that short rates have risen more than long rates. This has created the type of highly reliable yield curve inversion that signals a coming recession. I believe that the inversion represents a "get ready" warning. A rapid reversal in which short rates fall more quickly than long rates, will be the signal that the reccession is beginning. Once the reccession matures, falling rates, will eventually result in better equities, higher commodities, and an improving business' cycle. Rapidly falling rates should be viewed as a signal that the worst of equity declines is likely in the past. Equities typically trough before the low point of the economic cycle. As the recession matures, technical lows in equity charts should offer important macro entry points. As the flight to quality that occurred in 2022 runs its course and the economic cycle becomes more normal the DX will begin influencing commodities again. The Dollar and commodities TEND to trend in opposite directions but the Dollars relationship to other asset classes and the cycle is highly variable. Eventually markets will realize that the new macro backdrop is one of persistent inflation rather than persistent deflation. Central banks will be more focused on fighting inflation and liquidity, except during episodes of explicit systemic risk, will be far more constrained. As a result, the rates/commodity/equity link will become strong again. Generally speaking, more frequent periods of higher inflation will result in higher yields, a slowing economy, lower commodities, lower earnings and lower equities. A note on the bond — equity relationship: The relationship changes over time depending upon the market’s preoccupation with inflation or deflation. Prior to 1997 a fall in yields was bullish for equity as yields were declining in reaction to a falling inflation rate. After the inflation of the 70s, bonds and equity entered simultaneous bull markets as the deflationary forces generated by globalization and technological advance allowed Central banks to become more accommodative without fear of igniting inflaiton. In a deflationary environment, bonds rise when equities fall and act as a hedge to equities. In an inflationary environment both stock and bond prices eventually decline. I suspect that the inflation regime has changed. Conclusion: 1) The business cycle is likely to weaken significantly over coming months. 2) A rapid decline in rates accompanied by a sharply steeper curve, will likely mark the actual beginning of the recession. 3) The recession itself should produce an excellent entry macro entry point for equity. 4) Man plans, god laughs. 5) Happy New Year to all! And finally, many of the topics and techniques discussed in this post are part of the CMT Associations Chartered Market Technician’s curriculum. Good Trading: Stewart Taylor, CMT Chartered Market Technician Taylor Financial Communications Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
AMEX:XLIEducation
by CMT_Association
10
Educational Options Video Strangle v Capped Strangle Jade LizardConceptual view of how to trade non directional or semi directionally using strangles and capped strangles, also known as Jade Lizard option spreads. Non directional option trades attempt to benefit from sideways markets or markets where options are are pricing more implied movement than is realized in the underlying asset. Combing a vertical on top with a cash secured put on bottom, creates a range trade. Selling on both sides for credits helps either reduce the cost of buying shares or creates income while the stock trades sideways without direction. DIA SPX QQQ VIX NYSE:PLTR SNAP
AMEX:DIAEducation
by ValuePig
7
The Top 10 Trades of 2022 🥳Hey everyone! 👋 This week, we're counting down the top 10 trades from a tumultuous 2022. In what was a historic bear market in almost all global asset classes - stocks, crypto, bonds, and just about everything else was down - the majority of these trades are on the short side. Energy was one of the few sectors that actually had a good year. Another outperformer was the US Dollar. Let’s recap it all below including charts you have to see, stats about each trade, and key takeaways heading into 2023. 1.) Short Luna When UST - the flawed stablecoin at the center of the Terra ecosystem - depegged in May this year, it led to a $60 billion wipe out and the complete collapse of one of the largest hedge funds in the crypto space: 3 Arrows Capital. Luna, the Layer 1 token at the center of the ecosystem ended up dropping from $86 to ~$0 in just under a week. This event had contagion effects that affected the whole industry, and led to hundreds of high profile bankruptcies, insolvencies, suspended withdrawals, and more. CHART: 2.) Long ExxonMobil ExxonMobil and other major oil companies benefited from higher oil prices in 2022, as chronic global underinvestment in extraction & processing facilities in the last few years led to a spike in prices as post-pandemic demand for energy recovered more quickly than many expected. The sanctions on Russia