HOW TO TAKE TRADE AFTER PRICE BREAKS MAJOR LEVELAdvanced PRICE ACTION Trading
Key Trade Concepts:
Buyer Trap Identification:
Before entering, always check for a buyer trap or liquidity hunt, where impulsive buyers are lured into the market at a vulnerable level. In this setup, I’ve highlighted how a buyer trap has been triggered, providing a strong signal for potential reversals.
Order Block Strategy for Long Entries:
Wait for Price to Enter the Order Block: Before any long position, let price retrace to the designated order block.
Confirm with High Break and Rejection Candle: Once in the order block, wait for recent highs to break, followed by a rejection candle to confirm the entry. A candle close above this level on the 15-minute time frame is essential, adding strength to the confirmation.
Time Frames: Utilize the 5-minute chart for initial moves but rely on a 15-minute candle close for entry confirmation.
Take-Profit (TP):
Target buy-side liquidity and other strategic levels beyond that, maximizing the potential of each setup.
For more professional insights like this, don’t forget to like, follow, and comment. This is the kind of premium content many charge for, but I’m sharing it for free to help others succeed!
Community ideas
5 Important Lessons to Learn From the MarketsYou Can Never Outsmart the Market
Detailed analysis 🧐and strategies are not enough to survive in the market. There are several other economic or geo-political factors that may influence the movement of the market. If market is flying higher due to positive factors, there is no point in going reverse and shorting stocks or indices. Conversely if the market is going down, its good to wait and watch rather than going all in. A popular saying that mostly works in the markets is that a trend🚀 may last longer than you can expect.
Its Stock Market, Not Casino
A few elements like risk management, position management, diversification, research etc. differentiate the Markets from Casino🤑. However, most new traders enter the market with a dream of overnight richness. Social media influencers add fuel to this fire and soon this fire🔥evaporates the entire capital of new traders. One needs to realize that the stock market is a business which will develop and grow gradually.
Stock Market as Primary or Secondary Source of Income?
People from mediocre business or salary class come to the market, make some money with beginner’s luck, become confident, keep increasing capital and become more and more confident😵. Ultimately, they start thinking of quitting their job or ignoring their business. But finally, the dooms days follow, and they start losing and losing till they lose it all. One may think of stock market as a primary source of income if one is profitable for at least a year (3 years would be good though🤔). Secondary sources of income are must because all traders lose in their initial phase. In fact, keep the market as a secondary source for 1-3 years.
Stock Tips Will Burn Your Fingers
Relying on stock tips from friends, news sources, or social media can be risky. Most tips are randomly picked without any research. Blindly following them without conducting your own research would lead to poor investment decisions and must financial losses. Most people have time⏳ constraints, but they must first learn the market nuances by using small capital and making small losses. Improve their knowledge for at least 3-6months and then go for some reliable advisory service. Do your own research on their tips rather than blind👩🦯 faith.
Your Portfolio May Lag in a Bullish Market
Rising market would not always lead to rise in your portfolio. Your portfolio performance may still be stagnant👎 even when the market is up by 15%👍. It all depends upon the performance of your stocks. Its always good to keep blue-chip or good midcap stocks in your portfolio. Generally, they will perform in-line with the indices. Investing in penny stock hoping for a lottery might be highly disappointing and may lead to further worst decisions in future. Self-education📕 is the best investment.
I hope this small effort would help some new traders.
All views are personal.
Keep boosting 🚀for more educational content in future.
Combining Fundamental & technical Analysis to pick great stocksHello,
One of the most often asked question is how I conduct my market research and today I will be trying to answer the question in a simple way. Below is my process flow
1: Screening Potential Stocks
Purpose: Narrow down the list of stocks to focus on those that meet specific criteria.
Method: Use a stock screener to filter stocks based on factors like market capitalization, industry, financial ratios, etc. Sometimes, I research a stock based on recent developments or personal interest.
For our case you can find the stocks screener via link here www.tradingview.com . This screener allows you to filter stocks across different countries and apply various metrics to find potential investment opportunities.
2: Industry Research
Purpose: Understand the industry landscape and identify key trends.
Method: Use paid services, data terminals, expert insights, and accessible news sources to gather information about the industry. Keeping up-to-date with industry news is crucial for insights.
A great recourse to use when trying to understand the industry is the spark via link www.tradingview.com This will be very key because it simplifies the industry and breaks how the peers are also performing.
3: Assessing Investment Feasibility and Risks
Purpose: Evaluate the feasibility of a company’s plans, potential risks, and its ability to execute effectively.
Method: Examine the company’s strategic priorities, planned capital expenditures, and historical performance. Assess whether the company has a track record of successfully executing similar strategies or acquisitions.
4: Analyzing Financial Performance
Purpose: Understand the company's financial health and value.
Method: Look at long-term ROI metrics, such as Return on Capital Employed (ROCE), Return on Invested Capital (ROIC), and Return on Equity (ROE). Conduct peer analysis by comparing these metrics with similar companies in the industry.
Analyzing a company’s financial statements is key to understanding its performance. TradingView offers a detailed breakdown of financial statements over comparative years. For example, see the financials for Bharti Airtel www.tradingview.com These dashboards include additional metrics that can provide deeper insights into a company's performance.
more metrics to help you better understand the companies are incorporated in the dashboards.
5: Valuation Analysis
Purpose: Determine if the stock is fairly priced relative to its peers and historical data.
Method: Use relative valuation methods, including Price-to-Earnings (P/E) ratio, EV/EBITDA, and Free Cash Flow Yield. Compare these metrics to historical figures and industry benchmarks to assess valuation.
6: Identifying Competitive Advantages (Moat)
Purpose: Find companies with sustainable competitive advantages that protect them from competition.
Method: Identify unique features or barriers that provide the company with a competitive edge. Look for aspects that align with Warren Buffett’s concept of a “moat,” such as brand strength, cost advantages, or proprietary technology.
7: Monitoring and Watchlisting
Purpose: Keep track of potential investment opportunities and be prepared to act on them.
