Community ideas
One candlestick pattern - The MarubozuHey everyone!
In this post, we are going to talk about a candlestick pattern known as Marubozu, along with a few exhibits that may help you solidify your understanding of this pattern.
Please remember this is an educational post to help all of our members better understand concepts used in trading or investing. This in no way promotes a particular style of trading!
The candlestick charts offer a quick picture into the psychology of buyers and sellers. Before proceeding further, a few things to keep in mind:
→ A bearish candlestick indicates the opening price of the session being higher than the closing price.
→ Similarly, a bullish candlestick indicates the opening price of the session being lower than the closing price.
→ The shadow at the top and bottom represent the high and low for the session.
→ The size of the real body is indicative of the strength of the trend.
What is a Marubozu pattern?
A Marubozu is a candlestick with a full real body and no shadows. This solid body indicates a strong trend, be it in any direction. The name Marubozu comes from the Japanese and means "close-cropped", indicating a candle with no shadow.
Marubozu can be divided into two types, depending on the bias.
∎ Bullish marubozu
∎ Bearish marubozu
A Marubozu can appear anywhere in the chart irrespective of the prior trend; the trading implication remains the same.
⚠️ Please notice the textbook definition of a Marubozu is a candle with no shadows. However, in practice, the ideal setups rarely occur. Hence, there is a little bit of wiggle room on either side.
🟩 Bullish Marubozu
→ In a bullish Marubozu, the lack of the upper and lower shadow indicates that the low and high are equal to the open and close, respectively. However, there may be some shadows in reality, therefore we must be versatile within limits.
→ A bullish Marubozu indicates that market participants are willing to buy the stock at any price point throughout the day. As a result, the stock closes near the session's high.
→ In general, the occurrence of a bullish Marubozu indicates that the sentiment has strongly shifted to the upside and we can see higher prices in the coming sessions. Hence a trader should look for buying opportunities whenever the price pulls back to lower levels.
Exhibit 1: Bullish Marubozu
Exhibit 2: Bullish Marubozu with subsequent uptrend
🟥 Bearish Marubozu
→ In a bearish marubozu, the open price is almost equal to the high whereas the session closes near the low price.
→ A bearish Marubozu indicates a strong bearish sentiment because the market participants are willing to sell the stock at any price point throughout the day.
→ In general, the occurrence of a bearish Marubozu indicates that the sentiment has strongly shifted to the downside and we can see lower prices in the subsequent sessions. Hence a trader should look for selling opportunities whenever the price pulls back to higher levels.
Exhibit 1: Bearish Marubozu
Exhibit 2: Bearish Marubozu with subsequent down trend
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See you all next week. 🙂
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Thanks to the greatest teacher 'THE MARKET' !!!This publication is dedicated to thanking one of the greatest and strict teacher the ‘Stock Market’.
The lessons of the market not only help one to succeed in the stock market but also helps throughout life.
This 5th September i.e. Teacher’s day let’s have a detailed look at 5 Great Learnings of Stock Market and thank her for these
life-awakening learnings.
-> Discipline: The most important teaching in markets is discipline. As the wording of Jim Rohn states “Discipline is the bridge between goals and accomplishment” stock market develops that bridge.
The market has its way of teaching and punishing, I think all of us had witnessed its punishment whether in form of not keeping stop loss or not following your trade system.
Discipline plays a vital role in an individual’s life. As said by Horace “Rule your mind or it will rule you. ”The disciplined person has the power to rule his mind whereas others lack this ability.
-> Patience: Another gem cultivated by markets in our personality and harvested by us throughout life. One of the familiar names of our school time Benjamin Franklin says “He that can have patience can have what he will.” market first teaches this gem to us then offer us what we wish.
We all have at least once missed taking the real profit by not waiting till the target is achieved but leaving the trade in midway though it was moving in our direction the reason is we lack patience and the market gives profit only to eligible ones so, either you be eligible or market will make you fit for it by its own way.
-> Ability to conquer 3 gateways of hell: According to ‘The Bhagavad Gita’ there are 3 gateways to hell i.e. Lust, Greed, and Anger.
The market helps its students in conquering those strong emotions. The beginner in the stock market has a strong lust for making money very quickly and greed for making lots of money without that kind of effort and when he fails in his motive anger gets born in his personality from where degradation or hell starts.
Those few people who still have not left the hands of the market get the knowledge to conquer those emotions throughout their journey in markets.
-> Faith in yourself: One of the famous quotes by Ralph Waldo Emerson is “The best lightning rod for your protection is your own spine.” market strengthen that spine so that we as its student can withstand any kind of storm in our life.
Before taking any trade based on your analysis requires self-belief on the early days people hesitate but later they rely on their analysis because the market has taught them self-belief.
-> Crush your arrogance: Market is popular in crushing the arrogant guy along with this removing any trace of arrogance in his personality. The famous wording says “Close some doors today. Not because of pride, incapacity, or arrogance, but simply because they lead you nowhere.” market as a kind teacher keep a keen eye on her student for arrogance as she knows that as soon as arrogance arises person starts his fall.
All of us had witnessed that whenever we start thinking that we have mastered markets and try to neglect discipline market slaps us badly to awaken us that we are still newbies and still had to learn a lot.
According to me, these 5 are the most valuable learnings of markets but if you have any learning of market much valuable in your life please mention in comments.
Also, comment which subjects teacher in your school life is as strict as the stock market, for me its 2nd language(Hindi) teacher.
Finally great thanks to 'The Market' for these great teachings.
The stock market gives success only to eligible ones so, either you be eligible or the market will make you fit for it in its own way.
Important house rules of TradingViewHey everyone! 👋
In this post, we will be taking a look at some of the most important guidelines we have on our platform when it comes to publishing. By following these pointers, you can be sure that the stage is set for you to post the most creative, alpha-generating trade ideas! Who knows, we may even select your idea for the front page 👀.