earlier this year have also exacerbated global supply shortages and led to soaring profits for ExxonMobil and its peers. CHART: 3.) Long U.S. Dollars The dollar saw one of its strongest years ever as the Fed was the first major central bank to begin tackling the pesky problem of persistent inflation. As the federal funds rate was hiked over the course of 2022, USD interest rates became more and more attractive vs. global counterparts, leading to a massive shift in global capital, and massive outperformance for USD holders. USD/JPY CHART #1: EUR/USD CHART #2: GBP/USD CHART #3: 4.) Short FTT FTT investors have had a rough year. Throughout most of 2022, the general crypto malaise hurt the token as reduced trading volumes and profits from FTX led to lower buy-and-burn numbers. Then, in early November, whispers began that FTX wouldn’t be able to back withdrawals for users. Over the course of the next week and a half, FTT dropped over 90% as it became clear that FTX had loaned out user deposits to other SBF related ventures, using FTT (its own token) to backstop user funds. As the price fell, the house of cards came tumbling down, rendering FTT ostensibly worthless. CHART: 5.) Short ARKK As monetary tightening continued throughout 2022, many growth stocks got hit as the present value of their future profits shrank inversely with increasing risk-free interest rates. This was doubly true for high growth companies that had no profits to speak of, like many of the holdings found within Cathie Wood’s flagship ARKK Innovation ETF. Her fund, famous for its early bet on Tesla and massive outperformance in 2020 and 2021, is currently sitting down over 60% on the year. CHART: 6.) Long Natural Gas Natural Gas has seen a similar supply and demand situation to oil, which was discussed earlier. Heightened demand coupled with stable supply led to gains for the commodity early in the year. However, with the advent of conflict in Ukraine and sanctions on Russia, shortages, especially in Europe, led to skyrocketing prices as members of the EU scrambled to figure out how they were going to provide energy to their citizens in the coming winter. The Nord Stream 2 pipeline shutdown and explosion also put further stress on supplies. CHART: 7.) Short Meta Meta, formerly known as Facebook, has had a transformational year. Late in 2021 the company announced its rebrand to Meta, meant to underscore its business shift to Augmented and Virtual Reality. This new focus meant billions of dollars into R&D, and an uphill fight convincing the public that the Metaverse really is the next big thing. Investors haven’t taken the news well, dumping the stock from more than $300 per share, to, at its lows, $88. Also hurting performance; declining user numbers for its legacy products, and rising interest rates. CHART: 8.) Short Treasuries / Long Yield As the Fed continued to raise rates in 2022, government bond yields rose in kind. And, as bond yields rise, bond prices fall. TLT, one of the biggest ETFs for long-dated government bonds, is down more than 28% on the year so far, underscoring one of the worst years for bonds on record. 2 YEAR RATES CHART: TLT CHART: 9.) Short Coinbase Coinbase IPO’d in April of 2021 at around $380 a share, making the premiere U.S.-based crypto exchange one of the most valuable financial companies in the world. Fast forward to 2022, and it’s been a completely different story. Crypto’s total market cap topped in November of 2021 as the Federal Reserve began hiking interest rates, and 2022 has been nothing short of disastrous for the asset class. The biggest crypto assets - Bitcoin and Ethereum - are sitting down more than 60% on the year, and the high trading volumes that defined the speculative frenzy in 2021 are nowhere to be seen. Not to mention the Luna & FTX blowups which had far reaching consequences across the ecosystem. Coinbase is still kicking, but with a stock that’s down more than 80% on the year. CHART: 10.) Short Beyond Meat Shares in Beyond Meat had a rough 2022, sitting down nearly 80% on the year. The fake meat behemoth’s losses have widened, and investors have questioned the basic unit economics of the company. As a result, the big brand’s market cap has suffered. CHART: And there you have it! The top 10 trades from this crazy and historical year. Did you manage to join in on any of these? Think we missed any? Let us know below in the comments. Here's to a healthy, happy, prosperous 2023! - Team TradingView ❤️❤️❤️
LEducation
by TradingView
63
