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Howtotrade

Pattern Day Trader RuleI’m Markus Heitkoetter and I’ve been an active trader for over 20 years. I often see people who start trading and expect their accounts to explode, based on promises and hype they see in ads and e-mails. They start trading and realize it doesn’t work this way. The purpose of these articles is to show you the trading strategies and tools that I personally use to trade my own account so that you can grow your own account systematically. Real money…real trades. Now I want to talk to you about the pattern day trader rule because this rule requires that you have at least $25,000 in your trading account if you are day trading. Here’s the tricky part. The tricky part is that you could trigger this rule even if you’re only swing trading, and not day trading, which is why it’s important that you are aware of what the pattern day trader rule is. I will give you examples of what can trigger it, even if it’s accidentally, and I’ll break down what then happens if you trigger it. Most importantly, I want you to be aware of how you can avoid it. What Is The Pattern Day Trader Rule? So what is the pattern day trader rule? According to FINRA, who set the rule, a pattern day trader is a trader if you execute 4 or more day trades in 5 trading days. So if you execute 4 or more day trades in 5 trading days, then you’re being flagged as a pattern day trader. This is not a good thing. So what actually is a day trade? A day trade is a trade that you open and close, during a trading day. So as an example, if you buy a stock at the open, at 9:30 Eastern Time, and then sell it before 4:00 pm Eastern Time, you are placing a day trade. Now, very, very important: this whole rule only applies to stocks and options. It does not apply to futures, forex, or binary options. It only applies to stocks and options. How To Trigger The Pattern Day Trader Rule How can you actually trigger this rule even if you’re swing trading? Well, it actually happened to me very recently. My head coach, Mark Hodge, and I, we were trading with our Mastermind members. I asked Mark to place a trade in my account, but he accidentally placed it in the wrong account. When something like this happens, I have a rule. “When you make a mistake, liquidate.” So I asked Mark to close the position, and when he did that counted as a day trade. So we opened the trade, realized we made a mistake and closed it right away. This lead to me having one strike in this account. And again, if we would get 4 strikes within 5 business days, then we are flagged as pattern day traders. Now, here’s another scenario. Let’s say that we enter a trade tomorrow and it hits the profit target or stop loss on the same day. So this would be another strike because now we are also entering and exiting during a trading day. So as you can see with this, even if you’re not day trading, it is possible that this could happen a few times. If this happens 4 times within 5 trading days, then you’re flagged as a pattern day trader. What Happens When You Trigger The PDT Rule? What happens when you trigger this rule? Well, first of all, if you have more than $25,000 in your account, nothing happens. This is because the pattern day trader rule says, if you are a pattern day trader, then you need to have $25,000 in your account. Now if you don’t have $25,000 in your account, then you will be restricted to trade on a cash basis only for 90 days. What does this mean? Well, see, as a day trader, you actually do need a margin account, and when you trigger the pattern day trader rule and cannot put $25,000 in there, this means that now you are restricted to trading with cash only. So let me give you an example. Let’s say you are trading the Wheel trading strategy, and you put $20,000 in an account. This means if you put it into a margin account, that you get $40,000 in buying power. So when you trigger the day trading pattern rule, you no longer get this buying power here, the 2:1 leverage. You are now basically going back to whatever cash you put in there when you trigger this rule. How To Avoid Triggering The PDT Rule? Now the question is, how can you avoid this? Well, and I want to give you three tips for how to avoid it. Number one, have $25,000 in your account because if you have $25,000 in the account, then triggering the rule won’t matter. What about if you don’t. Number two, you want to make sure that you count the number of day trades. Leave the date you placed a day trade on a sticky note, and count the number of day trades that you do even if it is accidental, so you can keep track of how many strikes you have. Number three, you can avoid it here by trading a cash account. So if you’re not trading a margin account, you don’t have to worry about it. Then, of course, if you are trading futures, forex, bitcoins, so cryptocurrencies, or if you are trading binary options, this is also when the day trading pattern rule does not really matter. Summary Now you know what the pattern day trader rule is, how you can trigger it, even if it is accidentally, what happens when you trigger it, and how you can avoid this. So let me ask you this, at this point, was this helpful at all? If so, feel free to share this video on Facebook, on Twitter, and I’ll see you for the next article.