Method: Add promising stocks to a watch list. Monitor their performance and news. Be ready to take advantage of price dips due to market events, ensuring the impact is not material to the company's fundamentals.
8: Organizing and Documenting Research
Purpose: Ensure research is accessible and easy to reference in the future.
Method: Summarize findings in bullet points, using frameworks like SWOT (Strengths, Weaknesses, Opportunities, Threats). Create a checklist of factors to consider for each company, allowing for a structured and repeatable research process.
9: Continuous Review
Purpose: Stay informed and adaptable in investment decisions.
Method: Regularly review research and stock performance to ensure no critical updates are missed. Adjust investment thesis based on new information or changes in the company’s fundamentals.
10: Technical Analysis Using Wave Theory
Purpose: Predict future price movements and identify potential buying or selling opportunities.
Method: Utilize Elliott Wave Theory, which is a form of technical analysis that identifies recurring price wave patterns in financial markets. The theory suggests that market prices move in predictable cycles of five waves (impulsive) and three waves (corrective), driven by investor psychology and market sentiment. By analyzing these wave patterns, traders and analysts can forecast potential market trends and turning points. Combining wave theory with other technical indicators can enhance the accuracy of predictions and support informed decision-making.
the chart shows that the price of the stock is at the top & although all fundamentals might lead to it being a great company, buying at the top is not wise. Wait for correction before buying.
Goodluck!
Understanding the Cup and Handle Formation in Technical AnalysisThe Cup and Handle pattern is one of the most well-known and reliable chart patterns used by traders to predict bullish continuations. Understanding this formation can give you a valuable edge in identifying potential breakout stocks.
What is the Cup and Handle Pattern?
The Cup and Handle is a bullish continuation pattern that usually forms during an uptrend. It resembles the shape of a tea cup, with a rounded bottom followed by a slight pullback (the handle).
Cup: The cup is a rounded bottom, forming after a downtrend or consolidation. It indicates that the stock is finding support and gradually regaining momentum.
Handle : After forming the cup, the price pulls back slightly, creating a handle. This handle represents a period of consolidation before a breakout.
How to Identify a Cup and Handle Formation?
Prior Uptrend: The pattern typically forms after an established uptrend.
Rounded Bottom: The "cup" part should have a smooth, rounded bottom, indicating that the stock has gradually built support and is preparing for a bullish move.
Handle: The handle forms as a small pullback or consolidation, often at the upper end of the cup. This is where sellers temporarily outnumber buyers, but the selling pressure is limited.
Breakout: The breakout occurs when the price moves above the resistance level at the top of the handle, often accompanied by increased volume, signaling a continuation of the uptrend.
Example: DOLAT ALGOTECH LTD
DOLAT ALGOTECH LTD displayed a classic Cup and Handle pattern on its chart, signaling a potential bullish breakout. Here’s a breakdown of the key elements of the pattern:
Prior Uptrend: The stock was in a strong uptrend before entering a consolidation phase.
Cup Formation: The price formed a rounded bottom, creating the cup, showing a gradual recovery after a pullback.
Handle Formation: After the cup, the price consolidated and slightly pulled back, forming the handle.
Breakout: The stock has recently broken out of the handle with increased volume, indicating a potential continuation of the uptrend.
Key price targets based on the breakout:
First target: ₹202.53 (+17.82%)
Second target: ₹251.25 (+46.25%)
This real-world example demonstrates how the Cup and Handle pattern can be used to identify potential bullish breakouts in stocks.
Why is it Important?
The Cup and Handle pattern is considered reliable because it reflects a period of accumulation (cup) followed by a mild correction (handle), before the price resumes its upward movement. Traders often use this formation to identify potential buying opportunities before a breakout.
Key Points to Remember:
Pattern Duration: The cup can take several weeks or even months to form, while the handle usually takes a shorter time.
Volume Confirmation: A volume increase during the breakout is a strong signal that the pattern is valid and that the uptrend is likely to continue.
Risk Management: While this pattern is reliable, no technical analysis is foolproof. Always use stop-loss orders and manage risk properly.
NSE:DOLATALGO
A simple guide to coming up with an investment OpportunityHello,
1. Understand the Business
Before committing your money to any investment, the first and most crucial step is to thoroughly understand the company you’re considering. Below are some of the things you carefully need to look at.
Business Model: Start by breaking down the company’s business model. How does the company generate revenue? What are its primary products or services? In our case here;
Adani Wilmar Ltd. provides edible oil, vanaspati and specialty fats. The firm offers vanaspati, packed basmati rice, pulses, soya chunks, besan and specialty fats, lauric range products, castor oils, oleo chemicals and non-GMO soya products.
More analysis on the revenues & expenses of the company is also very key. All this data can be found on the Tradingview website under financials.
Once you have understood the companies moat, now its time to move to technical analysis.
Technical analysis is a method used to evaluate and predict the future price movements of financial assets, like stocks, by analyzing past market data, primarily price and volume.
Technical analysis is very important since all market information has been priced in the stock market price. Below is a past chart for the company adani Wilnar.
The chart shows that the company has moved from the bottom to the top and back to the bottom. From our Tradingview chart it's possible to identify the trend as well as the time used for each move. This will be very key as we build our trading bias. From our chart, its easy to see the time taken for each move and the highest/lowest prices.
Our chart easily communicates that the stock has been on a sideways move for over 500 days. Very key to note is that the stock is also trading at the bottom. This makes it at a great buy point.
Next is to identify the patterns forming on the chart. In our chart the stock is forming a corrective wave for a buy to the upside. My buy areas would be around 320 with my first target at IRN 500. I shall relook at the stock once we hit those areas.
Recommendation
Based on the analysis, consider buying Adani Wilmar Ltd. stock at around IRN 320, with a target to sell at IRN 500. Monitor the stock closely, especially as it approaches the target, to reassess your position.
Good luck!