History & Halving of Bitcoin from 2009 to 2022● October 31, 2008, Nakamoto Satoshi, known as the developer of Bitcoin, published a paper called Bitcoin: P2P Electronic Money System on the Internet. ● January 3, 2009, the first open-source Bitcoin client was created. Satoshi Nakamoto obtained 50 BTC through the first mining. This is commonly referred to as the Genesis Block ● May 22, 2010, Rogramer Laszlo Hanyetz delivered two pizzas of Papa Jones and paid for them in 10,000 bitcoins ● August 22, 2010, Bitcoin's first and last technical error occurred ● April 18, 2011, Namecoin, the world's first altcoin, appeared. ● September 27, 2012, the Bitcoin Foundation was formed. ● December 6, 2012, the first Bitcoin exchange in Europe obtained a banking license. ● October 29, 2013, the first Bitcoin ATM was installed in Vancouver, Canada. ● Vitalik Buterin Ethereum was first founded in 2014 ● February 26, 2014, Mount Gox (www.mtgox.com), the second largest Bitcoin exchange, was closed. ● January 6, 2015, Europe's third-largest bitstamp on the Bitcoin exchange revealed that its wallet had been stolen through hacking. ● December 2017, $19764 achieves a new reporting point ● In November 2018, a bill banning Chinese cryptocurrency mining and exchanges was issued ● It has been about 487 days since February 21, 2018, when $11,000 was reached on June 22, 2019. ● Bitcoin was designated as the world's first legal currency in El Salvador on June 9, 2021. ● April 14, 2021 achieved the highest point in Bitcoin history of 68944$ ● February 24, 2022: Ukraine's Russian War breaks out ● May 2022 Luna and FTX incident occurred
BNC:BLXEducation
by WhaleGO_BTC
16
THE PROCESSTHE PROCESS 1. Look at the Market State - The Market State column shows the state for all three broad market indices (Green = Bull Uptrend, Light Green = Bull Pullback, Yellow = Bear Rally, Red = Bear Downtrend) 2. What bucket of Volatility - The Market Vol Levels column tells you what level of volatility we are in currently. (Green under 20 = Trending Market, Yellow between 20-30 = Choppy Market, Red > 30 = Whipsaw Market with large moves usually to the downside. You can look to buy and hold assets for longer during Green Markets. In yellow markets you need to be more active and be willing to accept small gains. Red markets are a time to be very conservative and to consider investing in inverse ETFs and/or selling short if you can. 3. SP500 Volatility Structure - The SP500 VIX Volatility column shows a shorter timeframe. A favorable environment has numbers rising as you go down the column. If the first number in the column is higher than the third number in the column , that is a sign there is stress in the overall market to the downside 4. What to buy - keep and open mind and consider all asset classes (stocks, bonds, real estate, commodities and currencies). Certain asset classes perform better than others in different market environments. If possible diversify between multiple asset classes if the data shows multiple asset classes are performing well. If you are only buying individual stocks, do the same and consider buying stocks in multiple sectors. 5. When to buy - Look to buy strength on pullbacks and sell weakness on rallies. Wait for reversals in price either back to the upside for longs or back to the downside for shorts. This means when price reverses and goes above the previous days high for longs, or reverses and goes below the previous days low for shorts. 6. How much to buy - Position sizing is one of the most critical aspects for long term success. There are multiple ways to position size. We prefer to size based upon risk and volatility. For example, we don't like to risk any more than .5% of our account on any position enter. Our risk per position is determined by the volatility of the asset. The formula looks like this...Account Size * .05 = Total Risk per position. Total Risk / (Entry Price - Stop Price) = Number of Shares we can purchase. Our stop price at entry is always 3 * ATR. The ATR of each asset is in the table in the first column to the right of the 15-period history. This must be kept consistent with all new positions and your feelings about one trade vs another should not factor into your sizing decision. 7. How to buy - This is a little of personal preference. Once you determine the size of the position, some people buy the whole position at once. Others enter in pieces. We prefer to enter in pieces and enter 50% of our position first, a second tranche of 25% quickly once the position moves in our favor, and then the last 25% tranche shortly after again if the position is profitable. If we enter any of the first two tranches and the position goes against us, we will not enter the remaining tranche(s) unless the position once again becomes profitable. 8. Managing the position - Positions should be looked at daily. Alerts can be used to alert you if something dramatic is happening during the day. If price moves in your favor initially you should move your stop up with it keeping it 3*ATRs below the current price if you are long and vice versa if you are short. Never move it lower if the price pulls back for longs or higher for shorts. Once the position moves 3 ATRs above your entry price your stop will be at breakeven. From this point on it is good practice to take some of the position off, taking some profits off the table and lowering your risk of giving all your profit back. Particularly if we are in a Choppy Market. When you are in the position, you should be monitoring the table to see any signs of potential weakness (red colors).
