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Stay Ahead: Essential Tips to Avoid Trading PitfallsHello TradingView Community! I'm excited to share some valuable insights on trading pitfalls and how to navigate them effectively. Trading in financial markets can be a challenging journey, but understanding common pitfalls and methods to avoid them can significantly enhance your success. Here are 10 pitfalls traders often encounter and actionable strategies to help you steer clear of them: Having No Trading Plan: Entering trades without a plan can lead to impulsive decisions. Develop a clear trading plan outlining your goals, strategies, entry and exit points, and risk management. Using Strategies That Don't Match Your Personality: Align your trading strategies with your personality, risk tolerance, and lifestyle. A good match helps you stay consistent and focused. Having Unrealistic Expectations: Set realistic goals based on your initial capital and risk tolerance. Trading is not a quick path to wealth, so be patient and persistent. Taking Too Much Risk: Avoid over-leveraging and using excessive position sizes. Implement risk management techniques like stop-loss orders and diversification. Not Having Rules to Follow: Create a set of trading rules to guide your decisions. These rules provide structure and help you stay disciplined. Not Being Flexible to Market Conditions: Adaptability is key in trading. Monitor the markets and adjust your strategies as conditions change. Failing to Take Responsibility for Your Results: Own your successes and mistakes. This mindset empowers you to learn, grow, and improve your trading. Being Addicted to Volatility: While volatility can be exciting, avoid chasing it for thrills. Focus on making well-reasoned decisions based on your plan. Not Having a Process to Keep Track of Your Performance: Maintain detailed records of your trades and their outcomes. Analyze this data to identify patterns and refine your strategies. Not Dealing with Your Emotional Risk: Emotions can cloud your judgment in trading. Practice emotional intelligence and techniques like meditation or journaling to stay composed. Neglecting Proper Research and Due Diligence: Relying solely on tips or rumors can lead to poor decisions. Conduct thorough research and due diligence on potential trades and investments. Overcomplicating Your Trading Strategy: Complex strategies may not always lead to better results. Simplify your approach to focus on proven methods and avoid overanalyzing the market. Ignoring the Importance of Continuous Learning: The markets evolve, and so should your knowledge and strategies. Stay updated on market trends and continuously educate yourself to stay ahead. There is no trade without a stop-loss: This point emphasizes the importance of having a stop-loss in place before entering any trade. It highlights risk management as a fundamental part of trading, ensuring that you have a clear exit strategy to limit potential losses. If you have to re-analyze charts after being in a trade, you might be going in the wrong direction: This point underscores the importance of trusting your initial analysis and trading plan. It warns against second-guessing or changing your plan mid-trade, which could indicate you may be heading in the wrong direction. By implementing these strategies, you can enhance your trading experience and improve your performance over time. Remember, successful trading is a journey that requires discipline, patience, and continuous learning. I hope you find these insights helpful. Feel free to share your thoughts and experiences in the comments. Let's continue to support each other and grow as a community! Happy trading! RK💕 I am not Sebi registered analyst. My studies are for educational purpose only. Please Consult your financial advisor before trading or investing. I am not responsible for any kinds of your profits and your losses. Most investors treat trading as a hobby because they have a full-time job doing something else. However, If you treat trading like a business, it will pay you like a business. If you treat like a hobby, hobbies don't pay, they cost you...! Disclaimer and Risk Warning. The analysis and discussion provided on in.tradingview.com/u/RK_Charts/ is intended for educational purposes only and should not be relied upon for trading decisions. RK_Charts is not an investment adviser and the information provided here should not be taken as professional investment advice. Before buying or selling any investments, securities, or precious metals, it is recommended that you conduct your own due diligence. RK_Charts does not share in your profits and will not take responsibility for any losses you may incur. So Please Consult your financial advisor before trading or investing.
Editors' picks
NSE:NIFTYEducation
by RK_Chaarts
13
Price-Time Correlation: Through WavesPrice reflection through Waves We all know that price does not moves in a straight line, it moves in waves. A graphical representation of price with respect to time always gives us a wavy structure. If you notice carefully, on any chart, these waves reflect different characteristics. Some will be longer and quicker than the others while some will be smaller and slow. The behavior of these waves could help us in identifying strength and weakness in price and hence rational decision making. Waves Reflect Momentum The quick or slow action of a wave with respect to time indicates its momentum. A longer wave in a small duration of time is said to have more momentum than a wave of same length in a larger time duration. It should be noted that in trading, momentum of a wave is a relative term. It means that momentum of one wave doesn't make much sense unless it is compared with the momentum of another wave(s). It is through this comparison that we can discover strength and weakness in price action. Momentum or Human Behavior? Please do remember that when I say strength and weakness, that means the strength and weakness of market participants. Ultimately it is the human action and psychology that is playing in the background. In the foreground what we see are the waves on Price and Time axis. So, a weaker up wave would mean that buyers were not very strong in that up move. Or a stronger down wave would mean that sellers were stronger in that wave and so on. This contrasting behavior may help us in understanding the market behavior more accurately and taking prudent trading decisions. Also remember that Price-Time correlation does not focus on bottom picking but it provides additional confirmation that the correction/consolidation has been terminated and the larger trend has resumed. Secondly, while the market may behave differently in different geo-political environments, one should not expect identical outcomes all the time. Let's go through the Example in Chart Normally after a strong trend we see a correction/consolidation. A correction can be of any type but for the sake of simplicity I have taken the more popular 'abc' type structure. Wave A Very strong momentum up wave. Generally, very strong moves lead to consolidations. Wave B Strong momentum corrective wave Wave C 🚀Momentum is weaker than both waves A and B. 🚀From A to B, the price corrected in one go whereas C is a 3-wave sub structure in itself. 🚀Also, C took more time compared to B but could not reach the high of A. Inference- Buyers are not very strong at this stage so not a very good place for fresh buyers. Wave D 🚀Momentum is even weaker than C. 🚀5-wave sub structure and huge time taken by the wave to reach the low of B reflects that sellers were not strong enough to push the market down. Inference- Buyers could try for a low-risk trade. Wave E 🚀Price breached the high of C and A in a smaller duration of time. So huge momentum. Inference- Good to keep holding long positions and for fresh entry into small pullbacks. For measuring time one can count the number of candles in a wave with the help of DateRange tool provided in ForecastingandMeasurementTools Tab on the left pane of Tradingview chart page OR sometimes simply eyeballing a chart would serve the purpose. Disclaimer: This is a very simple but strong concept, and I am not the sole follower or proponent of it. Hope it added to your knowledge. Do hit the 🚀 button and share your experiences regarding momentum trading in the comment 💬 section below. Thanks.