What is Opening Range Breakout (ORB)Hello mates today i want to share an Educational post about Opening range breakout a very common and old strategy used by many traders and it's still pretty effective. I hope you will read the complete post and like my publication too friends.
So let's understand about Opening Range Breakout below-::
⚡ Introduction to Opening Range Breakout-::
In the world of trading timing can be everything. One of the strategies that traders use to capitalize on market movements at the start of the trading day is the Opening Range Breakout (ORB). This technique is particularly popular among day traders because it leverages the market's early volatility to make quick profits. In this article we'll dive deep into what ORB is, how it works, and how traders can effectively use it.
⚡ What is the Opening Range-::
The "opening range" refers to the price range established during the first few minutes of a trading session. This range is defined by the high and low prices observed within this period. Depending on the trader's preference and the asset being traded, this range can be set over different time intervals, commonly 5, 15, or 30 minutes.
⚡ Understanding the Breakout-::
A breakout occurs when the price moves outside the opening range, either above the high or below the low. This movement indicates a potential direction for the day's trend. The idea behind the ORB strategy is that the price, once it breaks out of this range, is likely to continue moving in that direction, giving traders a chance to enter a position early in the day and ride the trend.
⚡ Why Use ORB-::
1.Early Market Volatility-: The market often shows significant volatility at the opening bell, driven by overnight news, earnings reports, and economic data. This creates opportunities for sharp price movements.
2.Defined Risk and Reward-: Since the opening range is defined, traders can set clear entry, stop-loss, and take-profit levels, making risk management straightforward.
3.Capturing Early Trends-: ORB allows traders to capture trends early, often before the broader market catches on. This can lead to significant profits in a short period.
⚡ How to Implement the ORB Strategy-::
1-Identify the Opening Range-: At the start of the trading session, observe the price action and note the high and low points within your chosen time frame (e.g., the first 15 minutes).
2-Set Breakout Levels-: Once the opening range is established, these levels (the high and low) become your breakout levels.
3-Place Orders-::
Long Position-: If the price breaks above the high of the opening range, enter a long position (buy).
Short Position-: If the price breaks below the low of the opening range, enter a short position (sell).
4-Set Stop-Loss-: A common approach is to place a stop-loss just inside the opening range. For example, if you enter a long position, your stop-loss might be slightly below the high of the range.
5-Set Profit Targets-: Profit targets can be set based on a fixed ratio (e.g., 2:1 risk/reward ratio), or by trailing the stop-loss as the price moves in your favor.
⚡ Factors to Consider for ORB Success-::
1-Market Conditions-: ORB tends to work best in markets with high liquidity and volatility. Stocks with news catalysts, or major indices, are often good candidates.
2-Time Frame Selection-: The choice of the opening range time frame is critical. Shorter time frames (e.g., 5 minutes) might offer more frequent signals, but they can also lead to more false breakouts. Longer time frames (e.g., 30 minutes) may provide more reliable signals but fewer opportunities.
3-Volume Confirmation-: It's often wise to confirm breakouts with an increase in volume, which can indicate the strength of the move.
4-Avoiding False Breakouts-: Not every breakout leads to a sustained move. To avoid false breakouts, some traders wait for a retest of the breakout level or use additional technical indicators, such as moving averages or momentum oscillators, to confirm the trend.
⚡ Example of ORB in Action-::
Let’s consider a stock that has an opening range of 100 to 105 in the first 15 minutes of trading. Here’s how a trader might approach this:
Breakout Above 105-: The trader places a buy order at 105.10 (a little above the breakout level) and sets a stop-loss at 104.50 (just below the high of the opening range). The profit target might be set at 107.20, assuming a 2:1 reward-to-risk ratio.
Breakout Below 100-: Alternatively, if the stock breaks below 100, the trader could short the stock at 99.90 with a stop-loss at 100.50 and a profit target at 97.80.
⚡ Advantages of ORB-::
Clarity-: The strategy provides clear entry and exit points, reducing guesswork.
Structure-: It imposes discipline by setting predefined rules for trading.
Simplicity-: ORB is relatively simple to understand and execute, making it accessible to traders of all experience levels.
⚡ Challenges and Limitations-::
False Breakouts-: These can lead to losses if not managed carefully.
Whipsaws-: In highly volatile markets, prices might break the range multiple times, leading to potential whipsaws.
Over-Reliance on Opening Range-: Solely relying on the opening range might ignore broader market context or trends from previous days.
⚡ Conclusion-::
The Opening Range Breakout strategy is a powerful tool in a trader's arsenal, particularly for those who thrive on early market action. While it offers a structured approach to capturing trends, success with ORB requires discipline, proper risk management, and an understanding of market conditions. By combining ORB with other strategies or indicators, traders can increase their chances of capturing profitable moves while minimizing risks.
Whether you’re a seasoned trader or just starting, mastering the ORB strategy can provide you with the edge needed to navigate the fast-paced world of day trading.
Thanks for reading the post, I hope you will the information shared above and like my idea too.
Best Regards- Amit
DIVISLAB and ONGC showing high rise in Future OIDIVISLAB
The price has been consolidating in a narrow range for more than a year.
Recently, the price successfully surpassed its resistance level.
Since the breakout, the price has maintained above the breakout point and is steadily increasing.
The current RSI is above 60, suggesting strong buying pressure.
ONGC
Before, the price was rising steadily, pushing the highs and lows higher.
Since March’24, the price has entered a consolidation phase, and an ascending triangle pattern has been established.
A breakout with significant volume has occurred recently.
The RSI is currently above 60, indicating strong buying pressure.
Trading Vs InvestingTrading and investing are two distinct approaches to engaging with financial markets, each with its own strategies, goals, and risk profiles. Here’s a comparison to help differentiate between the two:
Trading
Definition:
Trading involves the frequent buying and selling of financial instruments, such as stocks, commodities, currencies, or derivatives, with the goal of making short-term profits.
Key Characteristics:
Time Horizon:
Short-Term Focus: Trades can last from seconds to months, but they are generally not held for long periods.