NASDAQ:NDXEducation
by rockwelltrading
1
UNI 🚀 [RECAP + TRADE SETUP GUIDE] 160% !! Here is the complete breakdown of the UNISWAP trade. On January 4th UNI made its last critical trend support retest at around 4$. 🔷After a few it was confirmed to continue an upwards channel. That was until we reached the critical $7 resistance cluster. Looking back in September UNI had exploded and saw a massive sell off, (most likely from the free air drop). We had scene small accumulation in this area which marked critical resistance / support ($6.80 - $7.50). 🔷On JAN 16th we closed above this resistance level saw buying activity after confirmation. Usually retail traders will FOMO sell after thinking they have reached the peak. This then caused the price to move back towards critical support levels. Paying attention to the wicks, we can see price had moved down to $6.80 and quickly climbed back up. This indicated heavy demand getting filled (people buying the dips). 🟢 After confirmation of the critical support cluster holding. We can make the predication of making a higher high. 👉It is always BEST to enter your trades after confirmation. In this case we had waited about 6 days to enter the trade. 👉If we had entered at the first break out, most of us would have fallen to FOMO selling. ⭐️ Entry : $8.00 ✅ 160% + Spot gain! ✏️ Current View Looking at the current price, we can see UNI had exploded again closing above its trend resistance. We are currently retesting this level and can see long wicks at the support cluster (high lighted area). The long wicks are indicating demand is getting filled. Remember to make your entries after confirmation of 4H candle holding above $8.20 Hopefully this can help you enter trades strategically with less risk level! Thank you for your time ❤️ Please give this a 👍 if learned something new :) Feel free to view previous analysis and results below ! This is not financial advice. The guide above should only be used for educational purposes.
by BigLava
8
XRP/USDT : Bullish flag and a breakout on current candle BINANCE:XRPUSDT Hello everyone 😃 XRP has been formed a bullish flag on current level and now it's breaking flag's resistance. Also XRP had a bullish crossover on EMAs, Everything is being green for this coin after a while. As current candle is growing, breakout is being more possible. Bullish flag : 🔴 It can be a fake breakout, So set tight SL. There is a high possibility for XRP to retest supports. Attention: this isn't financial advice we are just trying to help people on their own vision. Have a good day! @Helical_Trades
by Helical_Trades
Bitcoin - 10900 pips/$ Again - How Do My Trading Ideas Work ?!For today - all growth from 32000 (almost) achieved. The last mark is to close the position at 38150. And stop loss at breakeven. (already closed position) Profit - 6150pips / $ The second position was opened at 36850 - and the first target position was also closed at 38150 - 1300 pips / $ in our wallet. The third position is the short position from 37000. Now 3 profit targets reached 3400pips / $ Total for the day - Profit - 10900pips / $ - loss 0 If the level 33800-34400 is held, you can look for an entry point into the bosom, since we have formed 2 top ones, and the calculation of the take profit can be determined by the internal percentage - to the tops. Watch this level carefully, it will show you the further direction of the price.
Short
by UnknownUnicorn13204076
Bitcoin - How to trade profitably? Free positions (Open Trade)Btc/usdt Hello dear friends. I will choose for you, recommendations and reviews that at that time no one could have imagined that it would be so! Do not think that I am such a tough trader - no, I was also mistaken and will be mistaken, but everything that I write happens, sometimes I do not observe this and bear a loss, but it will be all the same! Green rectangles - achieved profit - red - loss. - total for 3 months - Profit: 123850 pips / $ ✅ Busted 13950pips / $ ⛔️ I can’t help but praise myself, I can’t help but share this with you, but every trade I made, we went through together. And since we have the end of the month, I summarize. I can't help but show you how many trades we made - how much profit and loss we have in our wallet, but it was insanely cool. I am happy that I trade with you, and happy that you have earned with me. On the chart, I have selected only a part of the position ... But we started trading with you when bitcoin was at 16,000. And everything, almost everything that can be achieved - we took it. I am very glad that each of you was able to earn with me. Please, observe risk management, money management, do not overstate the lot in a position, trade by take profit, take profit at strong levels, and be flexible in trading. This is what we have been all this time. Thank you for being there, thanks for 300 subscribers. I hope you continue to benefit from my trading reviews. Have a nice day everyone, profit and good luck.