Editors' picks
OANDA:XAUUSDEducation
by Bravetotrade
16
HOW-TO use the Fundamental Strength Indicator? (full guide)Below is the complete instruction on how to use the Fundamental Strength Indicator . Part 1: The Fundamental Strength of the Company To understand what it is for, let's imagine that you manage a long-distance running team, and you need to recruit a team of excellent athletes. However, you don’t even know the names of these athletes or their contract amounts. You only have information about their health and athletic performance: hemoglobin and iron content in the blood, maximal oxygen consumption, steps-per-minute rate, speed, age, etc. Each player has their own large table with different parameters. And you have, let’s say, a thousand tables like that. If you spend 3 minutes studying one table, it will take you 50 hours to analyze all the tables, which is just over 2 days of continuous work. And how long would it take to compare each athlete with the rest? Approximately 2 years of continuous work. This is obviously no good, that is why you take a computer, enter all the data from the tables and start thinking about how you can reduce the time to compare one athlete with another. As a result of your brainstorming, you come to the following conclusions: — Each parameter has its range of values, which can give you an idea of whether an athlete is suitable or not suitable for a marathon. — The parameter may have its dynamics: it may increase from month to month, stay the same, or decrease. — Each parameter can be assigned a score. For example, the step-per-minute rate can be: — 175 and above (+1 point) — 165–174 (0 points) — 164 and below (-1 point) And you do that with each parameter. What are these points for? To convert indicators that use different units into one measurement system. Thanks to this method, you can now compare apples to oranges. Then, you sum up all the points per month and get one single number — let's call it athletic strength. You like your thought process, and you apply this algorithm to every athlete’s table. Now, instead of dozens of parameters per month, you have one number (athletic strength) for each athlete. It looks like your task has been dramatically simplified. Next, to study the dynamics of athletic strength from month to month, you “ask” your computer to create a plot for each of the athletes. This chart shows that Athlete #1's athletic strength has fluctuated chaotically in the first three quarters of 2022, possibly due to the lack of regular training. But then you observe a positive trend, where athletic strength has grown from month to month. It seems like the athlete has taken up training. Then, to compare one athlete with another, you “ask” your computer to add the average value of athletic strength over the past six months (average pre-competition training period) to the existing plot. Now, you can use the most average recent value as a weighted score of athletic strength and compare athletes with each other based on this value. Thanks to this solution, you accelerate the analysis process by a magnitude: one athlete – one number. It appears that you can then simply sort the table by the highest athletic strength weighted score and consider the best athletes. However, not wanting to sort the table every time the data is updated or when you get new athletes, you make a better decision. The logic behind the points system implies that there is a maximum and a minimum possible number of points that one athlete can get. This allows you to create ranges of scores for athletes with excellent, mediocre, and poor training. For example, let’s say the maximum is 15 and the minimum is -15. Athletes with a score of 8 to 15 will be considered as strong, 1 to 7 – mediocre, and 0 to -15 – weak. That’s it! Now, thanks to this gradation, you can simply check which range the weighted athletic strength falls within, and decide whether each athlete will be admitted to the team. I believe that now your primary selection will take no more than one working day (including a lunch break). Now let's mentally replace athletes with public companies. Instead of data on health and athletic performance, we will have data from the companies’ financial statements and financial ratios. Applying a similar algorithm, we will get the fundamental strength of the company instead of athletic strength. I think it's time to show the Fundamental Strength Indicator . Let's launch! What do we see? — First, it is a Histogram with bars of three colors: green, orange, and red. The width of the histogram depends on the depth of data from the company statements. The more historical data, the wider the histogram over time. The green color of the bars means that the company has been showing excellent financial results by the sum of the factors in that period. According to my terminology, the company has a “strong foundation” during this period. Green corresponds to values between 8 and 15 (where 15 is the maximum possible positive value on the sum of the factors). The orange color of the bars means that according to the sum of factors during this period the company demonstrated mediocre financial results, i.e., it has a “mediocre foundation” . Orange color corresponds to values from 1 to 7. The red color of the bars means that according to the sum of factors in this period of time, the company demonstrated weak financial results, i.e., it has a “weak foundation” . The red color corresponds to values from -15 to 0 (where -15 is the maximum possible negative value on the sum of factors). — Second, this is the Blue Line , which is the moving average of the Histogram bars over the last year (*). Averaging over the year is necessary to obtain a weighted estimate that is not subject to medium-term fluctuations. It is by the last value of the blue line that the actual Fundamental Strength of the company is determined. (*) The last year means the last 252 trading days, including the current trading day. — Third, these are operating, investing, and financing Cash Flows expressed in Diluted net income. These flows look like thick green, orange, and red lines, respectively. — Fourth, this is the Table on the left, which shows the latest actual value of the Fundamental Strength and Cash Flows. Indicator settings: In the indicator settings, I can disable the visibility of the Histogram, Blue Line, Cash Flows (each separately), and Table. It helps to study each of the parameters separately. It is also possible to change the color, transparency, and thickness of lines. The movie Moneyball was released in 2011, where Brad Pitt plays the role of Billy Bean, the sports manager of the Oakland Athletics baseball team. With a small budget, he managed to assemble a high-scoring team based on the analysis of player performance. As a result, this approach was applied by other teams in the league, and Billy Bean received massive recognition from the professional community. Part 2: Benchmark Business Model One day, when I had already grasped the concept of the Fundamental Strength of a company, I was returning home from vacation. I was in a taxi and the driver was listening to an audiobook. As the drive took longer than an hour, I had nothing to do but listen to the story. I liked the content. It was a fictional novel with a plot centered around the main character named Alex Rogo. He is a manager of one of the three enterprises of the UniCo corporation. Even though Alex spends all his time and energy on work, things are not going very well for the company: over the past six months, the company has only had losses. This leaves Alex's executives no choice but to give him an ultimatum: if he can’t radically improve the situation in three months, the enterprise will be shut down, and he will be left without a job. At the same time, Alex's wife is tired of her husband’s absence in her personal life, so she decides to