Frequent Transactions: Traders often execute multiple trades daily, weekly, or monthly.
Strategy:
Technical Analysis: Traders often rely on technical analysis, using charts, patterns, and indicators to predict price movements.
Market Trends: Trading strategies may include day trading, swing trading, scalping, and momentum trading.
Risk and Reward:
High Risk, High Reward: Trading can yield high returns quickly but also comes with significant risk due to market volatility and leverage.
Risk Management: Successful traders use stop-loss orders and position sizing to manage risk.
Skills Required:
Market Knowledge: Understanding market dynamics, trends, and technical indicators is crucial.
Discipline and Emotion Control: Traders need to be disciplined and able to manage emotions to avoid impulsive decisions.
Investing
Definition:
Investing involves buying and holding financial instruments for the long term, aiming to build wealth gradually through appreciation, dividends, and interest.
Key Characteristics:
Time Horizon:
Long-Term Focus: Investments are typically held for years or even decades.
Infrequent Transactions: Investors make fewer transactions compared to traders, often holding positions through market fluctuations.
Strategy:
Fundamental Analysis: Investors focus on the underlying value of assets, examining financial statements, company performance, industry trends, and economic
factors.
Growth and Value Investing: Strategies may include growth investing, value investing, income investing, and index investing.
Risk and Reward:
Moderate Risk, Moderate Reward: Investing aims for steady, long-term growth, with risks spread over a diversified portfolio.
Compounding: The power of compounding returns over time is a significant advantage.
Skills Required:
Analytical Skills: Understanding financial health, market conditions, and economic indicators is important.
Patience and Long-Term Vision: Investors need to stay focused on long-term goals and not be swayed by short-term market volatility.
Summary
Trading is suitable for those looking to capitalize on short-term market movements and who have the time and skills to actively manage their positions. Investing is ideal for those aiming to build wealth over the long term, preferring a more passive approach with less frequent adjustments to their portfolio.
Each approach requires a different mindset, skill set, and level of involvement. Choosing between trading and investing depends on individual goals, risk tolerance, and time commitment.
❤️❤️ MARKET SECRET ❤️❤️👇
1. TRADE WHAT YOU SEE NOT WHAT YOU ASSUME
2. FOLLOW THE TREND BECAUSE TREND IS YOUR ONLY FRIEND
3. CHART IS SUPREME
4. YOUR ASSUMPTION & EMOTIONS HAS NO VALUE IN THE MARKET
Our motto is to help each and every individual to reach and achieve their financial goals across the world by empowering individuals with the accurate knowledge and skills necessary to navigate the complexities of the financial markets successfully. 💪
Please NOTE 👉 Levels shared are for intraday trading only.
🚫 Disclaimer 🚫 All information shared here is for educational purposes only, Please consult your financial advisor for your financial matters before investing And taking any decision. We are not responsible for any profit/loss you make. No Buy Sell Recommended 🚫
Request your support and engagement by like, comment & follow to provide encouragement
CHEERS 👍
Linear Vs Logarithmic Chart. Which one to use ?NSE:ADANIENT
Hello, Traders! 👋
I hope you’re all having a fantastic weekend! 🌟 Whether you’re sipping coffee, analyzing charts, or just enjoying some downtime, let’s make it even more productive. 📈💡
In today’s educational post, we’ll explore a concept that might have slipped under your radar or left you slightly puzzled. No worries—I’m here to shed light on it!
Understanding Linear vs. Logarithmic Charts
🔹When it comes to visualizing data, two chart types stand out: linear charts and logarithmic charts. These seemingly simple charts can reveal powerful insights about trends, growth rates, and relative changes. Buckle up—we’re about to explore their differences and use cases! 📊🚀
What is a Linear chart?
🔹The Price plotted on a graph which we call charts, the price on the Y-axis shown will be consistent and uniformly scaled, which shows more significance to recent price action over old price action.
🔹Linear charts are great for showing absolute changes when each price has similar increments.
🔹Linear charts are easy to understand and you are already using them.
What is Logarithmic Chart (Log Scale):
🔹A logarithmic chart, or log scale, depicts percentage changes, giving a more accurate view of relative movements.
🔹Logarithmic charts are especially useful when analyzing Long-term price data. They can show proportional relationships and percentage changes more effectively.
🔹As time goes by, the difference between linear and logarithmic charts becomes more pronounced. Log scales are often preferred for their accuracy.
On this difference table, you can easily understand the uses and benefits of logarthmic charts.
How to switch to a logarithmic chart?
Just right right-click on the Price scale on the Tradingview chart and you will find log chart.
or you can just hover your cursor at the bottom of the price scale you will see A and L (A - means arithmetic and L- Logarithmic).
Note:- On short-term or recent price action these charts will not make any big difference but surely they impact longer-term data.
Feel free to explore both chart types and choose the one that suits your analysis best! 📊🔍
If you’d like more examples or have other questions, just ask—I’m here to help! 😊🚀
Keep Learning,
Happy Trading.
⭐️⭐️Leading V/S Lagging Indicators⭐️⭐️What is a leading indicator?
A leading indicator in trading is a tool or metric used to predict future price movements in financial markets. These indicators provide signals about potential price changes before the new trend or reversal occurs, allowing traders to make informed decisions ahead of time. Leading indicators are particularly useful for identifying market trends, potential reversals, and the general direction of price movements.
Common Types of Leading Indicators
⭐️Relative Strength Index (RSI)
⭐️Stochastic Oscillator
⭐️Moving Average Convergence ⭐️Divergence (MACD)
⭐️Commodity Channel Index (CCI)
Characteristics of Leading Indicators
Predictive Nature: Leading indicators attempt to forecast future market movements rather than reflect current or past price actions.
Sensitivity: These indicators are typically more sensitive to market movements, providing earlier signals but also having a higher likelihood of generating false signals.
Early Signals: Provides traders with early warning signs of potential market reversals or trends.
Decision Making: Helps traders to make proactive trading decisions, potentially capturing larger price movements.