by UnknownUnicorn13204076
4
BTC/USDT : How to trade in volatile market BINANCE:BTCUSDT Hello everyone 😃 BTC has been rejected from 40K and now it's moving above 32.5K support. Now EMA 100 is supporting movement, and it's good at all ! But we expect a wick on 30.5K level. Main target is 37K, Now indicators are at limits and they are Turning into Bullish phase again. 🔴 This upward movement is for short-term and it be canceled below 32.5K. Attention: this isn't financial advice we are just trying to help people on their own vision. Have a good day! -Helical_Trades
by Helical_Trades
2
🎓 EDU 4 of 20: A PROFESSIONAL TRADING APPROACH (FIST)Hi traders, wish you a happy and prosperous New Year. In the last EDU post, we touched on the main factors that move currencies in the short, medium, and long run. Professional traders follow these influences to determine what currencies to buy and sell. However, each trader has its own time horizon, so following long-term market determinants if you want to hold your trade for a few hours doesn’t make much sense. In fact, it’s counterproductive. Currencies can move in the opposite direction of their Purchasing Power Parity (PPP) rate, or Terms of Trade (ToT) for months and even years. While these models work well to provide us with a possible market direction in the long-term, their short-term track-record is rather poor. At CommaFX, we hold our trades mostly intraday or for a few days, and close them ahead of the Weekend (if a trade is still open on Friday.) This way, we can make more short-term trades and avoid the market risk of holding trades over the weekend. News that are releases over the weekend can have a significant impact on open trades after the markets open on Monday! I am following the FIST approach, which is a global macro approach that allows us to take only high-probability trades. FIST stands for Fundamentals, Intermarket, Sentiment, and Technicals. On the Fundamental side, I am following: 1. The current business cycle of a country through leading economic indicators such as housing starts, durable goods orders, and PMIs. Countries that are in the expansionary phase of the business cycle see their currencies strengthen, while countries that are in the recessionary phase usually see their currencies weaken over time. 2. Important news and themes: Such as Brexit, US stimulus, OPEC meetings, Central Bank commentaries... 3. Economic Indicators used by central banks to adjust their monetary policy: inflation rates, labor market indicators, economic growth. On the Intermarket side, I am following the performance of other markets and asset classes that can have an impact on the FX market, such as: 1. Commodities: For commodity currencies like CAD (oil), INR (oil), AUD (copper, gold), NZD (dairy). 2. Stocks: The performance of the stock market can provide clues for future exchange rates (e.g. higher Nikkei 225 usually leads to JPY weakness). 3. Bonds and yields: Global capital chases the highest yield. When bond prices fall and yields rise in a country, the country’s currency will often strengthen. If I see a strong divergence in the Intermarket (for example oil rises but the Canadian dollar falls, such as the case in the previous week), it gets our attention. I become bearish on the CAD from an Intermarket perspective. On the Sentiment side, I am following risk appetite indicators and market sentiment as shown by the options and futures markets. What I pay attention to is: 1. The performance of risky assets vs safe-havens: stocks (risky), risk-currencies (AUD, NZD), oil (market optimism), metals (silver, copper) vs safe-havens such as gold, bonds, JPY and CHF. When risk sentiment is positive (risky assets are bought and safe-havens sold), I become bullish on stocks, AUD and NZD, and bearish on the JPY, CHF, and USD, for example. 2. Market positioning: I follow the positioning of fast money (hedge funds) and smart money as shown by the Commitment of Traders report. When the big guys become bullish on a currency and increase their bullish bias week over week, I become bullish as well. 3. Options put/call ratio: The put/call ratio shows how many put and call contracts are active for a currency. As the ratio rises (i.e. more puts than calls), this is usually a bearish sign for a currency, and vice-versa. Finally, once I see a promising trading opportunity in the market after performing my Fundamental, Intermarket, and Sentiment analysis (matching strong vs weak currencies), it’s time to identify possible entry and exit points with the use of Technicals. Bear in mind that I know what direction I want to trade (i.e. short USD/CAD) before even opening a price-chart! The chart is only used to find suitable levels for a selling position. On the technical side, I focus on important retracement levels, volume profile, and price-action. I don’t trade breakouts, but wait for the market to come to my level (using LIMIT orders) to enter into a trade with an attractive reward-to-risk ratio. This was a short introduction to how professional traders find trading candidates in the market. Unlike the usual retail trader who focuses only on charts, we know what we want to trade before even opening the chart! A chart is the last thing I pay attention to, and my technical analysis takes me around 5 minutes to find where I want to enter into a trade. 90% of the time, I am only focused on fundamentals, intermarket, and sentiment. If you found this post useful, please hit the “LIKE” button and follow. Also, I’ll try to respond to all questions you might have, just post them in the comment section below. Stay tuned for the next part of our Educational Series! In total, there will be 20 posts that will CHANGE the way you trade and look at the markets – PROMISED!