In addition, following these rules will also help keep the site free of spam and low-quality content. Let’s dive in!
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See you all next week. 🙂
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"Volume and Price" Trend Relationship📈"Volume and Price" Trend Relationship📈
Price Up and Volume Up ✅
The volume trend has supported the uptrend movement. Therefore, we can look for buying opportunities.
Price Up and Volume Down ✅
The volume trend has not been supported the uptrend movement. Therefore, we can exit our long position
Price Down and Volume Up ✅
The volume trend has supported the downtrend movement. Therefore, we can look for selling opportunities.
Price Down and Volume Down ✅
The volume trend has not been supported the downside movement. Therefore, we can exit our short position
Basic patterns of Elliott Wave Theory ExplainedTHE INTRODUCTION
As you all know the waves always moves in zig zag fashion, either it moves up or it moves down, but the pattern always remains same i.e. Zig zag.
So, the most important question is, with which method one can define the trend or some meaningful pattern, which can help anyone to plan his trade & other opportunities.
There are multiple technical indicators available which can help to identify the patterns. However, the method which I use is The great Elliott Wave Theory.
In this post I would like to summarize all of the basic Elliott Wave patterns.
Here, in the Elliott Wave world, waves are always of two types.
1- Impulsive
2- Corrective
CYCLE
Whenever one impulse and corrective waves get combined one cycle is formed.
Here, I have drawn the graphical representation of same.
IMPULSIVE WAVES
A Impulse is the combination of five wave structure, where all five waves are termed as: wave: 1,2,3,4 & 5
SUB STRUCTURE:
Here, wave 1, 3 & 5 always sub divides into five smaller waves (*)
(•)Waves 1 & 5 sometimes also gets converted into leading diagonal & ending diagonal.
And, waves 2 & 4 always gets completed into a combination of three wave s structure. (structures could be simple or complex) (A separate topic) (also called as the corrective waves)
CORRECTIVE WAVES
ZIG ZAG
Zig Zags are the pattern having the combination of three waves. (Wave a, b & c) Where, Wave A, subdivides into five waves , Wave B, sub divides into three waves and, Wave C, sub divides into five waves
Here, I have drawn graphical representation of same.
FLAT
FLATS are the pattern having the combination of three waves. (Wave a, b & c)
Where, Wave A, subdivides into three waves Wave B, sub divides into three waves And, Wave C, sub divides into five waves
Here, I have drawn graphical representation of same.
TRIANGLES
A Triangle is the side ways price moves, bounded by converging trend lines. Internal wave in a triangle sub divides into 5 sub waves, named as A,B,C,D & E which further sub divides into 3 sub waves.
Triangle often called as the terminating waves patterns, as it always terminates the big wave structure.
LEADING DIAGONAL
It consists of five sub-waves, labeled 1-2-3-4-5, Here, waves 1 & 4 always overlaps (exception) & Here, wave 1,3,5 sub divides into 5 sub waves & waves 2,4 sub divides into 3 sub waves.
ENDING DIAGONAL
It also, consists of five sub-waves, labeled 1-2-3-4-5, Here, waves 1 & 4 always overlaps (exception) & Here, wave 1,2,3,4,5 sub divides into 3 sub waves
The patterns explained above are some of the basic patterns of " The Elliott Wave Theory" In future I would to cover separate topic in great detail..
Stay Tuned....
Important types of chartsHey everyone! In this post, we are going to talk about different types of charts that are used in technical analysis.
Please remember this is an educational post to help all of our members better understand concepts used in trading or investing. This in no way promotes a particular style of trading!
Charts are used to illustrate change in prices over different time frames. It’s a graphical method of showing the historical price information. Charts are two-dimensional and have an x-axis (horizontal) and a y-axis (vertical). The x-axis generally represents time whereas the y-axis indicates the price.
👉 Line chart
• “Line charts” are formed by connecting the closing prices of a specific stock over a given period of time.
• It is particularly useful for providing a clear visualisation of the underlying trend.
• It only considers the “closing value” of the stock and ignores the open, high, and low values.
• Since it only uses the closing prices, hence it less noisy as compared to candlestick or bar charts.
👉 Bar chart
• A bar shows the high price for the period at the top and the lowest price at the bottom of the bar.
• Each bar displays the open, high, low, and close prices (OHLC).
• Small lines on either side of the vertical bar serve to mark the opening and closing prices.
• The opening price is marked by a small tick to the left of the bar; the closing price is shown by a similar tick to the right of the bar.
👉 Candlestick chart
• A candlestick chart provide visual insight to current market psychology.
• It displays the open, high, low, and closing prices (OHLC).
• The rectangular section of the candles is called the real body, which is the range between the session’s open and close.
• Bearish candle- When the close of the session is lower than the open.
• Bullish candle- When the close of the session is higher than the open.
• The thin lines on each side of the candle are called the wicks/shadows and they represent the session’s price extremes.
👉 Heikin Ashi chart
• Heikin Ashi uses a modified formula of close-open-high-low (COHL).
• Normal candlesticks keep changing colour depending on the OHLC even if the price is moving heavily in one direction. But the Heikin Ashi candles stay predominantly mono-coloured during trends.
• Candles with no lower "shadows" indicate a strong uptrend.
• Candles with no upper "shadows" indicate a strong downtrend.
• Candles with a small body surrounded by upper and lower shadows indicate a trend change.
👉 Renko chart
• A new brick is created when the price moves a specified price amount. The brick only forms on the chart once the price has moved the set amount.
• A brick can be of any size (called the box size). Box size can be set manually or it can be calculated using the Average True Range (ATR).
• There is a time axis on Renko charts, however, the time scale is flexible. This means that the bricks are not formed at an equal pace.