CME_MINI:MNQ1!Education
by mbrannigan
14
Advanced Bull Flag ConceptsHave you ever wondered why price action sometimes forms a bull flag pattern? Have you ever wondered if there is a way to predict whether a bull flag will break out before it actually does so? In this post, I will try to address these questions by presenting a couple of theories about the nature of bull flags. Bull Flag Theories (1) The flag structure of a bull flag tends to form along Fibonacci levels, with the ideal flag proportion being an approximated golden ratio to the flagpole; and (2) Fibonacci and regression analyses can provide useful insight into whether price will successfully break out of its bull flag pattern, sometimes long before price even attempts to do so. I will try my best to clearly explain both theories in detail below. Note: Although this analysis is also generally true for bull pennants, bear flags, and bear pennants, to keep things simple I will focus solely on bull flags. Additionally, this analysis is generally true across timeframes. Part I - The Basics of a Bull Flag First, let's begin with the basics. As shown in the image below, bull flags form when an asset is in a strong uptrend. The uptrend forms the flagpole of the bull flag structure. The flag structure forms when price consolidates, usually in a falling trend. This consolidation phase is often characterized by price oscillators rotating back down while the price retraces only a small part of its prior upward move. From a market psychology perspective, bull flags often form when most market participants who bought the asset continue to hold it expecting the uptrend to resume, while only a minority of market participants sell (or short the asset) as its price corrects downward. The bull flag pattern is a continuation pattern because it reflects the market's general expectation that price will eventually resume its upward move. Once the price definitively breaks above the upper channel of the flag (often with strong momentum and high volume), the bull flag pattern is validated. Upon breakout, the expected move up is equal to the vertical height of the flagpole. Part II - The flag structure of a bull flag tends to form along Fibonacci levels, with the ideal flag proportion being an approximated golden ratio to the flagpole Here's where things begin to get interesting. Below is the golden ratio. Two quantities, a and b (where a > b ), form the golden ratio if their ratio is the same as the ratio of their sum to the larger of the two quantities. (See the equation below) The equation above shows the Greek letter phi which denotes the golden ratio. Phi is equivalent to a/b when such ratio is also equivalent to (a + b)/a. Although bull flags can take various forms, it is my hypothesis, based on chart analysis and research, that the most perfectly structured bull flags (ones that also have the highest probability of successful breakouts) occur when the flag forms a golden ratio to the flagpole. Mathematically, this means that the vertical height of the flagpole is equivalent to (a + b) and the vertical height (i.e. the width) of the flag is equivalent to b. This is also to say that price retraces down to the 0.382 Fibonacci level as measured by applying Fibonacci retracement levels along the flagpole (or to the 0.618 point on the vertical height of the flagpole if one measures from the bottom to top). I realize that this can be quite confusing, so let’s walk through some visualizations. Let's first visualize this hypothesis using the golden rectangle. Below is an image of the golden rectangle. A golden rectangle is composed of a square (with sides equal to a) and a smaller golden rectangle (with width equal to b and length equal to a). Now let's rotate the golden rectangle to better visualize the hypothesized flag pattern. The bull flag is hypothetically an approximation of the golden rectangle, whereby the width of the flag is in a golden ratio approximation to the length of the flagpole. In the illustration below, there are multiple bull flags contained within a Fibonacci spiral. The spiral is made up of golden rectangles, with each larger golden rectangle containing a smaller golden rectangle inside it. The smaller golden rectangle is the flag structure, and the length of the larger golden rectangle is the flagpole. One can think of the Fibonacci spiral and the golden rectangles as a series of bull flags that build on top of each other in a repeating pattern. In this diagram, price is represented by the increasing length of the sides of each golden rectangle. In other words, the price on a chart can be seen as spiraling higher after each bull flag breakout. Of course, not all bull flags form a structure that approximates the golden ratio, but it is my belief that in forming a bull flag, price action is aspiring to achieve as close of a golden ratio approximation as it can. I believe that the bull flags that best approximate the golden ratio structure also present the highest probability