leave him. Anyway, the story's beginning turned out to be very dramatic, and I wondered how Alex would cope with all this. Luckily, in this stressful time, he meets his former physics teacher Jonah, who now consults companies regarding efficient production. Alex tells his old acquaintance about what’s going on and how he managed to increase labor productivity at the enterprise after purchasing new robots. However, the losses continue to hang over his head like the sword of Damocles. After listening to Alex's story, Jonah wisely suggests that the problem with his enterprise lies in the management is concerned about anything but the main goal of their business, which is creating money or profit. Jonah explains to Alex that all management ideas related to expanding the sales market, using new technologies, or improving product quality can lead the company to a disaster if fundamental things are not considered. In his opinion, management should only focus on three indicators: — Throughput , which is the rate at which a company makes money through sales. — Inventory , which is all the money invested by the company in assets: premises, equipment, patents, raw materials, etc.: that is, in something that can then be sold. — Operational expenses , which are all the money a company spends turning investments into cash, or something that can’t be sold, such as the salary of employees, the cost of rent, payment for delivery services, etc. Thus, the management’s job is to make improvements that will ultimately lead to an increase in Throughput and a decrease in Inventory and Operational expenses. For example, Alex’s purchase of robots to increase the number of products produced has led to an increase in production. However, suppose you look at it through the prism proposed by Jonah. In that case, we actually have the following picture: Inventory has increased, Operational expenses have not decreased (no one has been fired), and the robots can’t contribute to sales growth in any way (the Throughput is not increasing). As a result, this was not an improvement, but a deterioration. The accumulation of such bad decisions eventually leads to the unprofitability of the company. Conversely, continuous improvements that will increase the Throughput and reduce Inventory and Operational expenses will inevitably lead to achieving the main goal – making money. After I got home, I tried to find this book on the Internet. It turned out that it was written by physicist and philosopher Eliyahu M. Goldratt back in 1984. The novel is called The Goal . That’s when I realized that if the company's management adheres to the approach described by Goldratt, then after a while, we will most likely see a fundamentally strong company. And the Fundamental Strength Indicator clearly shows how much the management has succeeded along this path. For example, according to Goldratt, an increase in Throughput should lead to an increase in Earnings per share (EPS) and Total revenue . The reduction in Inventory may be linked with a decrease in Inventory to revenue ratio . Optimization of Operational expenses will definitely reduce the Operating expense ratio . All these parameters are considered when calculating the Fundamental Strength of the company. So, let's move on to the methodology for calculating the Fundamental Strength Indicator. The main idea that inspired me to create this indicator is: "Even if you buy just 1 share of a company, treat it like buying the whole business" . Guided by this approach, you can imagine what kind of business an investor is interested in owning and simultaneously determine the input parameters for calculating the indicator. For me, a benchmark business is: — A business that operates efficiently without diminishing the return on shareholders' investment. To assess the efficiency and profitability of a business, I use the following financial ratios(*): Diluted EPS and Return on Equity (ROE). The first two parameters for calculating the indicator are there. — A business that scales sales and optimizes its costs. From this perspective, the following financial ratios are suitable: Gross margin, Operating expense ratio, and Total revenue. Plus three other metrics. — A business that turns goods/services into cash quickly and does not fall behind on payments to suppliers. The following financial ratios will fit here: Days payable, Days sales outstanding, and Inventory to revenue ratio. These are three more metrics. — A business that does not resort to significant accounts payable and shows financial strength. Here I use the following financial ratios: Current ratio, Interest coverage, and Debt to revenue ratio. These are the last three parameters. (*) If you are keen to learn more about these financial ratios, I suggest reading my two articles on TradingView: Financial ratios: digesting them together What can financial ratios tell us? Next, each of the parameters is assigned a certain number of points based on its last value or the position of that value relative to the annual maximum and minimum. For example, if the Current ratio: — greater than or equal to 2 (+1 point); — less than or equal to 1 (-1 point); — more than 1 but less than 2 (0 points). Or for example, if Diluted EPS: — near or above the annual high (+2 points); — near the annual minimum and below (-2 points); — between the annual maximum and minimum (0 points). And so on with each of the parameters. As a result, the maximum number of points a company can score is 15 points. The minimum number of points a company can score is -15 points. These levels are marked with horizontal dotted lines: the green line is for the maximum value, and the red line is for the minimum. I track the number of points for each day of a company's life on a three-color Histogram. The resulting average value for the last year is on the Blue Line. For me, it is the last value of the Blue Line that determines: this is the actual Fundamental Strength of the company. As an additional filter, for example, when comparing two companies where all other conditions are equal: I use the dynamics of Cash Flows expressed in Diluted net income. These are the thick green, orange, and red lines over the Histogram. Examples: Below, I will evaluate various companies using the Fundamental Strength Indicator. Tesla, Inc. The indicator shows that since 2020, Tesla Inc. has been steadily increasing its Fundamental Strength (from 3.27 in Q1 2020 to 12.79 in Q1 2023). This is noticeable both by the color change of the Histogram from orange to green and by the rising Blue Line. If you look in detail at what has been happening with the financials during this time, it's clear what meaningful work the company has done. Revenues have almost quadrupled. Earnings per share have increased 134 times. At the same time, Total debt to revenue fell almost 10 times. Keurig Dr Pepper Inc. The company, formed in 2018 by the merger of Keurig Green Mountain and Dr Pepper Snapple Group, has failed to deliver outstanding financial results, causing its Fundamental Strength to fall from 4.63 in Q1 2018 to -0.53 in Q1 2023. During this period, the decline in diluted earnings per share was accompanied by higher debt and deteriorating liquidity. Costco Wholesale Corporation Wholesaler Costco has been surprisingly stable in its financial performance and with steady growth in both earnings and revenue. This is the reason the Histogram bars are exceptionally green throughout the calculation of the indicator. The Fundamental Strength has not changed in three years and is high at 11 points. Part 3: Company Cash Flow Dynamics The other day I came across an interesting article about the work of the Swiss company Glencore International AG in the 1990s. This company specializes in trading raw materials, and at that time it was actively trading with the countries that had left the USSR. None of those countries had foreign