• Renko charts typically only use closing prices and mitigate the noise to a higher extent, making trend identification easier.
👉 Kagi chart
• When the price of the asset rises above the previous high price, a thick line is formed, signalling an increase in the demand.
• When the price drops below the previous low, a thin line is formed to indicate an increased supply.
• When there is a price reversal of a certain threshold amount, the chart starts to reverse the direction.
• Swing highs are called shoulders and the swing lows are called waists.
• Rising shoulders = Bullish. Falling waists = Bearish
👉 Point and Figure chart
• A P&F chart is used to visualize price movements and trends without any dependence on time.
• It makes use of columns made up of stacked Xs or Os, where each one stands for a specific amount of price change.
• In general, X illustrates rising price, while O represents a falling price (Some people use the reverse too).
• Point and Figures also emphasize on the closing prices only.
Thanks for reading! Hope this was helpful!
See you all next week. 🙂
– Team TradingView
Feel free to check us out on Twitter , Instagram , and YouTube for more awesome content! 💘
Elliott Wave PatternsTried to capture Elliott Wave Theory Patterns:-
Elliott Wave Theory is named after Ralph Nelson Elliott (28 July 1871 – 15 January 1948).
3 Cardinal Rules of the Elliott Wave Theory
Rule Number #1: Wave 3 can NEVER be the shortest impulse wave
Rule Number #2: Wave 2 can NEVER go beyond the start of Wave 1
Rule Number #3: Wave 4 can NEVER cross in the same price area as Wave 1
Wave 2 will develop into a zigzag, flat, or combination. Wave 2 cannot be a triangle in its entirety
Wave 4 will develop into a zigzag, flat, combination, or Triangle.
On rare occasions, Wave 5 will not move beyond the pivot of wave 3. This is known as Truncation
Ratios:-
Ratios for Wave 2
Fibonacci Rule for Wave 2:
Wave 2 is always related to Wave 1.
Common Ratios for Wave 2:
Wave 2 = either 50% of Wave 1
or 62% of Wave 1
Ratios for Wave 3
Wave 3 is related to Wave 1 by one of the following:
Wave 3 = either 1.62 x length of Wave 1
or 2.62 x length of Wave 1
or 4.25 x length of Wave 1
The most common multiples are 1.62 and 2.62. However, if the 3rd Wave is an
extended wave, then 2.62 and 4.25 ratios are more common.
Ratios for Wave 4
Wave 4 is related to Wave 3 by one of the following:
Wave 4 = either 24% of Wave 3
or 38% of Wave 3
or 50% of Wave 3
The 24% and 38% are the most common ratios for Wave 4
Ratios for Wave 5
Wave 5 has two different relationships. Both are shown below.
If Wave 3 is greater than 1.62 or extended, then Wave 5 ratios are as
follows:
Wave 5 either = Wave 1 or
= 1.62 x Wave 1 or
= 2.62 x Wave 1
Wave 5
Extended if Wave 3 is less than 1.62 X Wave One
5 = .62 X Length of 0 to 3
5 = 1 X Length of 0 to 3
5 = 1.62 X Length of 0 to 3
If Wave 3 is less than 1.62, Wave 5 ratios are as follows:
When Wave 3 is less than 1.62, the 5th Wave overextends itself. From research,
the ratio of Wave 5 will be based on the entire length from the beginning of Wave
1 to the top of Wave 3.
Extended Wave 5 = either 0.62 x length
(beginning of Wave 1 to top of Wave 3) or
= length of
(beginning of Wave 1 to top of Wave 3) or
= 1.62 x length of
(beginning of Wave 1 to top of Wave 3)
Regards,
SG
Types of participants in the derivatives marketHey everyone!
Last week we talked about the basics of derivatives and what all different derivative instruments are available in the markets. In this post, we will talk about the types of people who use derivatives and why they exist.
There are broadly three types of participants in the derivatives market:
→ Hedgers
→ Traders (also called speculators)
→ Arbitrageurs.
An individual may play different roles at different times.
Hedgers
→ They employ derivatives to mitigate the risk they suffer from fluctuations in the pricing of the underlying assets.
→ Institutions such as investment banks, central banks, hedge funds, etc. all use derivatives to hedge or reduce their exposures to market variables such as currency exchange rates, interest rates, equity values, bond prices, and commodity prices.
Speculators/Traders
→ The speculators are primary participants in the futures market.
→ They try to predict the future movements in prices of underlying assets and position themselves accordingly.
→ Speculators can be individual traders, proprietary trading firms, hedge funds, or market makers.
Arbitrageurs
→ Arbitrage is a deal that produces profit by exploiting a price difference in a product in two different markets.
→ Arbitrage occurs when a trader executes a simultaneous purchase and sale of the same asset in different markets in order to gain from tiny price differences between them.
→ The arbitrage trade is often short lives because the arbitrageurs would rush in executing these transactions, thereby closing the price gap at different locations.
Thanks for reading! Hope this was helpful.
See you all next week. 🙂
– Team TradingView
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One chart, different trading systems!Hi all, hope you guys are doing well.
We retailers spend a lot of time in searching for that "holy grail" in trading. The majority of the time our search is centered around different strategies. However, in my opinion, "Strategy is overvalued whereas risk management is undervalued" .
A chart can be analyzed in different ways by different traders. A trader using patterns will analyze the same chart with a different perspective as opposed to a trader using pure support-resistance levels or a trader using indicators such as moving averages.
The aim of this post is just to make you understand that you shouldn't run after different systems. Rather, focus on managing the risk.
Exhibit 1: The Cup and Handle system
Exhibit 2: The Support-Resistance system
Exhibit 3: The Triangle pattern system
Exhibit 3: The Moving averages system
Thanks for reading. I hope you found this helpful! 😊
Disclaimer : This is NOT investment advice. This post is meant for learning purposes only. Invest your capital at your own risk.