Limitations:
False Signals: More prone to providing false signals compared to lagging indicators.
What is a lagging indicator?
A lagging indicator is a tool or metric that follows the price action of an asset and provides signals based on past data. These indicators do not predict future price movements but confirm trends and price patterns after they have already started. Traders use lagging indicators to identify the strength and direction of a trend, helping them make decisions about entering or exiting trades.
Common Types of Lagging Indicators
⭐️Simple Moving Average (SMA)
⭐️Exponential Moving Average (EMA)
⭐️Bollinger Bands
⭐️Average Directional Index (ADX)
⭐️Parabolic SAR
Characteristics of Lagging Indicators:
Confirmation: They confirm trends after they have started, reducing the risk of false signals but potentially leading to delayed entry or exit points.
Smoothing: They smooth out price data, making it easier to see the overall trend without being distracted by short-term volatility.
Historical Data: They rely on past price data, which means they react to events after they have occurred.
Limitations:
Delay: They can lead to delayed entry and exit points, potentially causing traders to miss the optimal time to enter or exit a trade.
Not Predictive: Since they are based on historical data, they do not predict future price movements but only confirm past trends.
Leading Vs Lagging Indicators
Consider the market as a car to understand the relationship between leading and lagging indicators. Leading indicators are your windshield (showing you where you are going), whereas lagging indicators are your side mirrors (displaying where you are coming from). Both indicators are essential to your driving. It is always tempting for traders to focus on leading indicators because they offer ideal entry points for maximum profits but are also prone to numerous false signals. On the other hand, despite lagging indicators limiting potential profits, they provide the much-needed conviction to enter trades in the market. Therefore, a will find a way to combine the two indicators in relevant market conditions effectively.
⭐️⭐️⭐️Final Word⭐️⭐️⭐️
Many traders use a combination of both leading and lagging indicators to enhance their trading strategies. For instance:
Leading indicators can provide early entry and exit signals.
Lagging indicators can confirm the validity and strength of those signals, reducing the chances of reacting to false signals. By integrating both types of indicators, traders can create a more robust trading strategy that balances early action with confirmation, improving overall trading effectiveness.
SPARC - BO FAIL, IMPORTANT RISK MANAGEMENT LESSONHello Community,
today i will talk about the importance of risk management in stock market, why its important to respect risk in stock market with proper stoploss method you should have as per your risk apetite with example. We have talked much about the BO stocks which had made good money for us but still in market there are lot many examples where good BO got failed at later stage.
I was looking at the chart of sparc which i traded before as a 52 WEEK BO but since after my entry it stalked a little bit so i booked my profit as i got other opportunity to make money and keep the alerts at BO points to reenter later. Now to day while scanning my multiyear bo watchlist i saw that a BO Faliure with gaps in the chart at weekly time frame. Rest details are on chart.
That's why i say everytime profit booking is also very improtant at every level, you can always reenter in any stocks becoz booking profit is better than the looking profit.
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.
I use Trading view for my Analysis and charts Repositories. I could have Or Couldn’t have positions in Sharing Ideas.
Treat trading like a business and it will pay you like a business…..!!
Hope this post is helpful to community
Thanks
RastogiG
What is Swing Trading Let's Know Hi mates and friends, Here i am sharing again an educational post and this time it's all about Swing trading as you might have guessed after reading the title so sharing some insight on this topic below mates !!
Swing Trading: A Strategy for Riding Market Waves
Swing trading is a popular trading strategy utilized by investors seeking to profit from short-to-medium-term price movements in financial markets. Unlike day trading, which involves rapid buying and selling within a single trading session, swing trading typically spans a few days to weeks. This publication delves into the fundamentals of swing trading, its strategies, advantages, and considerations.
Understanding Swing Trading:
Swing trading capitalizes on "swings" or price movements within an established trend. Traders aim to identify and exploit price fluctuations, buying at low points and selling at higher points, or vice versa in a bearish market. This strategy relies on technical analysis, which involves studying price charts and indicators to forecast future price movements.
Key Strategies:
1. Trend Identification: Traders analyze price charts to identify the prevailing trend, whether it's bullish (upward), bearish (downward), or ranging (sideways). Swing traders typically avoid counter-trend trading and focus on aligning their positions with the dominant trend.
2. Entry and Exit Points: Swing traders seek entry points near support levels (for buying) or resistance levels (for selling) within the trend. They often use technical indicators such as moving averages, Fibonacci retracements, and oscillators like the Relative Strength Index (RSI) or Stochastic Oscillator to pinpoint these levels.
3. Risk Management: Effective risk management is crucial in swing trading. Traders establish stop-loss orders to limit potential losses and employ position sizing techniques to manage risk exposure. The risk-reward ratio, which compares potential profit to potential loss, is carefully considered for each trade.
4. Trade Duration: Unlike day traders, swing traders hold positions for several days to weeks, allowing trades to develop and capture larger price movements. This approach requires patience and discipline to withstand short-term fluctuations.
Advantages of Swing Trading:
1. Flexibility: Swing trading can be pursued alongside other commitments, as it doesn't require constant monitoring of the markets.
2. Profit Potential: By capturing intermediate price movements, swing traders have the potential to generate significant profits compared to day traders.
3. Reduced Noise: Swing traders focus on higher timeframes, filtering out intraday noise and false signals often encountered in shorter-term trading.
Considerations and Risks:
1. Market Volatility: Swing trading carries inherent risks, particularly during periods of high volatility or sudden market reversals. Traders must adapt their strategies accordingly and be prepared for unexpected price movements.
2. Overtrading: Impulsive trading or excessive trading frequency can erode profits and increase transaction costs. Maintaining discipline and adhering to a predefined trading plan are essential to avoid overtrading.
3. Psychological Factors: Emotions such as fear, greed, and overconfidence can influence decision-making and lead to poor trading outcomes. Effective risk management and emotional discipline are critical for success in swing trading.