currency, and trust in local currencies had not yet appeared, so it was necessary to exchange commodities for commodities like in the Middle Ages. For example, to sell copper in Kazakhstan, a Swiss company bought raw sugar in Brazil, then took it to Ukraine for refining, then the refined sugar was exchanged for Siberian oil in Russia, then the oil was exchanged for copper ore in Mongolia, which was then sent to a plant in Kazakhstan to create copper suitable for sale on the world market. As we can see, money was used here only at the moment of purchase of raw sugar and sale of copper, the rest of the chain of transactions was an exchange of goods for goods. It turns out the following scheme: Money - Raw sugar - Refined sugar - Oil - Copper ore - Copper - Money' Of course, all of this made sense when Money' (with a stroke) equaled big money. Otherwise, the cost of preparing and executing such a complex transaction simply wouldn't have paid off. This example once again convinced me how significant a role money plays in any company's operations. Can you imagine the chaos that a business can become without money and having to make up similar supply chains? Money simplifies and accelerates all processes in a company, so competent management of these flows is the basis of an effective business. If you compare a company to a living organism, Cash Flow(*) is its circulatory system. It is thanks to this system that the company is supplied with everything it needs to produce goods or services. (*) If you are keen to learn more about Cash Flows, I suggest reading my two articles on TradingView: Cash flow statement or Three great rivers Cash flow vibrations Considering that cash flows play a fundamental role in the activity of any company, it is reasonable to assume that their analysis will give us the necessary information to decide. For this reason, an additional parameter was added to the Fundamental Strength Indicator : the dynamics of Cash Flows expressed in Diluted net income(*). (*) Since the value of income can be negative, the Diluted net income module is taken, that is, without the "minus" sign. Why do I use income as a unit of measure of Cash Flows? Because it is a good way to make the scale of indicator values the same for companies from different countries, with different currencies. It also allows you to use a single value scale for both Cash Flows and Fundamental Strength. So, let's take a look at how the dynamics of Cash Flows look like in the Fundamental Strength Indicator. These are three lines of different colors, which are located over the Histogram. Each of the flows corresponds to a specific color: — Operating cash flow: green line; — Investing cash flow: orange line; — Financing cash flow: red line. In this way, I can track the dynamics of the company's Cash Flow over time. To interpret the dynamics of Cash Flows, I pay attention to the following patterns: — How the cash flows are positioned in relation to each other; — In which zone each of the cash flows is located: in the positive or negative; — What is the trend of each of the cash flows; — How volatile each of the cash flows is. As an example, let's look at several companies to interpret the dynamics of their Cash Flows. John B. Sanfilippo & Son, Inc. This is the most ideal situation for me: operating cash flow (green line) is above the other cash flows, investment cash flow (orange line) is near zero and practically unchanged, and financial cash flow (red line) is consistently below zero. This picture shows that the company lives off its operating cash flow, does not increase its debt, does not spend a substantial amount of money on expensive purchases, and retains (does not sell off) assets. Parker Hannifin Corporation With stable operating cash flow (green line), the company implements investment programs by raising additional funding. This is noticeable due to an increase in financial cash flow (red line) and a simultaneous decrease in investment cash flow (orange line) with a significant deepening into negative areas. Apparently, there is not enough operating cash flow to realize the planned investments. One has to wonder how sustainable a company can be if it invests in its development using borrowed funds. Schlumberger N. V. The chaotic intertwining of cash flows outside the Fundamental Strength range (-15 to 15) is indicative of the company's rich life, but to me, it is an indicator of high riskiness of its actions. And as we can see, Fundamental Strength has only begun to strengthen in the last year, when the external appearance of cash flow has normalized. Thus, when the Fundamental Strength of two companies is equally good, I use an additional filter in the form of Cash Flow dynamics. This helps me to clarify my interest in this or that company. What is the value of the Fundamental Strength Indicator: — allows for a quantitative assessment of a company's financial performance in points (from -15 to 15 points); — allows you to visually track how the company's financial performance has changed (positively/negatively) over time; — allows to visually trace the movement of main cash flows over time; — accelerates the process of selecting companies for your shortlist (if you are focused on financial results when selecting companies); — allows you to protect yourself from investing in companies with weak and mediocre fundamentals. Mandatory requirements for using the indicator: — works only on a daily timeframe; — only applies to shares of public companies; — company financial statements for the last 4 quarters and more are required; — it is necessary to have the data from the Balance sheet, Income statement, and Cash flow statement, required for the calculation. If at least one component required for calculating the Fundamental Strength is missing, the message "no data to calculate the Fundamental Strength correctly" is displayed. In the same case, but for the operating cash flow, the message "no data to calculate the Operating Cash Flow correctly" is shown, and similarly for other flows. Risk disclaimer: When working with the Fundamental Strength Indicator and the additional filter in the form of Cash Flows, you should understand that the publication of the Balance sheet, Income statement, and Cash flow statement takes place sometime after the end of the financial quarter. This means that new relevant data for the calculation will only appear after the publication of the new statements. In this regard, there may be a significant change in the values of the Indicator after the publication of new statements. The magnitude of this change will depend both on the content of the new statements and on the number of days between the end of the financial quarter and the publication date of the statements. Until the date of publication of the new statements, the latest relevant data will be used for calculations. I would like to draw your attention to the fact that the calculation of Fundamental Strength and Cash Flows requires the availability of data for all parameters of the valuation model . It uses data that is exclusively available on TradingView (there is no reconciliation with other sources). If at least one parameter is missing, I switch to another company's analysis to continue using the indicator. Thus, the Fundamental Strength Indicator and an additional filter in the form of Cash Flows make it possible to evaluate the financial results of the company based on the available data and the methodology I created. A simple visualization in the form of a three-color Histogram, a Blue line, and three thick Cash Flow lines significantly reduces the time for selecting fundamentally strong companies that fit the criteria of the selected model. However, this Indicator and/or its description and/or examples cannot be used as the sole reason for buying or selling stocks or for any other action or inaction related to stocks.