Happy learning. Cheers!
Rajat Kumar Singh (@johntradingwick)
Community Manager (India), TradingView
ABC Pattern- Optimal Entry TechniquesHi,
This idea is about the very promising ABC pattern and the most optimal ways to enter into this pattern.
✅ABC Pattern
This is considered as a continuation pattern.
There has to be a strong trend up/down in the background.
Wave A: Minor correction against larger trend, usually not more than 5-10%
Wave B: Another attempt to push the price higher but could not break the previous highs
Wave C: breaks the low A but has less momentum than wave A. Weak stops are taken below A
I am presenting four techniques of entering into this pattern, in the anticipation of a continuation of the prevailing trend. The techniques used, however, depend upon the traders' appetite and temperament.
Let's start..
✅Minimum Risk Entry
>The entry point is near the low C
>C should have less momentum than A
>Price barely breaks the low A
>There are wicks at the low of Candles at C
>Stop is placed under the low of C, so less risk more reward potential
✅Confirmed Entry
>Entry is at the break of swing high B
>The price makes a higher-high so structural change is confirmed
>The break often comes with good volumes & strong closing candles
>SL under C is wider than 1 in this case
>This technique is used when, in wave C, there are few weak candle closings below A
✅Trendline Entry
>Entry is at the break of TL
>The break often comes with good volumes & strong closing candles
>SL is wider than 1 but lesser than 2. So less riskier
>This technique is used when, in wave C, there are few weak candle closings below A
✅ABC-W Entry
>A unique entry technique
>The price breaks deeply below B and then retests at W
>At this point it seems that price will continue down but
>The price could not hold down and again breaks out of W, giving us a breakdown failure entry
>You would see a usually sharper continuations as many traders, who entered short positions, would start exiting in a hurry
Stop loss in all the cases is placed under the low of wave C and trailed as per traders' time horizon. These are relatively small corrective patterns so you can expect sharp continuations and take targets measured equal to the strong impulsive move in the background.
I hope it was useful.
Thanks for reading.
@Bravetotrade
Basics of DerivativesEver wonder what derivatives are? Check out this handy guide! 😉
A derivative is a contract or a product whose value is derived from the value of some other asset known as underlying. A variety of underlying assets serve as the foundation for derivatives.
These include:
→ Financial assets such as Shares, Bonds, and Foreign Exchange.
→ Metals such as Copper, Zinc, Gold, Silver, etc.
→ Energy resources such as Crude oil, Natural Gas, etc.
→ Agricultural products such as Wheat, Cotton, Sugar, Coffee, etc.
Cotton Futures
Gold Futures
Derivative Instruments
Forwards
It is a contractual agreement between two parties to buy/sell an underlying asset at a certain future date for a particular price that is pre-decided on the date of the contract.
Both the contracting parties are committed and are obliged to honor the transaction irrespective of the price of the underlying asset at the time of delivery. The terms and conditions of the contract are customized to cater to the needs of both parties. These are Over-the-counter (OTC) contracts, meaning they are a deal you make directly with a bank or a dealer. As a result, there is always counterparty risk involved.
Futures
Futures are standardized contracts similar to a forward contract, except that the deal is made through an organized and regulated exchange rather than being negotiated directly between two parties. The arrangements come with a fixed maturity date along with uniform terms for all the parties involved.
In simple language, futures are exchange traded forward contracts. The futures contract has little to no counterparty risk since the exchange is acting as a mediatory.
Options
An Option is a contract that gives the right, but not an obligation, to buy or sell the underlying on or before a fixed date and at a stated price. While the buyer of the option pays the premium and buys the right, the writer/seller of the option receives the premium with the obligation to sell/ buy the underlying asset if the buyer exercises his right.
There are two types of options:
→ American
→ European
American options can be exercised at any time prior to their expiration while the European options can only be exercised on the expiration date. In India, European options are used.
Swaps
A swap is an agreement made between two parties to exchange cash flows in the future according to a prearranged formula. A random variable (such as an interest rate, foreign exchange rate, commodity price, etc.) is used to determine at least one of these series of cash flows at the moment the contract is initiated.
Swaps are, broadly speaking, a series of forward contracts. They help the participants manage risk associated with volatile interest rates, currency exchange rates, and commodity prices.
Thanks for reading! Next week we’ll talk about the types of people who use derivatives and why they exist. Stay tuned!
See you all next week. 🙂
– Team TradingView
Feel free to check us out on Instagram , YouTube , and Telegram for more awesome content! 💘
The Cup & Handle patternHey everyone! 👋
Today we are going to share an informative write-up about the “Cup and Handle” pattern along with a few exhibits that may help you solidify your understanding of this chart pattern.
Please remember this is an educational post to help all of our members better understand concepts used in trading or investing. This in no way promotes a particular style of trading!
The post will shed some light on the following topics:
→ Basics and identification of the pattern
→ Components
→ Important aspects
What is a Cup and Handle pattern?
• The Cup and Handle is a bullish continuation pattern that resembles a cup with a handle.
• The cup is visualized as the alphabet "u" and looks like a rounding bottom pattern.
• The handle is formed as a range or a smaller “u”.
• The cup marks a consolidation phase whereas the handle has a slight downward move, which marks a retest phase.
• The handle is meant to signal a buying opportunity. When this part of the price formation is over, the stock may reverse the course and resume the prior uptrend.
Components of a Cup and Handle pattern:
The cup and handle chart has 3 main components:
• Cup
• Handle
• Neckline
Important aspects:
1. Prior Trend: The cup and handle pattern is a bullish continuation pattern, hence the prior trend should be an uptrend.