Education
by MujkanovicFX
1
ATOM/USDT : Broke Tringle's higher and now breaks ResistanceCOINBASE:ATOMUSD Hello everyone 😃 Atom had a breakout from Key level resistance and now MACD is being Bullish. Also Volatility is going to have a Bullish crossover, By the Way on daily view, ATOM is Strong Bullish : 🔴 IF Bitcoin can maintain its current price levels And consolidate longer so the altcoins may have the chance to rally up again. Attention: this isn't financial advice we are just trying to help people on their own vision. Have a good day! - Helical_Trades
Long
by Helical_Trades
ETH/USDT : Retest on Pivot point and supply zone !BINANCE:ETHUSDT Hello everyone 😃 ETH had a retest on Supply zone ( ETH did this Retest for 2nd time ! ). ETH is moving into Bearish Wedge, But it's to early to consider it as Bearish phase. Now ETH have more space on Funding Rate and makes it more Bullish than Before !! 🔴 As ETH is Above 900$, target is 1350$ or more... Attention : this is not a financial advise we just try to help people on their own vision. HAVE A GOOD DAY - Helical_Trades
by Helical_Trades
LTC/USDT : Critical point, How to trade now ?BINANCE:LTCUSDT Hello everyone 😃 LTC is moving Above a Bullish Trendline and Now it don't have enough Volume to Break resistance. Indicators was Slightly Bullish and now they are Turning Bearish, Above Trendline We're still Bullish... We expect a retest on EMA 50 and Ichimoku cloud but Below Trendline, Will make another Directions For LTC. So Next Candles are very important, If LTC Breaks Resistance Target will be 215$ at Next resistance zone ! 🔴 Watch for Next Hourly Candles, Also BTC is near to FIBBO resistance and Now it's moving Below Bullish Trendline. Attention : this is not a financial advise we just try to help people on their own vision. HAVE A GOOD DAY - Helical_Trades
by Helical_Trades
ADA/USDT : ATH Options, How to trade now ? BINANCE:ADAUSDT Hello everyone 😃 ADA has broken 0.25$ resistance zone and now it's moving to ATH resistances. For now we expect a retest on lower support line which is near to Ichimoku cloud and EMA 50 support line. Main Target is 0.32$ above it we will take another long to ATH. 🔴 Below 0.23$ will change Direction. Whole market is in Over Bought zone... Watch for it ! 📍 It could Grow from current point. Attention : this is not a financial advise we just try to help people on their own vision. HAVE A GOOD DAY - Helical_Trades
by Helical_Trades
LINK/USDT : Directions, How to trade ?BINANCE:LINKUSDT Hello everyone😃 Link Is above Ichimoku Cloud and MACD is Bearish, Also Volatility had a Bearish Crossover. we Expect a retest on EMA50 and Target will be 15.6$, By the we have Bullish flag on 1 TF and If it works, LINK will head to 15.6 from this point. Any 4H closes above 14.6$ will make it more Bullish and It can reach higher resistances. For Now BTC is at Resistance zone and it's Critical, We expect a range movement zone on BTC and it could make more space for ALTs... 🔴 Below 13.25$ will change direction, And we have a FIBBO time zone cross on 11th January, watch for it ! 📍 We Update our status, When directions changes. Market volatile and Risky ! Attention : this is not a financial advise we just try to help people on their own vision. HAVE A GOOD DAY - Helical_Trades
by Helical_Trades
ETH/USDT : What's next candles direction ?! BINANCE:ETHUSDT Hello everyone 😃 ETH is moving just like past months, So We decide to show up what happened on last months candles ! As You can see ETH breaks Wedge and its being neutral on Base 2 ( mentioned on chart ). By the way, Indicators are touching limits and we expect a correction after it... Also BTC is affective on ETH's movement. 🔴 We will analyze BTC on next !! Attention : this is not a financial advise we just try to help people on their own vision. HAVE A GOOD DAY - Helical_Trades
by Helical_Trades
1
BTC/USDT : Bearish triangle, AIM for 25K BINANCE:BTCUSDT Hello everyone 😃 BTC Has formed Bearish triangle on 17th December and failed to handle it. But now, There is no more BTC buying from Grayscale at the moment and Funding Is getting very positive ! 🔴 MACD is being bullish on 1H timeframe but it won't last too much... 📍 As BTC is moving into triangle we won't take any side, Wait for break from triangle. Attention : this is not a financial advise we just try to help people on their own vision. HAVE A GOOD DAY - Helical_Trades