Editors' picks
NSE:NIFTYEducation
by Be_Capy
4
What Is Bitcoin Halving? Here's All You Need to KnowWhat Is Bitcoin Halving? Here's All You Need to Know. Halving is the event of slashing Bitcoin's mining rewards every 210,000 blocks, or roughly every four years. Read all about it here. Table of Contents Overview What Is Bitcoin Halving? When Is the Next Bitcoin Halving? Deep Dive into Blockchain How Are Miners Rewarded? Why Halving Matters? The Big Picture What About Bitcoin’s Price? Halving and the Way Forward Overview Bitcoin’s halving is a milestone event for the crypto space. Essentially, halving pushes back the moment we see all 21 million BTC tokens pulled out of their cryptographic hash puzzles. Satoshi Nakamoto, the individual or group who created Bitcoin , programmed it to a fixed amount of 21 million coins. In other words, the total amount of Bitcoin can never exceed 21 million. Presently, miners have picked up just over 19 million through a process called Bitcoin mining. This amount is over 90% of the total supply with mining having started with the creation of Bitcoin 15 years ago. That leaves just about 2 million tokens to be unearthed before the final Bitcoin enters our dimension. How long should we wait until this mammoth of a milestone happens? More than a century, or around the year 2140 , according to forecasting wizards. The logic behind this peculiar mechanism lies in the so-called halving and this guide will help you understand all about it. What Is Bitcoin Halving? Halving, in its simplest form, is the process of gradually reducing the rewards of Bitcoin mining. As we mentioned, Satoshi Nakamoto originally hard-coded Bitcoin to a fixed supply of 21 million. All of them will come to life at an increasingly slower rate. More precisely, the pace at which Bitcoin is created is “halved” every 210,000 blocks. The current block reward is 6.25 Bitcoin as the last halving occurred on May 11th, 2020. When's the Next Bitcoin Halving? In April 2024, miners will add the next batch of 210,000 blocks. And that only means one thing - they will have their revenue immediately slashed in half to 3.125 Bitcoin. All halvings are evenly spread out approximately every four years, consistent with Bitcoin’s hard-coded design. This way, supply will keep increasing, just at a slower clip. The reason is simple - the Bitcoin halving rewards will continue to reduce. Deep Dive into Blockchain In order for new Bitcoin to come into circulation, miners need to create blocks in a chain, hence the term ‘blockchain’. Network operators—the hardworking miners—uncover blocks through computer-powered mining operations. These crypto diggers compute hashes as quickly as possible. What they do is search for the successful fixed-length output that they add to the block. The more hashes per second (hashrate), the more chances for hacking out new blocks and adding them to the blockchain. How Are Miners Rewarded? Generally, miners have two ways to reward themselves for the effort. The first one is to earn revenue from transaction fees of users who send and receive Bitcoin. That’s when they act as decentralized network operators and validate transactions without a central authority. At their height during the crypto boom in April 2021, the Bitcoin network fees reached as much as $60 per transaction and took hours to complete. After all, the network can only handle 4-7 transactions per second. To compare, payment giant Visa can validate 24,000 transactions per second. Average transaction fee of Bitcoin, USD Timeframe: April, 2021 Source: bitinfocharts.com/co...transactionfees.html The other way to reward Bitcoin miners is to let them pocket the newly-minted Bitcoin contained in the block. Halving is basically a reward system for miners. But more broadly, halving is part of the proof-of-work model associated with high levels of energy consumption. Millions of mining rigs soak up that energy and crank out new Bitcoin. Why Halving Matters? Halving the block reward for mining Bitcoin is a way to protect its integrity. This immutable feature of the OG crypto makes it stand out as a unique asset class. In this light, it is also an alternative to inflation-prone national currencies, also known as fiat money. With that in mind, in a world that craves disruptive innovation, a technology that’s rewiring the global financial system has progressively moved into the limelight. The growing role of Bitcoin as a new investment vehicle is apparent, factoring in the elevated investor appetite . Bitcoin transacts tens of billions of dollars of daily volumes, with a peak of more than $126 billion on May 19, 2021. The figure is sufficient to prove it has piqued the interest of enough crowds to form a market around it. Before we revisit Bitcoin as an investable asset, let’s take a breather and trace the original crypto back to its origins where halving was introduced. The Big Picture Just over 15 years ago, the mysterious Satoshi Nakamoto mined the initial “genesis” block . For the effort, the clandestine developer(s) earned a hefty reward of 50 Bitcoin. And also bothered to leave a message hooked to the chunk of transactions. The message read: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." Since then, the Bitcoin network has witnessed three halving events: On November 28, 2012, Bitcoin’s block reward was cut from 50 BTC to 25 BTC. On July 9, 2016, Bitcoin’s block reward was slashed from 25 per block to 12.5 BTC. The last one occurred on May 11, 2020, when the reward was axed to 6.25 BTC. The next Bitcoin halving event is on deck for April 19, 2024. Rewards will fall to 3.125 BTC. The Bitcoin halving dates may vary and we're yet to get a confirmation over the next one. Estimations indicate that every 10 minutes or so all network operators add a new block to the Bitcoin blockchain. With the current reward of 6.25 Bitcoin per block, miners dig out around 900 new Bitcoin a day. At today’s prices , this is equal to around $50 million worth of Bitcoin extracted daily. This is where the halving becomes interesting not just to the geeks among us. Halving events play a key part in shaping up supply and demand and weigh on the price of Bitcoin. Speaking of price movement, how does the rate at which new Bitcoin is churned out affect valuations? What About Bitcoin's Price? Bitcoin, as the world’s first cryptocurrency in a sea of many , is the quintessence of scarcity premium. Investment professionals are quick to say that Bitcoin carries a unique glamor as the only large tradeable asset with a predictable emission leading to a hard cap. In that