2. Cup length : In general, the cups with longer and more "U" shaped bottoms that resemble a rounding bottom, provide a stronger signal. This ensures that the cup is a consolidation pattern with valid support at the bottom of the “U”. The perfect pattern would have equal highs on both sides of the cup, but this is not always the case. In general, cups with sharp "V" bottoms should be avoided because there is almost no consolidation in this case.
3. Cup depth: Normally, the cup should not be overly deep. In practice, the cup depth can be up to 60-70% of the last swing move. (This can vary widely, though.)
4. Handle: The handle can occur in the form of a flag, a pennant, or a rectangular consolidation. This is the final retracement phase before the impulsive move higher. By and large, the handle can retrace anywhere between 40-60% of the depth of the cup.
5. Breakout: Bullish confirmation comes when the pattern breaks above the neckline (made using the prior highs) with a good volume.
6. Volume: In general, the volumes should decrease during the formation of the base of the cup as well as during the formation of the handle. Conversely, the volumes should pick up when the stock begins to make its move higher, back up to test the previous high.
7. Target: Using the measurement objective, the target comes out to be equal to the depth of the cup. It can be measured by calculating the distance between the bottom of the base and the neckline.
8. Stop-loss: Ideally, the stop loss is placed at the lowest point of the handle. But if the price oscillated up and down a number of times within the handle, the stop-loss can also be placed below the most recent swing low.
Exhibit: Cup and Handle pattern with a failed breakout
Thanks for reading! As we mentioned before, this isn't trading advice, but rather information about a tool that many traders use. Hope this was helpful!
See you all next week. 🙂
– Team TradingView
Feel free to check us out on Twitter , Instagram , YouTube , and Telegram . 💘
What is moving average?If you have been in the market for some time, you may have heard of an indicator called the “moving average”. Today we are going to take a deeper look at the indicator, along with a few examples of how pros use it. This post will also lay the groundwork for future posts about more advanced moving average topics.
Please remember this is an educational post to help all of our members better understand concepts used in trading or investing. This in no way promotes a particular style of trading!
The post will shed some light on the following topics:
- What is a moving average?
- How does moving average work?
- Correct usage along with exhibits
Introduction
A moving average (MA) is a technical indicator that is commonly used to determine the direction of the trend. By continuously recalculating the average based on the most recent price data, a moving average assists in smoothing out the price data. This helps in reducing the impacts of random short-term variations of the price over a given period of time.
Working with moving averages
- Moving averages are typically calculated to determine the direction of the trend and are sometimes used as dynamic support and resistance levels for a given time period.
Exhibit: Moving averages acting as a dynamic support
Exhibit: Moving averages acting as a dynamic resistance
- Since a moving average is derived using historical prices, it is a lagging indicator.
- The lag increases with the length of the moving average. As a result, a 200-period moving average (which includes prices for the previous 200 periods), will lag significantly behind a 100-period MA.
- Likewise, a moving average with a shorter period (faster MA) will be more sensitive to price changes as compared to a slower one.
Usage
- Faster moving averages are typically employed for short-term trading, while slower moving averages are more often utilized for understanding longer-term market dynamics.
- Moving averages are applicable to all time frames. Therefore, experimenting and testing several settings over a range of time frames is the best approach to determine which one works for you.
- A rising moving average indicates strength, while a falling moving average indicates weakness. Hence, in general, a stock is said to be in an uptrend if its moving average is increasing, whereas in a downtrend if MA is decreasing.
- In general, a stock may show bullish momentum if there is a bullish crossover, i.e. when a faster moving average crosses above a slower moving average.
- Conversely, bearish momentum may be expected on a bearish crossover, which occurs when a slower-moving average crosses below a faster-moving average.
Thanks for reading! As we mentioned before, this isn't trading advice, but rather information about a tool that many traders use. Hope this was helpful!
See you all next week. 🙂
– Team TradingView
Feel free to check us out on Twitter , Instagram , and YouTube for more awesome content! 💘
Adding Custom Watchlists in TradingViewHi
This is my first video idea on this website and this is about adding watchlists. I have tried to keep things raw and simple so that everybody understands it. There might be some other methods, of course, for this purpose but this is the one that I prefer to use.
This method works in India and I have taken reference lists from the NSE India website.
Excuse me about the background noise if any.
I hope it will be useful for some users.
Options - Best & Worst Trading InstrumentOptions (Index & stock) have been double edged sword. In the hands of experienced traders, it has resulted into multi fold growth of capital but at the same time for beginners or new traders, it has been capital killer.
Over the last 5 years, I have had opportunity to speak to hundreds of traders most of which have lost their hard earned money by trading options. Some of them have even gone to extent that they borrowed money from friends or banks to trade and only to lose it all by gambling in options.
Lets review some of important factors which has given helped experienced traders earn lakhs or even crore daily from options while most are just losing out their capital.
Factors resulting in losses for New Traders.
1. Lack of Technical Knowledge
Most of so called traders ignore the importance of Technical Analysis and directly jump into option trading. Most are either following news or tips from various platform with zero understanding of when to trade, when to book profit & most of all when to book loss. Its like jumping into water without knowing how to swim. Technical Analysis understanding is very important as it will give an edge to trader and help them analyze key factors related to entry, stop loss & target. Even though their is no 100% success formula in trading but having correct knowledge can increase your success chances from 50% to 70-80%.
2. Random Trading
Random or boredom trading is also another factor for failure of most option traders. Market gives us 1-2 good trading opportunity but many of us are part time traders who want to earn from market based on our availability and do not wish to wait for right opportunity given by market. Some will start the day with proper plan and only to get bored after couple of hours and then they will start trading randomly.
3. No Risk Management
The most key aspect for a good trader is risk management. But all new option traders will initiate trade first and then think about SL/Target. They have no knowledge about position sizing and will risk all the capital on a hero or zero trade on weekly expiry. Most of new traders will keep their losing trades with the hope of recovery while book small profits due to fear of losing.