by Helical_Trades
3
XRP/USDT : Bullish Wedge is about to end BINANCE:XRPUSDT Hello everyone 😃 XRP formed a bullish wedge and now its moving into it, We expect a retest on bottom and then breakout is possible ! You can enter XRP on a retest above wedge after breakout... 📍 Stochastic RSI and Stochastic Rainbow had a bullish crossover. 🔴 XRP is still moving into wedge it's not safe to take any position before breakout !! Attention : this is not a financial advise we just try to help people on their own vision. HAVE A GOOD DAY - Helical_Trades
by Helical_Trades
YFI/USDT : Breakout confirmed BINANCE:YFIUSDT Hello everyone 😃 YFI formed a triangle recently and it breaks triangle and take hold above it,.. For now we expect a retest on triangle and it could be a good entry zone to take long position on it ! By the way Stochastic Rainbow had a bullish crossover, which can confirm our vision. 🔴 EMAs can hold price for hours so sideway movement is also possible. Attention : this is not a financial advise we just try to help people on their own vision. HAVE A GOOD DAY - Helical_Trades
by Helical_Trades
🎓 EDU 3 of 20: Here is What Moves the Forex Market 📈EDU 3 of 20: What Moves the Forex Market? Hello traders! First of all, I wish you a merry Christmas and a happy holiday season. Now that markets are closed and liquidity is thin, we have got some time to learn more about what it takes to become a successful Forex trader. In the last educational post (2 of 20), we have covered why you shouldn’t rely only on technical analysis in your trading. That’s the most common mistake that new traders make! They follow only charts, and trade when they see a trendline breakout, triangle breakout, MA crossover, or any other signal that won’t return consistent profits over the long run. Professional traders in banks and other large market participants don’t trade with technical analysis! We do use technical levels to find appropriate entry and exit levels, but we will never enter into a trade because of a simple trendline breakout! That’s why institutional traders make millions in the markets, and the average retail trader loses 90% of its capital within 90 days of trading. My mission is to teach you how to trade like a professional trader. So, what are my credentials to claim this? I am a full-time profitable trader and follow the markets since 2008, I worked in the trading department and have first-hand experience, and my passion for the markets helped me to gain academic degrees in financial markets (MSc in fundamental analysis of currency markets.) So, what moves the Forex market? What causes the EUR/USD pair, for example, to move from 1.15 to 1.20? Here are the main determinants in the short-term, medium-term, and long-term. Short-term determinants: 1. Trend-following behavior and herding effect : Market participants tend to buy into uptrends and sell into downtrends, which accelerates the original moves and causes the trend to continue. 2. Investor sentiment : When investors are bullish on a currency, they tend to buy. When they are bearish, they tend to sell. There are ways to measure investor sentiment in the market, and we’ll cover this later in our educational series (hint: We use the futures and options markets to measure investor sentiment) 3. Risk appetite : When investors are willing to take on risk (risk-on), they tend to buy riskier high-yielding assets, such as stocks and high-beta currencies like the AUD and NZD. When they are risk-averse, they tend to park their capital in safe-havens (“Flight to Quality”) such as bonds, gold, the JPY and the CHF. If you can measure the current risk appetite, this can help you identify great day trading opportunities. 