light, analysts consider Bitcoin to be the newest entrant in the store-of-value category. An investment product that holds its purchasing power over time. Ideally coming with consistent price increases. This is possible thanks to halving - the brilliant mechanism hard-wired into the Bitcoin protocol. The minds behind the original digital currency conceived it as deflationary. A concept alien to the present financial system, flooded with central-bank cash and government stimulus. The reason is that, contrary to fiat currencies that inflate over time, Bitcoin should not be debased by inflation. Satoshi Nakamoto explained this inflation-rate flaw in an online forum around the time of Bitcoin’s inception. "The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” Halving and the Way Forward If there’s a need to draw broad conclusions, here are some of the more salient points to make a compelling argument. Bitcoin’s purchasing power is likely to avoid debasement thanks to the halving mechanism. With less than 10% of Bitcoin still to come to the surface, it will take more than 100 years for the last unmined Bitcoin to pop out. Once all the 21 million Bitcoin spring to life, miners will no longer stake their livelihood on uncovering new tokens. Instead, they will earn revenue from network fees for their work on validating transactions. But that’s only if the network sticks to the plan. FAQ ❔ "What is the purpose of halving?" ► Halving maintains a decreasing pace of block rewards, which emphasizes on the idea of scarcity in Bitcoin. ❔"When is the next Bitcoin halving?" ► The next Bitcoin halving event is scheduled to occur on April 19, 2024. This date is approximate, and the actual date may be different, depending on the time it takes to complete one full batch of 210,000 blocks. ❔"Is halving related to price increase?" ► Technically, when the supply of new Bitcoin is cut in half, and demand remains the same, prices may go up. But the price discovery of Bitcoin does not obey archetype models of economics. ❔"When will the last Bitcoin be mined?" ► Estimates point that the last available Bitcoin will be mined in the year 2140.
Editors' picks
Education
by TradingView
3
The most subjective facet of my decision-making systemIn the previous publication I started talking about my decision-making system. I use it when investing in stocks. This system allows me to answer three questions: - which stocks to choose? - at what price to make a trade? - and in what quantity? In this post, I will continue to answer the question Which stocks to pick? and tell you about another facet of my crystal. As you can see, my decision-making system is quite formalized. What do I mean? It has clear criteria for which a company must be checked before investing in its stocks. If we go deeper into this idea, we can say that the state of affairs in any public company can be assessed using numbers from its statements and stock exchange prices for its stocks. All this can be visualized, put into a form that is readable for the investor, and accelerate the decision-making process many times over. However, there is an area with information that hovers around the companies, directly or indirectly influences it, but is poorly formalized: this is News . News can be called a message related to a company and distributed through its website, media, and social networks. This message triggers an almost knee-jerk reaction among stock investors (and traders). They will try to interpret the information received, make a forecast, and in some cases even make a trade. It is for this reason that the moment the news is published is often accompanied by a sharp movement in the stock price and an increase in trading volume. The order book now has a lot more players than before. These are traders excited by the news, confident of what will happen next. Here I can’t help but recall the allegory about Crazy Mister Market from Benjamin Graham. It presents the market as a partner who is constantly knocking on your door and offering you crazy ideas (stock prices). Where does this mister get his madness from? My answer is simple — from the news. Despite this, I cannot help but pay attention to the news, I cannot help but interpret it, to build predictions in my head. This happens reflexively, as a reaction to boiling water hitting my skin. However, will I make a trade under the influence of this information? We'll talk about this at the end of the post. Let's find out what news is available and where to find it. In this publication, I will only consider matters relevant to the stock market. That is information that can directly or indirectly affect the state of affairs in the companies. As I work, I divide the news flow into two categories: macro-event and corp-event . A macro-event is something that can indirectly impact the state of affairs in a company since it impacts the external environment in which it lives. For example: 1. In the third quarter, US GDP grew by 4.9% year-on-year, which was better than expected (*). GDP Dynamics are a general economic indicator of economic growth in a particular country. This event only indirectly affects the business of the US companies. In other words, a company can be unprofitable even if the GDP in the country of its business is growing. (*) In the news, you will often see the following wording: - better than expected - worse than expected - as expected These are significant clarifications since it is believed that the exchange price already considers expectations for future events. Therefore, the coincidence with expectations will most likely be perceived calmly by market participants. Conversely, price fluctuations can be significant if the news can be qualified as a “surprise”. 