4. Use of High Leverage
Unfortunately their are new trading platforms which float rules set by SEBI and provide High Leverage to attract new clients. People with small capital of 10-20K can buy 2-5 lots on an index option which can erode their capital in just 1-2 trades. Leverage trading can accelerate your losses 5-10 times which is another blunder for new traders.
5. Social Media Influence
Nowadays we regularly see people making lakhs or crores of profits on daily basis and all social media platforms are full of such screenshots. Many of them may be great traders who are actually making money and others may have just put a doctored screenshot but this influence/attract new traders to directly jump into Option trading with the hope that they will also replicate this success.
New Option traders completely ignore the hard work, analysis & planned work done by most successful traders and they only focus on money aspect which is main reason for their downfall.
6. Get Rich Quick Mentality
Every one of us want to earn money and have luxurious life. But most of us forget about hard work & practice which is required to reach their. Everyone is now directly jumping into Option trading with mindset to double or triple their capital in a short span without even putting a month of effort. When I have discussed expected monthly returns by most new Option traders, most common answer is 30-40% return on the capital in a month which translate into 350-500% return in a year. When we get 5-6% return in a year from fixed deposits, people are not happy with 5-7% return per month from trading.
Experienced Traders on other hand have following attributes which makes them winner.
1. Technical Expertise
All pro traders have a setup, strategy or proper knowledge of Technical Analysis which they have practiced over and over again for many years. It is not about having hundred strategies but have 2-3 strategies which you have practiced countless times in Live Market.
2. Trading Plan
All good traders have a plan w.r.t. maximum number of trades in a day/week/month. Maximum loss or profit their are willing to take before they close the system. They have understood that it is important to stick to a plan for long term success in trading.
3. Only Trade Right Opportunities
Patience is the key in trading and experienced traders knows this well. They wait for stock/index to come to their defined levels & form right setup before they initiate the trade. They are like sniper who patiently wait till all the factors are right to take the shot.
4. Focus on Risk Management
Risk management is by far most crucial aspect of trading. Importance of Risk Management is only understood by those who have been in market for some time. Although most think that it is the winning strategy of setup which will earn your money but only few focus on psychology building which include not taking revenge trade, do proper position sizing so that you are not under influence of fear or greed.
In the end, I only want to pass the message that Option trading is the last instrument which a new trader should jump into. Anyone starting trading should start with Equity as it has less volatility compared to Options and person can try their strategies for smaller risks.
Do you resonate with any of the factors above? Share your inputs on how you have grown to be a successful Option Trader.
Thanks
Piyush Gupta
Learn & Earn
Kennedy's channeling Technique Explained Hello everyone,
I have tried my hands to explain Kennedy's Channeling technique (KCT),
In this video what I have explained is:
ZigZags ( Internal pattern & concept of channel)
Flats (Internal pattern & concept of channel)
Impulsive waves (Internal pattern & concept of channel)
& a Example
Please do comment what you guys like about the video & scope of improvement.
Thanks for watching!
How to add alerts on TradingView?Hey everyone! 👋
Alerts are a key trading tool that every trader should know how to use. Check out this quick guide for more information and some secret tips!
What are alerts?
TradingView alerts are immediate notifications you can set for yourself when the market meets the custom criteria you create. For example, "Alert me if Nifty crosses above 16000". All users can get visual popups, audio signals, email alerts, email-to-SMS alerts, and also PUSH notifications that are sent to their phones. Pro, Pro+, and Premium users can also receive webhook notifications when an alert is triggered.
You can also create alerts on prices, indicators, strategies, and/or drawing tools.
There are 2 ways to create alerts:
1. Using the Right-click
2. Using the vertical scale
Method 1:
This is a pretty straightforward way. Go to the price level at which you want to add the alert, then right-click and select "Add alert". Voila! You are done.
Method 2:
The second way to add alerts is by using the vertical scale (Price scale). If you hover over the vertical scale, you will see a “+” sign.
On clicking this sign, you will be greeted with the “Add alert” option. Just click on it and the alert will be set at the selected price level.
You can also customise your alerts by using alert settings.
Indicator Alerts
You can also set indicator-based alerts with predefined conditions like "crossing up/down", "greater/lesser than", and "entering/exiting channel". You can also create your custom trigger settings by using the alertcondition and alert functions.
Tip : The alerts can be accessed using the “Alerts” tab which is the second option from the top, on the right toolbar.
Thanks for reading! Hope this was helpful!
See you all next week. 🙂
– Team TradingView
Feel free to check us out on Twitter and Instagram for more awesome content! 💘
Why It Is Hard To Hold A Winning Position. ?Why It is hard to Hold a winning position. ?
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Suppose You took a trade ,bought 100 quantity at price 100 , with a SL : 80, and Potential target of 120,
Now what happens it goes up to 105 (you think your analysis is good let us wait)
Then it come back to 100 went further down till 90 (you thinks it is ok we have to give it room)
Then it went up above your buying level till 115 (now your target is 120 you are just 5 points away, what will come into your mind?)
Then suddenly sharp selling starts and you got your SL triggered.
More or less the PnL whipsaw, take you to the moon and within seconds, it drop you down. The PnL whipsaw creates dynamic changing emotions into your mind.
Am I correct or not till now, feel free to comment. ?
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Let us more about some pre-set emotions which comes out and affect our decision making with open position.
1) Fear of Losing the open position’s profit :
See everybody want to win nobody want to see himself of herself as a Loser in the mirror , when you take a trade you always think that it is going to give you profit (subconsciously), with such a biased mind the open position PnL affect your decision making. You get so much attached with the running profit that you start thinking like that it the profit you have already booked and feeling that it is your released profit, now you are “not willing to let it go” because you now attached to it emotionally (psychologically).
This type of fear arises from our belief system and past experience developed over previous trades. The social culture, family atmosphere also can be the reasons.