4. Market positioning : Certain groups of market participants take longer to change their positions, while others are quicker in rebalancing their portfolios. When large players show a tendency to buy a certain currency, we can expect higher prices for the currency in the future. Real money (like pension funds) are less price-sensitive, while smart money (like hedge funds) are more price-sensitive and quicker in identifying new market trends. Medium-term determinants : 1. Real interest rate differentials : Currencies follow interest rates, and Forex traders are basically interest rate traders. The real interest rate differential between two countries tends to be a leading indicator of future exchange rate movements. The real interest rate represents the nominal interest rate minus the current inflation rate. We follow the real interest rate differential of 10-year government bonds of respective countries (like between the UK and the US for the GBP/USD pair) to get a hint of where the currency pair is heading to. 2. Monetary and fiscal policy : Changes in monetary and fiscal policy can create strong and long-lasting trends in the Forex market. Usually, a tighter monetary policy will put buying pressure in a currency, while looser monetary policy will exert selling pressure in the currency. Tighter fiscal policy is usually bearish for a currency, while looser fiscal policy (i.e. more public investments) is usually bullish for a currency (at least until more fiscal spending starts to negatively impact a country’s budget deficit, which is then bearish for a currency!) 3. Trends in the current account : Countries that run a current account surplus (i.e. they export more than they import) often see their currency appreciate (rise in value) because of capital inflows and higher foreign demand for their currency. A typical example for this is Japan in the 80s and 90s (When the US imported Toyotas, they had to buy Japanese yens to pay for them). Countries that have a current account deficit (i.e. they import more than they export) see capital outflows, which then lead to currency depreciation (fall in value). Long-term determinants : 1. Purchasing Power Parity (PPP) : The PPP is a macro-economic principle that says that different currencies need to have the same purchasing power over time. Let’s say a Porsche costs 100,000 pounds in the UK, and 120,000 USDs in the US. If the current GBP/USD rate is 1.40, a buyer from the UK could exchange 100,000 pounds to 140,000 USDs and buy the Porsche in the US for 120,000 USDs. Over time, this demand for US dollars will cause the GBP/USD exchange rate to fall towards 1.20, which is the Real Exchange Rate according to the PPP. Of course, the buyer has to take into account import taxes and shipping costs to the UK, as well as the time required to complete the purchase and import the car. We also have to make the assumption that Porsches are the same and have the same built quality in the UK and the US. It can take years until a currency pair finally moves towards its PPP equilibrium level. Fun fact : The Economist magazine has created the Bic Mac Index, which compares the prices of a McDonald’s Big Mac in different countries to calculate the PPP exchange rate for different currencies. 2. Terms of Trade : Terms of Trade for a country measures the trends in prices for imports and exports. For example, when oil rises, oil exporting countries will experience a positive trend in their Terms of Trade and likely see their currencies rise in value (take Canada for example.) On the other side, countries that rely on cheap oil will likely see their currencies fall in value when the price of oil rises (India for example.) In the upcoming educational posts, we'll combine the most important currency determinants into an effective framework used by professional traders: The FIST analysis. The stuff I deliver here for free is world-class trading education! There isn't anything like this on the world wide web, and you'll learn a full and profitable trading framework (analysis + execution + risk management) used by professional traders! We are still developing your "Analyst brain", and will then move on to your "Trader brain" (execution) and "Manager brain" (risk and money management) in this fully free 20-part Educational Series! Upcoming post: Introduction to FIST Trading Don't forget to FOLLOW and LIKE to receive new posts! Also, if you have any questions, let me know in the comment section below. Happy holidays again!