2. The EPA is setting rules for a proposed “methane fee” on waste generated by oil and gas companies. This news also refers to macro events, as it impacts an entire industry: the oil and gas business. Moreover, please note that methane fee is only suggested. That is, it is not at all a fact that it will ultimately be implemented. Unlike macro events, a corp-event directly affects the state of affairs in the companies. Let's look at some of them. For example: 3. Hilton's (HLT) 3rd quarter Profit was in line with revenue forecasts. The news contains information about Hilton's financial results for the 3rd quarter. Of course, this directly impacts investors’ assessment of the company's prospects, and therefore the volume of investment in it. 4. Devastating wildfires have forced California's largest utility, Pacific Gas and Electric Company, to plan the sale of gas assets. Based on the news headline, we can conclude that the company is considering selling a significant part of its business (since the word “gas” even appears in the company name) to compensate for the damage from the devastating fires. Of course, this directly points to the difficult situation in the companies. Well, we figured out which news is considered a macro-event and which is a corporate event. Now let's find them where we need to. First, let's look at the event calendars that are available on TradingView. They are convenient because they inform us in advance what event to expect on the date in question. Let's start with the ⁣Economic calendar . You can find it in the main TradingView Products menu (Products -> Economic calendar ). This calendar shows upcoming publications of key macroeconomic indicators such as GDP, ⁣ interest rate, unemployment, and inflation. It will also reflect national events — for example, presidential elections. Thus, you will only see macro events in it. Click on globe and select the country you are interested in, a group of countries, or the whole world: this way you will filter events by geography. If you are interested in tracking only important events, there is a special button for this High importance . There is also a three-column importance indicator next to each event. If all are shaded, the event is of maximum importance. You can expand any event, read information about it, view statistics, and even add it to your personal calendar. In terms of importance, the higher the importance of the event, the stronger the market reaction may be after the information is released. Furthermore, the strength of the reaction will depend on how much reality diverges from expectations for this event (with the forecast). Please note that the current value published is published to the left of the forecast, and the value for the previous period is published to the right. This allows you to evaluate the released metric over time. So, my standard set of filters for the economic calendar is: - Geography: all over the world; - High importance; - This week; - All categories. The economic calendar has been set up. There is another calendar on TradingView: this is Earnings calendar . It is located in the interface for working with Supercharts and, of course, is intended for analyzing corporate events. Once you go to the chart, click on the calendar icon in the menu on the right, and the events panel will open in front of you. The Earnings calendar will contain the names of the companies, their next reporting date, and analysts' estimates of earnings per share: EPS. In its meaning, this estimate is an average expectation or forecast. Therefore, any strong discrepancy between current data and the forecast value can greatly change the value of the company's stocks. By the way, you can check this simply by clicking on the company's name in the calendar: the window with the stock price chart will update instantly. The released earnings per share value can be viewed both on the chart itself and in the company's information (the top menu button on the right). The current value will be marked with either a red circle (below the forecast) or a green circle (above the forecast). The gray circle indicates the forecast itself. Calendars are convenient because they present us with the main essence of the news in a compressed, digitized form. The description of such news is not as important as the value of the key indicator. However, if you want to read classic text news about a related company, simply click on the lightning bolt icon on your chart. You can also find news grouped by asset class, region, news agency, etc. in the main menu of the TradingView site's root page. Of the groups presented, I most often use News Flow to get a general context of what is happening. Returning to my decision-making system, there is news (let's call it critical ) that can trigger the closure of a position or non-opening of a position in the shares of a particular company, even though the main indicators do not suggest this. To determine such news, I ask myself three questions: 1. Do I trust this news source? We are surrounded by many sources of news: social networks, news sites, television, etc. It’s easy to check everyone’s reputation on the Internet. Therefore, to take the news into account, you must trust its source. If you see significant news about a company, but it is not in reputable media resources and/or on the company's website, this is a reason to think whether the source is trying to increase its popularity through a loud headline and unverified content. 2. Does this news describe an accomplished fact? Even in reputable publications, you can find publications with versions of events, forecasts, and opinions. This is good food for thought. However, when deciding, I constantly try to separate the standpoint from the fact confirmed by a reliable source. Only facts can be considered when deciding. 3. Is an accomplished fact capable of leading the company to bankruptcy? This is a difficult question that requires an assessment of the company's economic damage, and its comparison with the level of total debt to creditors and current assets. Even if a company is facing bankruptcy, it can be saved by providing assistance from the government or other businesses. Answering this question, I can listen to the opinions of analysts and my intuition. Therefore, this is the most subjective facet of my decision-making system. I just have to tell myself: “Yes, this fact can lead the company to bankruptcy” or vice versa: “No, this news is bad, but it does not pose a critical threat to the business.” So, if I answer “yes” to all three questions, then I can close a position in the shares of a particular company or not open it, guided simply by my “yes, this should be done.” The fact is that critical news comes out now, and reporting on a specific date in the future: there is a time gap between these events. Therefore, I find myself in a situation where I just need to decide and evaluate it later, in the future, based on published reports. It is similar to flying an airplane that fails during transit. The pilot may not fully understand what happened, but the choice must be made right now. If I answer “no” to any of the three questions, then I continue to use other facets of my “crystal” in standard mode, and leave the news “just for my information.” In future publications, I will continue to elaborate on my decision-making system and share my approach to choosing the price and quantity of a stock trade.