“If You think you are a risk taker than you must thanks God , because everybody do not have such brave heart.”
Advice: “Let it go”, the open position’s PnL, is not yours, it is the released one that counts. Believe in your system and let the target hit or trailing SL get triggered (SL according to your strategy).
2) Past Experience (Fear intensifies when have a very bad experience earlier)
Students approaching me for learning trading psychology ask me why you ask us about our past experience and track sheet, they do not want to recall, but their past experience and the track record tells their complete story , it tells everything what is the problem with their trading , what need to correct immediately what are the strong weak part of their psychology.
But why: Because past experience shapes our psychology. If you have witnessed a series of trade where your target is missed by few ticks and you have to book SL. Then you start thinking about your exit style, you think is there any improvement needed. At this point of time you again shift from this strategy to that strategy. If you are trading from a while then you can understand the gains we make are not smooth sometimes great sometimes they are worse. If you think there is a holy grail strategy you will spent whole life searching it, but still remain empty hand.
Advice: You have to realise that having continuous losses in a row can happen frequently as, you cannot avoid losing streak, even the professional traders have their losing streaks going for 2 , 3 weeks. You came here not to trade 1 week , 1 month or 1 year , you must have a long term view.
3) Lack Of Clarity :
If you are among those traders who always have a very sceptic view about trading, have knowledge and experience but , do not see it as a sustainable business, thinking that you cannot rely on trading income. You will develop a tendency to book early. Because holding a winning position requires a courage which comes from clarity.
I met a research analyst managing his client’s portfolio giving trading and investing recommendations to his clients on regular basis for more than 5 years. I asked him why you selling your valuable advice when you can profit from it. You know what he said to me, it is shocking for me he said , Nobody make money in trading. He do not believe in trading business even though having his bread and butter by selling his advice.
It is worst how you can sell your recommendations when you personally feel that nobody can make money. Is it not contradictory?
Advice: If you do not have clarity about your trading system, you cannot trade confidently and this one thing alone can derail you from your trading plan. So spent time reading, listening to various successful trader, know their story their style, the more you read listen the more you will get the knowledge and clarity.
4) Complacent with the Current profit :
I think this is the worst problem happening with you because if you are very complacent you will end up booking very small and losing big ultimately your equity curve will go down slowly. This happen to novice traders who want to make some extra income, they see that open position profit is enough for their one day or two day expenses they close their positions immediately.
Note: Have you seen people doing a mediocre job or their father’s small business even they have the potential for a bigger goals. Booking small profit frequently makes us convinced that what we are doing is great because we see a streak of winning trades.
Reason: Simple reason of it is than, we tend to apply our day to day life logics here, we are unable to see the potential and avoid systematic approach.
Advice: Your strategy is developed according to the profit potential, risk management not for your day today expenses or complacency level. Stay goal oriented make small, short duration goals and see a series of trade at a time not stuck your mind in single trade.
5) Lack of acceptance:
When you do not accept loss you will always try to avoid it this is the main reason why people sit tight will their losing position but cannot hold their wining positions.
Reason : Arrogance, Confusion, less belief.
Advice : You can make profit or loss on a particular trade depends on market situations. Recall this before creating every new position. Just follow you system.
How and when should apply which Option's strategyHey everyone! 👋
This post is just for sharing knowledge about Future and Options strategies,
First of all, one should build view (bias) on market direction, it may be bullish, bearish, sideways, or there may be some events too, like budget day or quarterly results seasons or may be something else, once view is built then what are the ways to apply futures and options strategies are shown in this post.
Options trading may sound risky or complex for beginner investors, and so they often stay away.
Some basic strategies using options, can help a novice investor protect their downside and hedge market risk.
Options trading is meant to provide a process that defines the selling and buying of options by a trader.
The options trading strategies are what make up the options trading. There are various ways that a trader can use the options trading strategies to their advantage.
Options trading is a great way to increase your returns as an investor. You will be able to generate profits when the market goes up or when it goes down. However, with so many options trading strategies on offer, you may find it difficult to know which one to choose. This post is showing ideas of the different options strategies and help you choose the right one based on your views.
What Are Options Strategies?
Options are one of the most flexible and powerful way for investing in the stock markets.
Investors can utilize stocks in many ways, including buying and holding onto them to long-term appreciation in value or short-term trading to make a quick buck. However, the stock market is huge, and investors can utilize many sophisticated strategies.
The first complex strategy is called a call option. Call options are contracts that enable the holder to purchase a stock or other asset at a specific price within a specific time frame. If the price goes above the strike price, the owner can buy the stock at a lower price and then sell it at a higher price. This can result in a great return, but a loss is possible if the stock doesn't move or move in opposite direction.
Types of Options Strategies
There are four ways to trade options strategies : call, put, spread, and straddle. First, let's start with the call and put. A call is a contract that gives the owner the right to buy a stock at a specific price on or before the option's expiration date. On the other hand, a put is a contract that gives the owner the right to sell a stock at a specific price on or before the option's expiration date.
Spreads and straddles are both strategies used to manage risk. A spread is created by buying the same type of option with the same expiration date but with a different strike price. The strike price is the underlying stock price when the option is exercised. A straddle is created by buying an option with a lower strike price and an option with a higher strike price with the same expiration date.
Pros and Cons of Options Strategies
Just like selecting a stock to trade or invest in, selecting an options strategy can be a difficult task with risks and potential payouts. The pros and cons of options strategies help you decide which is best for your investing style.
Pros:
- Lower investment costs
- Stock options can be used as a way to hedge your investment or portfolio risk
Cons:
- High risks and losses can occur if you don't research your options strategy
- Options can only be exercised at the expiration date
Conclusion
Traders can use Options strategies to take advantage of both rising and falling prices of stocks. We hope you have gained a deep understanding of what options strategies are this post.