Education
by MujkanovicFX
2
🎓 EDUCATION 2: STOP Trading (Only) with Technicals ❌Happy Thursday traders! It’s time to continue with our Educational Series on how to become a successful trader with a professional trading approach. It's holiday season, and closed markets mean more time to sharpen our trading skills! Let's go... In the last post, we touched on the main ingredients of a successful trader (check the link to "related idea"). Let’s reinforce those again: 1. Market Analysis – Your “Analyst” side. Here, you are going to combine Fundamentals, Intermarket analysis, Sentiment analysis, and (the correct) Technical analysis (FIST approach). 2. Trading – Your “Trader” side. Once the analyst in you spots a promising trade idea, the trader in you is responsible to execute the trade with proper entry and exit levels. 3. Management – Your “Manager” side. Every trader is a risk manager. Your manager side is responsible to manage your trade and risk levels, scale in and out of positions, open the correct position sizes, evaluate the reward-to-risk of your trades, etc. Alright, so far we are still covering your “Analyst” side. Your analyst side determines whether you will buy EURUSD, sell GBPJPY, buy gold, and sell silver. It’s the part of your trading that constantly scans for profitable trade ideas and setups in the markets, and passes them on to your “Trader” side. Why You Shouldn’t Rely on Technical Analysis? The majority of new traders I see in the retail space place too much attention on technical analysis. They search the internet for TA articles, look for the “holy grail” indicator, read dozens of technical analysis books, but still don’t manage to improve their trading performance. The truth is, they don’t understand the markets. I don’t care how many TA books you’ve read in your entire life, if you don’t understand how markets work and what moves prices up and down, you won’t succeed as a trader. Unfortunately, almost every retail trading website promotes and publishes those articles, because they are attracting clicks of inexperienced traders. Here is a hint: When I worked in the trading department of a large European bank, I didn’t even look at charts. There are almost no charts and no indicators on the trading floors of big banks and hedge funds! Do you really think that banks will move hundreds of millions into a trade because the 50-day MA crossed the 100-day MA, or because the price formed a Head & Shoulders pattern? The first time you do this in a bank will likely be your last day as a professional trader. So why do retail traders trade like that? Because they don’t know of better ways to trade. No one has taught them that trading based purely on technical analysis will never work. It’s in nobody’s interest to teach you this because large market participants need the “dumb money”. Yes, they make a profit when you trade badly and lose money. So, what’s moving the market if it’s not technicals? The Forex market is the marketplace for the world’s currencies, and currencies are influenced by supply and demand. To be more precise, interest rates influence currencies, with higher interest rates increasing demand for a currency (therefore leading to higher prices) and lower interest rates decreasing demand for a currency (therefore leading to lower prices.) We as Forex traders are interest rate traders. We trade currencies based on (short-term) views about their future interest rates. For example, let’s say the market expects higher inflation rates (inflation represents the change in the price of goods and services during a year) in Australia, which could lead to a response from the Reserve Bank of Australia by hiking interest rates. This will create demand for the AUD (remember, global capital is always chasing yield), which in turn would lead to a higher exchange rate of the AUD. If you only followed technicals and identified a bearish divergence on the RSI in AUD/USD - and you entered short - it’s your fault. The pair would likely move higher on higher interest rate expectations in Australia. So, when do technical levels work? When the market trades in fair value (in fundamental equilibrium), you’ll find that simple technical rules work. If large market participants agree that the current exchange rate of a currency pair is “fair” given the current fundamentals, smaller players may move the market when the price reaches a support or resistance level, or when the price breaks above or below a triangle. Unfortunately, markets are always in a state of flux and rarely in equilibrium, so following other analytical disciplines (besides technical analysis) will improve your trading performance dramatically. This chart shows the Band of Agnosticism. This band represents a span of exchange rates where fundamental-based traders are unlikely to join the market because the market is already in a fundamental fair-value zone. As the exchange rate starts to approach the upper or lower band, fundamental-based traders (which happen to be large banks and hedge funds) start considering opening new positions. The volume of their orders pushes the price back inside what is considered fair value. Professional traders first look at a variety of other factors before they decide what currency pair they want to trade. Once we identify a good trading candidate (our “Analyst” side does that), then it’s time to open the chart and find areas where we could enter with a long position (and those are not trendline breakouts!) We will cover all of this, step by step, in the coming Educational posts. Don't forget to FOLLOW to receive all future trade ideas and educational posts! Happy holidays everyone. 🎆