In conclusion, swing trading offers an alternative approach for investors looking to capitalize on short-to-medium-term price movements in financial markets. By combining technical analysis with effective risk management, traders aim to profit from the ebb and flow of market trends while managing inherent risks and challenges.
If you like my publication do boost my post, Thanks in advance.
Best Regards-: Amit
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.
Stock Selection Based on ATH/52 Week Stock and Relative strengthHello community
Here I will be talking about the process for picking up the stocks based upon the All Time High (ATH)/52 Week BO Stock and RSI . As this is known to everyone but only few are getting benefited by applying it in real trading. The stock represents strength if it breaks its ATH Level and comes from Weekly BO Base. Most of the gains are made with the stocks breaking its ATH and Coming from Weekly Base BO and once it is combined with the RSI and Price Volume this can do wonders and improve trading style.
In my earlier write up i also talked about the use of RSI with Screener from Tradingview only. Since i used this as my repository so save all my write up here only and can be viewed.(Stock Selection Based on Relative StrengthEDUCATION)
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 New All Time High
- Select Relative Strength Index (14) >=75
The above will filter out stocks based on ATH and 52 Week High stocks and RSI. You can add more filters according to your requirements and make your stock list more refine and Make a list and look for opportunities.
I use the above filter to filter out stocks every weekend and mix it with Price and Volume to get Maximum Benefit.
As I am a Price Action trader I mix Price/Volume,Trend and ride the momentum.
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 each other in Learning and excel in our profession.
Remember: I am a Price Action Trader and use Price and Volume together with different Timeframes, including RSI, and market conditions. To get the 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
Disclaimer and Risk Warning.
I am not a Sebi registered analyst. The analysis and discussion provided on in.tradingview.com intended for educational purposes only and should not berelied upon for trading decisions. RastogiG is not an investment adviser andthe information provided here should not be taken as professional investmentadvice. Before buying or selling any investments, securities, or preciousmetals, it is recommended that you conduct your own due diligence. RastogiGdoes not share in your profits and will not take responsibility for any lossesyou may incur. So Please Consult your financial advisor before trading or investing.
Expensive Mistakes in Trading and how to Clear Them !Hello Trading community, Today i brought an educational publication for sharing with all of you mates in which most of the experiences are mine too that what are the expensive mistakes we are doing and how can we improve that mistakes i am trying to share below mates. But before i start i want to say a big Thanks to Trading view and entire team for adding index and stock Options chart in the system and with this integration we no longer need to go any other platform to view those charts.
Trading in financial markets comes with risks, and mistakes can be costly. Some of the most expensive mistakes in trading include:
⚡Lack of Risk Management:
Failure to set stop-loss orders or not adhering to risk management principles can lead to significant losses. Traders who expose themselves to excessive risk without a safety net often suffer severe financial consequences.
⚡Overleveraging:
Using excessive leverage amplifies both gains and losses. While it can increase potential profits, it also magnifies the impact of market fluctuations. Traders who overleverage their positions may find themselves facing margin calls and significant losses.
⚡Ignoring Fundamental Analysis:
Neglecting to conduct thorough fundamental analysis and relying solely on technical analysis or market trends can lead to poor investment decisions. Changes in economic indicators, company financials, or geopolitical events can have a profound impact on asset prices.
⚡Chasing Losses:
Trying to recover losses quickly by making impulsive and high-risk trades can exacerbate the problem. Emotional decision-making driven by a desire to recoup losses often results in further financial setbacks.
⚡Lack of Discipline:
Traders who deviate from their established trading plans or strategies due to emotions, fear, or greed may make poor decisions. Maintaining discipline is crucial to successful trading.
⚡Insufficient Research:
Inadequate research before entering a trade can lead to unexpected surprises. Traders should thoroughly understand the assets they are trading, market conditions, and relevant news that might impact their positions.
⚡Falling for Hype and Speculation:
Investing based on market hype or speculative trends without proper due diligence can result in losses. Relying solely on the opinions of others or following the crowd can be detrimental to a trader's financial health.
⚡Market Timing Errors:
Attempting to time the market perfectly is challenging and often leads to losses. Traders who consistently mistime market entries and exits may miss out on profitable opportunities or incur substantial losses.
⚡Not Diversifying:
Putting all funds into a single asset class or market increases vulnerability to downturns. Lack of diversification can expose traders to significant losses if a particular sector or asset class underperforms.
⚡Ignoring Transaction Costs:
Neglecting to consider transaction costs, such as commissions and fees, can erode profits. Frequent trading without accounting for these costs can significantly impact overall returns.
Successful traders often learn from their mistakes, adapt their strategies, and prioritize risk management to minimize the impact of errors in the future. It's essential for traders to continually educate themselves, stay informed about market conditions, and remain disciplined in their approach.
Now we will talk that how we can take control on these above mentioned mistakes-:
Avoiding costly mistakes in trading requires a combination of education, discipline, and a well-thought-out trading plan. Here are some of the most expensive mistakes in trading and tips on how to avoid them, Understand the financial markets, trading instruments, and the factors that influence prices. Stay informed about economic indicators, market trends, and news that may impact your trades.
🚀Have a Trading Plan:
Develop a clear and well-defined trading plan that includes your goals, risk tolerance, and strategies. Outline entry and exit points, risk management rules, and position sizing guidelines.
🚀Risk Management:
Never risk more than you can afford to lose on a single trade.
Use stop-loss orders to limit potential losses and protect your capital.
Diversify your investments to spread risk across different assets.
🚀Control Emotions:
Emotional decisions often lead to trading mistakes. Stay disciplined and stick to your trading plan. Avoid making impulsive decisions based on fear, greed, or overconfidence.
🚀Start with a Demo Account:
Practice your trading strategies with a demo account before using real money.
This allows you to refine your approach and gain experience without risking your capital.
🚀Continuous Learning:
Stay updated on market trends, new trading strategies, and evolving market conditions.
Learn from both successful and unsuccessful trades, and use that knowledge to refine your approach.
🚀Monitor Positions:
Regularly review your open positions and adapt your strategy as market conditions change.