for a successful break out. To learn more about Fibonacci spirals, including the golden spiral that Fibonacci spirals approximate, you can check out this Wikipedia article: en.wikipedia.org Part III - Fibonacci and regression analyses can provide useful insight into whether price will successfully break out of its bull flag pattern, sometimes long before price even attempts to do so. To see how Fibonacci levels and regression analysis can give insight into whether a bull flag will break out or break down before it does so, let's consider an example. Let’s consider the massive bull flag that the iShares Russell 2000 ETF (IWM) formed in 2021. In 2021, the monthly chart of IWM formed what appeared to be a bull flag, as shown below. Now let's see why Fibonacci analysis and regression analysis were warning that this bull flag was not likely to break out successfully. First, IWM's price did not retrace to a Fibonacci level before attempting a breakout (when using the pole as the Fibonacci retracement reference point). In the chart below, we see that price tried to break out, without even so much as retracing down to the highest Fibonacci retracement level: $196.71. By not undergoing Fibonacci retracement, price did not give its oscillators the opportunity to rotate back down fully. Instead, price remained overextended at the time it attempted to break out. Now let's look at regression analysis. Below is a log-linear regression channel that contains IWM's entire price history. As noted in my prior posts, a regression channel simply indicates how far above or below the mean (or average) price an asset's current price is trading. In the regression channel above, the red line is the mean price, the upper channel line is 2 standard deviations above the mean, and the lower channel line is 2 standard deviations below the mean. A successful breakout of the bull flag would have taken IWM's price way above its regression channel, to a level that is too many standard deviations above its mean price for us not to question the probability of the breakout’s success. Achieving the full measured move up would have been extremely unlikely, assuming that the regression channel is valid and that price tends to revert back to its mean over time. What was more likely than a breakout was a breakdown, and a reversion back to the mean, which is what ended up happening with IWM. Another interesting note about IWM’s bull flag is that it presented a false breakout in November 2021. This false breakout was presenting multiple warnings signs including being a UTAD test of a Wyckoff Distribution. As shown below, however, another important clue that the November 2021 breakout would likely fail was that the breakout was not confirmed when comparing IWM to the money supply (M2SL). See the chart below. One can interpret this chart to mean that in late 2021, IWM’s price was rising because the central bank was increasing the money supply, but not due to improving strength of the underlying companies that comprise the ETF. Using the money supply as a ratio to an asset elucidates the true inherent strength of the asset's value. To understand more about why the money supply can be used in this manner, you can check out my post below. Part IV - Additional Comments I have a few additional comments. I usually use Fibonacci levels on a log-scale chart to identify Fibonacci spirals because Fibonacci spirals are logarithmic spirals. However, when using Fibonacci levels based on log scale, the ratios, percentages and numbers, can seem quite confusing because they are logarithmically adjusted. If you choose to replicate my process, please be mindful of this. While using log-scale charts is critical for higher timeframes (e.g. the monthly chart or higher), I have not identified much benefit to using it on shorter timeframes. In a prior post, I noted that Plug Power (PLUG) is currently forming one of the best-looking log-scale, golden ratio bull flags I have ever seen. If my above hypotheses are true, I would expect to see PLUG move dramatically higher in the years to come. For more information about PLUG, you can read my post linked below. (This is not a solicitation to buy PLUG. Please do your own research and carefully consider all risks.) At the risk of making this post too long and too dense, I just want to briefly note that it is also my hypothesis, based on observation and research, that the golden ratio is where many S-curve dilemmas are solved. If you don't know what an S-curve dilemma is and you'd like to read about this you can see my post below about Jumping S-Curves . In short, an S-curve dilemma is another way of conceptualizing the question of whether a bull flag will break out or break down. I hope that someone finds value in this post. I spent a lot of time studying, researching, analyzing, and cogitating the mathematical nature of price action to reach many of the conclusions here. Thank you for your valuable time in reading my post.
AMEX:IWMEducation
by SpyMasterTrades
51