Education
by MujkanovicFX
1
EUR/USD: It happens over and over again 📈Hi traders, I've been busy with trading and didn't have much time to upload new ideas. Sorry for that, here comes a short educational post. Trading isn't complicated, but it's complex. Certain patterns appear over and over again, and our job is to take advantage of them. Here is an example in EUR/USD. The pair broke above a major resistance level on the daily chart after Eurozone PMIs beat expectations this morning. The strong bullish candle means that large players didn't have time to accumulate euros at favorable prices. So what do they do? They drain liquidity (manipulate the market) to buy euros cheaper. Sell-side (banks) need euros in their warehouse to satisfy the demand of the buy-side (hedge funds). And for banks to make money, they need to buy euros cheaper, which is why most large candles are immediately followed by a pullback. Of course, this only works if fundamentals support the direction. In this case, EUR PMI numbers and broad USD weakness ahead of the FOMC means one thing: High-possibility of further strength in EUR/USD. Thanks for reading and stay tuned for more posts! Please hit the "LIKE" button and follow if you haven't already.
by MujkanovicFX
🎓 EDUCATION 1: What Does It Take to Become a Successful Trader?EDU 1: What Does It Take to Become a Profitable Trader? Hello traders. With this post, I am starting an educational series on TradingView unlike any other. We’ll go through all the aspects and nuances of becoming a professional, consistently profitable, and successful trader. Now, those are big words. You have likely heard them from various other sources that claimed to teach you the holy grail of trading or that offered some sorts of “secret indicators” that would pave the way to financial freedom. The truth is, nothing is secretive about successful trading. Thousands of professional traders are consistently profitable, and large institutional traders manage to beat the markets, year over year. The key is learning how to trade the correct way. That’s my trading approach as well: Institutional trading for the retail trader. I have been fascinated by the markets since the early 2000s. I am not only a self-taught trader, but also have an academic background that has helped me tremendously in understanding market forces and applying them in my daily trading. I enrolled at the Faculty of Economics in 2008, finished my undergraduate degree in technical analysis and my Master’s degree in fundamental analysis in the FX market. Since then, I have been following markets daily, created various trading strategies, backtested them, and chose the ones that work best for me. Alright, now it’s time to finally start the educational part. What does it take to become a successful trader? A successful trader is an analyst , trader , and (risk and psychology) manager – all at once. The analyst side of a trader generates trading ideas, the trader side executes the trades, and the manager side manages both the risk and psychological aspects of trading. We’ll go through each of them in this educational series. Trading is not about following technicals all day long. Professional traders and large players in this market don’t buy EUR/USD (or any other pair) when a Moving Average crosses above or below another Moving Average, or when the RSI shows overbought or oversold levels. Forget about trendlines and wedge patterns for a moment (how many times did you catch a fake breakout trading them?) and open your mind to a trading approach that combines: Fundamentals Intermarket analysis Sentiment analysis ...and (the correct) technical tools Those disciplines form the cornerstone of what I like to call the FIST analysis. We’ll use technicals only to enter into a trade after we already have a direction derived from the other types of analyses. So, this educational series will start with your analyst side (FIST), continue with your trader side (process/strategy/execution), and finish with your manager side (managing risks, managing yourself, position-sizing, scaling in and out of positions, etc.). By the end of the series, you’ll hopefully get a completely different picture of trading than you had before. If you find this trading educational series useful, please follow and hit the “LIKE” button. Have questions? Post them in the comment section below. Coming Up: Why Technicals Alone Are Not Enough?
Education
by MujkanovicFX