Set realistic profit targets and be willing to take profits when your goals are met.
🚀Stay Informed:
Keep abreast of global economic and political events that may impact the markets.
Be aware of scheduled economic reports, earnings announcements, and other events that can cause volatility.
🚀Avoid Overtrading:
Resist the urge to trade excessively. Quality over quantity is key.
Focus on high-probability setups and wait for the right opportunities.
🚀Stay Flexible:
Markets can be unpredictable. Be willing to adjust your strategy if conditions change.
Avoid being overly attached to a specific trade or outcome.
🚀Review and Analyze:
Regularly review your trades, both successful and unsuccessful.
Identify patterns in your decision-making process and learn from past mistakes.
🚀Seek Professional Advice:
Consider consulting with financial advisors or experienced traders for insights and guidance.
Joining trading communities or forums can also provide valuable perspectives.
Remember, trading involves risk, and there are no guarantees of profit. By following these guidelines and maintaining a disciplined approach, you can increase your chances of making informed decisions and avoiding common trading mistakes.
Regards-: Amit
Happy Trading mates, Thanks for reading hope you like this publication friends.
“If most traders would learn to sit on their hands 50 percent of the time, they would make a lot more money.” - Bill Lipschutz
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.
Getting Started with Technical AnalysisInvesting in the stock market can be both exciting and overwhelming. There are so many stocks and strategies are there that make it hard to decide where to invest. That’s where technical analysis comes in. It’s the study of market data to find patterns, trends, and potential opportunities.
To get started with technical analysis, you need to first understand what exactly technical analysis is.
Technical Analysis:
Technical analysis may sound complex, but it’s actually quite easy. In simple terms, it’s a method of assessing stock or any tradeable asset by studying statistics based on market activity, like past prices and volume.
Technical analysts believe that by analysing charts and other indicators, they can identify and predict market trends for any security. Essentially, they study a stock’s trading history to measure its potential for future price changes.
Let’s understand this with an example:
Let’s make a comparison to weather forecasting.
Can we predict the weather for the future? Yes.
Is the weather forecast always 100% accurate? No.
Weather forecasts are applicable over a period of time rather than being precise second by second.
Similarly, just like meteorologists use past weather data and atmospheric patterns to forecast future weather conditions, technical analysts utilize past price and volume data to predict future stock prices.
How You Can Start Technical Analysis of Stocks?
To begin with technical analysis, the first step is selecting a security for analysis. This can include stocks, commodities, currency pairs, or any other tradable financial instrument available on an exchange. Once you have decided on the security, the next step involves studying its price and volume data.
A widely used tool in technical analysis is the price chart. It provides a visual display of a security’s price changes over time. Price charts come in various types, with the candlestick chart being the most popular and commonly used option.
Candlestick charts offer wide information in a single platform. Each candlestick represents a specific time period, like a day or an hour. The body of the candlestick indicates the security’s opening and closing prices within that timeframe, while the wicks or shadows represent the highest and lowest prices recorded during that period.
By studying these candlesticks, traders can identify patterns and trends in the price movements of the stock.
Along with price charts, traders use various technical indicators to analyse securities. These indicators are mathematical calculations derived from the price and volume data of a security. They give signals that confirm trends, identify potential buy or sell signals , and provide additional information to traders.
Some popular and commonly used technical indicators are moving averages , relative strength index (RSI) , and Bollinger Bands , among others. These indicators help traders to judge market conditions, identify potential price reversals or trends, and help to take trading decisions.
Dos and Don’ts to follow when starting Technical Analysis:
Do’s:
A Volume is an important tool for technical analysis. High trading volume suggests a strong trend, while low volume can indicate a lack of buyers and sellers in security.
Traders mostly confirm trends and signals by using multiple indicators. With one or more than one indicators, a trader can become more confident in a potential trade. This approach allows for a thorough analysis of different aspects of the market, increasing the chances of making informed trading decisions.
One of the most important tips to remember is that while technical analysis can assist in identifying potential trades, practising effective risk management is essential.
Risk Management involves implementing stop-loss orders and ensuring that you don’t risk more than a certain percentage of your portfolio on any single trade. With the help of these risk management techniques, you can protect your investments and maintain a disciplined approach to trading.
As the price of stocks is changing every time, you need to stay updated with news and investments that can impact your investment.
Don’ts:
While technical analysis can look complex, it’s important to avoid difficult things. Stick to the fundamental principles and strategies, and you should be on the right track. Sometimes, simplicity is the key to effective analysis and decision-making in the stock market.
While technical analysis is important, it shouldn’t be the only way to evaluate securities. It’s also important to consider fundamental analysis , which involves looking at a company’s financial statements and economic factors. By using both technical and fundamental analysis, investors can get a better overall understanding of the securities they are analysing.
Trading can involve emotional decisions, but it’s important to let no emotions cloud your judgment. Stick to your trading strategy and avoid making impulsive trades driven by fear or greed. By maintaining discipline and adhering to your predetermined plan, you can make more rational and informed trading decisions.
When you’re taking potential trades, it’s important to think about the risk-reward ratio . This means comparing the potential profit with the potential loss.
With a good risk-to-reward ratio, you can make smarter decisions and aim for a good balance between R:R in your trading strategy.
Conclusion:
Technical analysis is a great tool for traders and aspiring investors in the Indian stock market. It helps identify potential opportunities by analysing price and volume data, allowing traders to recognize patterns and trends. However, it’s important to follow certain guidelines when using this approach. With the help of candlestick patterns , indicators, risk management tools, and fundamental analysis traders can achieve their financial goals.
Double Bottom & Double Top Patterns and How To Trade Them👋 Hello Trading community and my friends so today i came here with an educational post hope you like my work mates, In technical analysis quite often we hear about Double bottom and Double top patterns so today i am sharing that in very simple and easy to understand way. Although a lot can be understood from the idea's image alone but for those who are new to technical analysis i am explaining them by the description below.