NSE:RELIANCEEducation
by Be_Capy
Community challenge: Share Your Best Trading Idea!Hey there, fellow investors and trading enthusiasts! We're starting the year with an exciting opportunity to reward the wisdom and experience that each of you brings to the table. With markets reaching new highs, and the economy continuing its unpredictable nature, it's a perfect time to talk about the markets. After all, it's this volatility that makes the markets interesting, right? Whether you're a seasoned veteran or a newbie eager to learn, your perspectives are incredibly valuable, and now you can even win an exclusive reward for sharing them! What's your prediction for a breakthrough trade this year? Comment below and share your thoughts. One lucky participant with the most insightful comment will win 1 month of TradingView Premium. 🎁 Remember, if a comment resonates with you or sparks an idea, feel free to like or reply to it. We can't wait to read your comments! 🔥
Editors' picks
NSE:NIFTYEducation
by TradingView
23
Stock Selection Based on Relative StrengthHello, Here i will be talking about the process for picking up the stocks based upon the Relative Strength. As this is known to everyone but only few are getting benefitted by applying it in real trading. Most of the gains are made with the stocks having greater RSI. If RSI having > 75 those are the ones which create maximum wealth in Short time. Now, Question comes at what time frame it will apply and this depend upon the individual trading style. It works well on Daily, Weekly, and Monthly TF. The higher the timeframe the better the reward. This can be combined with the Price and Volume, It Can do wonder in your trading Journey. Screener for Stock Selection in Trading View:- - Go to Stock Screener Tab at bottom in the Tradingview. - Go to Filters - Symbol Type - Common Stock - Select New 52 Week High - Select Relative Strength Index (14) >=75 The above will filter out stocks on Daily Timeframe. You can add more filters according to your requirements and make your stock list more refine such as All Time High, New 6 Months high etc. and Make a list and look for opportunity. As i am a Price Sction trader i mix this with Price and Volume and ride the momentum. Few examples - Cupid, Glaxo You can try it and submit your feedback to me. Also, Tell me if you find something else which can be useful to the community. Together we can help eachother in Learing and excel in profession. Remember: I am a Price Action Trader and use Price and Volume together with different Timeframes, including RSI, and market conditions. To get best result always wait for confirmation. Focus on Risk Management and Position sizing. Treat trading like a business and it will pay you like a business…..!! Hope this post is helpful to community Thanks RastogiG
Editors' picks
NSE:GLAXOEducation
by RastogiG
10
Nifty2015-16 vs 2021-23Price has a habit of repeating historical pattern, as patterns are nothing but psychology of thousands of traders watching same charts. Nifty currently is showing very similar price pattern on daily timeframe which it developed in 2015-16, where previously it made a top and then was facing a resistance on falling trendline and sort of made triple/multiple tops. It finally broke out of it by making a double bottom on daily charts and then started another upmove. This upmove got fizzled out and made a rounding top pattern, and potentially those who were active that time would have faced similar dilemma which traders are currently facing that if this rounding top sort of formation breakdown then what are downside target. That didn't happened and Nifty made another double bottom around Dec 2016 and post which it rallied and rest is history where dream run of Nifty started and it went on to make a new high until 2020, when Covid crash came. Similarly, in current chart of 2021-23 session (as of today), Nifty has shown similar price pattern of facing resistance at a falling trendline then breaking out of it via a double bottom formation and making a new high. Post which it has now corrected and is sort of making another rounding top. Will Nifty survive the swing lows around 16750 or will it break and invite fresh aggressive shorts to trap them and then run away - only time will tell that, but these are just observations with an anticipations that potentially this correction will also get over very soon and we are may be near to bottom formation and then start a fresh up move. There is no trade recommendation here and these are just observations for learning purpose Nifty 2015-16 Nifty 2021-23
Editors' picks
NSE:NIFTYEducation
by aktradelearning
29
How to compare relative performance between stocks and indices ?You can compare the relative performance by using the compare option on charts. The compare function tool is used to compare the market movements of two or more different symbols simultaneously. Popular use for a comparison chart is comparing two companies within the same sector. Click on the 'Compare or Add symbol button' (displayed as plus sign) on the toolbar along the top of the chart, search and add the indices/stock which you would like to compare. You will see a representation of the percentage comparison from the beginning price point to the current price. To delete the comparison line right-click on it and click on ‘Remove’. This example is comparison chart of Nifty Bank and Nifty PSU Bank. After 13 years approx i.e. November, 2010 - December, 2023: Nifty Bank - 263% Positive Nifty PSU Bank - 6% Positive I hope this little information on comparing indices/stocks is useful. Please feel free to write any additional information in the comments section below. Thanks and happy learning/trading. Disclaimer: This is for demonstration and educational purpose only. This is not buying or selling recommendations. I am not SEBI registered. Please consult your financial advisor before taking any trade.
NSE:CNXPSUBANKEducation
by MandeepSinghKohli
4
Trading Gyan 👑👑🤑💸💸💸💸💸 ​Technical trading is a broader style that is not necessarily limited to trading. Generally, a technician uses historical patterns of trading data to predict what might happen to stocks in the future. This is the same method practiced by economists and meteorologists: looking to the past for insight into the future. NOTE #We Are Not Promote Anything #This channel Purpose to share market ideas. Thanks for Watching🙏
NSE:BANKNIFTYEducation
by Optionclub
2
Option Trading By Professional's🤑💲💸✔✔👑Royal Trend👑 Topic Trading Things Topic - Option Trade and Trading 💸💸💸💸👑🤑 #If u Buy stock without stop loss that mean U are weak in Physiology #Train Your self To take small trade with Stop-loss How to make Big Profit💸 With Small Account In this video we try to Identify Trend and Entry By Big Bull👑🤑🤑💸💸 How market really work with number's How important is option chain analysis? The option chain analysis data provides a very comprehensive view for all the available options for any particular underlying asset. This helps in understanding and selecting the correct option for trading or investment purpose. Difference between technical analysis and option trading Technical analysis and options trading can go hand in hand. Many of the best practices for options trading come directly from technical analysis concepts. Technical analysis focuses on price. Fundamental analysis does not solely focus on price. why we learn option chain? Option chain is a chart that will give in-depth information related to all stock contracts available for Nifty stocks. The best thing about the option chain is that it provides valuable information about the current security value and how it will affect it in the long term. What is the purpose of option chain? It can be used in creating an option strategy at several strike prices. It can be used to analyse and draw noteworthy insights about the stock and its probable movements. It helps the traders in evaluating the liquidity and the depth of the option contract. Technical trader ​Technical trading is a broader style that is not necessarily limited to trading. Generally, a technician uses historical patterns of trading data to predict what might happen to stocks in the future. This is the same method practiced by economists and meteorologists: looking to the past for insight into the future. NOTE #We Are Not Promote Anything #This channel Purpose to share market ideas. Thanks for Watching🙏
NSE:BANKNIFTYEducation
by Optionclub