⚪ Double bottom pattern-:
It is a bullish reversal pattern that typically occurs at the end of a downtrend. It consists of two distinct lows at approximately the same price level, separated by a peak in between. Here's how you can identify and trade on a double bottom pattern:
⭐️Identify the Pattern- Look for two consecutive troughs (low points) in the price chart, with a peak (high point) in between. The lows should be roughly at the same price level, forming a "W" shape.
⭐️Confirmation- After identifying the double bottom pattern, it's important to wait for confirmation before entering a trade. Confirmation can come in the form of a breakout above the peak that separates the two lows. This breakout should ideally be accompanied by an increase in trading volume, signaling strong buying interest.
⭐️Entry- Once you have confirmation of the pattern, you can enter a long (buy) position. Some traders prefer to enter immediately after the breakout above the peak, while others wait for a pullback to the breakout level before entering to improve risk-reward ratios.
⭐️Stop Loss- So there are no particular definition of stop loss after the activation of trade because it totally depends on a trader's setup some takes below resistance close or trigger basis and some can take below the recent swing low and maybe there are some more ways too.
⭐️Target- Determine a target price based on the height of the pattern. Measure the distance between the lowest point of the double bottom and the peak, and then add this distance to the breakout level. This gives you a potential target for your trade.
⚪ The double pattern-:
it is another common technical analysis pattern observed in financial markets, often signaling a potential reversal of an uptrend. The double top pattern typically occurs after an extended uptrend in the price of an asset.
⭐️Identify the Pattern- It consists of two consecutive peaks (or tops) at approximately the same price level, separated by a trough (or valley) in between. The peaks resemble the letter "M" on the price chart.
⭐️Confirmation- Traders typically look for confirmation signals to validate the pattern, such as a break below the trough between the two tops, increased volume during the breakdown, or other technical indicators like bearish divergence on oscillators such as the RSI or MACD.
⭐️Entry- Enter a short trade after confirmation, preferably when the price breaks below the trough between the two tops. Some traders may wait for a pullback to the breakdown level before entering to improve risk-reward ratios.
⭐️Stop Loss- So as i said above for the double bottom stop loss now telling the same for it too that it depends on trader to trader setup that some can take stop loss above resistance on closure or trigger basis and some can take above recent swing high likewise.
⭐️Target- Set a target for your trade based on the height of the pattern, which is the distance between the peak and the trough. Additionally, consider other support levels or Fibonacci retracement levels as potential targets.
⭐️Remember that no trading strategy is foolproof, and it's essential to combine the Double bottom & Double top patterns with other forms of analysis for better accuracy and risk management.
⭐️Risk Management- Always manage your risk by sizing your position appropriately and setting stop-loss orders. Additionally, consider the overall market conditions and use other technical indicators to confirm your trade decision. As always, combining technical analysis with proper risk management and market understanding is crucial for successful trading.
⭐️Exit- Exit the trade when your target is reached, or if the price shows signs of reversing. Pay attention to other technical indicators or chart patterns that may suggest a change in market sentiment.
My Setup-: So after the confirmation usually i take retest entries to minimize my risk for these type of trades and somehow retests gives me more confirmations too of the strength of breakout, And one more thing i use and that is RSI indicator with default settings for these type of trades provided by Trading View so thank you very much to them. Stop loss i take on closing basis above or below on support and resistance. This is educational post so no logic to update this idea but still then if i will get any good example i will provide that via update. Thanks for reading and giving your valuable time.
Best Regards- Amit
“I get real, real concerned when I see trading strategies with too many rules (you should too).”
Larry Connors
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.
Only one indicator is enough to trade.Yes. ! Super trend.
If we know how and where to use this indicator, you are sure about getting very good trade.
It ensures
1. Low risk
2. High returns and at times real big trend
So how to use it?
1. Prefer larger time frame to avoid noise. I use weekly.
2. Once super trend is green wait for pullback towards super-trend.
3. When supertrend acts as support/resistance and price reverses from nr super trend make entry. (I would wait for break of earlier week high nr super trend)
4. SL is close below super trend. (weekly close for weekly chart)
5. Try to exit far from super-trend to book profit. (Target around 15% possible on weekly)
Opposite is true for shorting in down trend....!
All these charts are from Nifty50 stocks
Note: I am re-publishing this post as earlier post was on Nestleindia which got split and chart is not getting updated.
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.
Bajel Products Limited - Cup and Handle Breakout - UnderstandingGreetings, Traders!
Today, I present an illustrative example of the Cup and Handle Pattern Breakout in Bajel Products Limited, focusing on key considerations for a comprehensive analysis.
Stage - 1
Firstly, Time Frame:
Always conduct your chart analysis on a higher time frame. In this instance, we are utilizing the Daily Time Frame for a more strategic perspective.
Secondly, Price Rise:
A surge in price must be accompanied by a proportional increase in volumes. This correlation is crucial, and I have highlighted these instances on the chart for clarity. The breakout candle shows a good strength with rise in price.
Thirdly, Volumes:
Carefully monitor how volumes respond to the rising price. A simultaneous uptrend in both price and volumes signals a robust bullish trend. The subsequent drop in volumes or contraction during the Cup formation suggests traders are holding onto their gains. Conversely, a decline in price without a corresponding volume increase indicates a weak bearish trend. Thus, meeting a criteria of breakout.
Stage 2 -
Handle Formation: During the creation of the Handle, anticipate a similar pattern of rise and drop in volumes. This stage is pivotal in preparing for the eventual breakout.
Stage - 3
Pattern Completion:
Once the Cup and Handle pattern is finalized, expect a substantial increase in volumes and price. Recognition by other traders amplifies momentum, particularly after a breakout from the resistance zone.
Stage - 4
Target:
For setting targets, a common approach is measuring from the apex of the cup to the base. I have marked this on the chart for a practical understanding.
I hope this breakdown enhances your understanding of the Cup and Handle pattern. Feel free to share your thoughts and comments; your feedback is greatly appreciated!
Happy Trading!