See you all next week. 🙂
RK_Charts
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.
I am not sebi registered analyst.
My studies are for educational purpose only.
Please Consult your financial advisor before trading or investing.
How to add images to your charts?Hey everyone! 👋
Do you know that you can add images to your TradingView charts? That’s right!
We have prepared this visual guide to help our awesome users customize their charts by adding images!
Sounds good? Let’s get started. 🚀
There are 2 ways to add images to your charts:
1. The good old copy-paste method
2. Using the “Image” upload option
Method 1:
1. Open the image that you want to add to your chart.
2. Copy it and open the chart window where you want to add this image.
3. When you are at the chart window, right-click and you will see the “paste” option. You can also use the keyboard shortcuts as per your operating system. (Ctrl + V for Windows OR Cmd + V for Mac)
4. Once you are done pasting, the image will appear on your chart.
Method 2:
1. Go to the toolbar on the left side of the screen and select the 5th option from the top.
2. Once you click on it, you will see plenty of options. Just select the “image” option.
3. This option will provide you with an upload window. All you have to do is just click on “choose image”, select the file, and click open.
.
4. You can change the opacity of the image using the “transparency” option.
If you still need help, try watching this short video tutorial that we made out for you.
Thanks for reading! Hope this was helpful!
See you all next week. 🙂
– Team TradingView
Feel free to check us out on Twitter and Instagram for more awesome content! 💘
Why Most Traders Fail? Practical ReasonsAs per my personal experience the following are the most primary reasons for failure in trading - applicable to all types of new traders and all the markets. Well! this is not an exhaustive list but the most reasonable one.
🚩 No Plan of Action
Trust me on this one, most traders fail to build a plan of action and fail. It is not only true for new traders but also to those who have been in this market for several years. Even if the latter have ever formulated such a plan, they would have never executed it with dedication. A couple of failures and all planning just vanishes in thin air.
The trader needs answer to the following questions:
What to trade?
How much to trade?
When to trade?
Why to trade?
Is it for intraday or swing trade?
How much is the risk?
Is risk tolerable?
Is risk reward ratio favorable in this trade?
Is the trade in the direction of primary trend or against it?
If he answers all these questions in advance, he will not have to regret after entering the trade. This would also bring confidence 🦾 in him.
🧐 Tip Seekers
New entrants would always look for tips from friends, business channels, broker or paid service providers. I don’t want to get into how this tip system works but I have never seen any tip seeker to be a successful trader. Rather I have seen many traders who lost their entire capital, even before their paid subscription was over. The harsh truth is that there is no shortcut to success in trading. Even seasoned traders have to work hard for making money. So, learning 👨🎓 is the first step for novice traders to approach what they seek.
🤑 Get Rich Quick Policy
Everyone wants to be rich overnight so that he doesn’t have to work for the rest of his life. This attracts traders to buy penny stocks. What is more attractive than anything, with these stocks, is the quantity that can be bought. A larger number of shares with the available capital. The other thing is profit potential. Buy at 2 and sell at 4, money doubled overnight. Unfortunately, that doesn’t happen very often. Traders buy such stocks for day trade or swing trade but then they keep it for years for one simple reason that these stocks never attracted large portfolios, for some valid reason. For such traders, investment in a sound company would have been a better option 😆
Another very popular instrument which lures traders and has the potential to destroy a trader’s capital at much faster pace is 'Options', especially weekly index options. I have seen people at broker’s floor loosing millions in just few minutes. New traders should stay away from Options and always start small, may be in cash segment.
🥵 Overtrading
Overtrading works like a currency shredder machine. Whatever goes in, never comes out in one piece. Its a very common practice among tape readers or those who trade on one-minute chart or less. Remember that you can either take one trade in a day or you can take 50 trades in a day. If you lose the former at tolerable risk, it would not harm your capital much. But if you make small profit after 50 trades, consider it a loss due to costs involved.
If you are unable to control this habit, then just start shifting to a higher timeframe after taking the trade. It will help.
🚦 Inconsistency
Say you have a plan but you are not executing it on every single trade. Your plan was to take a 1:2 risk-reward trade but sometimes you are taking 1:1 while the other times 2:1. A consistent trader would have a back-tested plan that he executes daily on every trade that he takes, no matter if that’s for a small profit every time. The trader needs to show some consistency in making small money every day/week. If he is consistent in it, then he can increase his position size for more profits and so on.
All the above reasons combine together to develop indiscipline. But if you will take care of the above habits, one at a time, as discussed then rest assured that you are on the right track.
Thanks for reading. I hope this was helpful 😉
Keep liking and comment for more such posts in future.
Trading Performance PsychologyThe greater the difficulty, the more glory in surmounting it. Skillful pilots gain their reputation from storms and tempests.
- Epictetus.
Hey everyone! 👋
This week, we thought it would be interesting to dive into a less-commonly discussed topic: performance psychology - and discuss how it relates to Trading. Specifically, we're going to look at the following question: What actually drives outperformance from one trader to the next?
From a process standpoint, there are lots of things that aspiring traders can take from other performance disciplines (like sports) in order to better understand the necessary steps to get where they would like to be. Let's jump in!
Time is the common element to expertise ⏰
Mastery is built over time. First through exploration, then knowledge building, then well-structured practice.
To invest the great amounts of time and effort required for mastery, an individual typically bonds emotionally with the field, creating a long-term relationship.
Present in almost all extremely high performing traders is an inherent, intrinsic love of trading itself. This means a love for analyzing charts, working on strategies, looking at markets, and trying to fit the pieces together in one's head. In this frame - Trading isn't a job, it's a CRAFT. If you just love the status, the lifestyle, or the income, then it's likely that you won't reach the true heights of the profession. The highest performing traders spend hours and hours working on their trading; not because they WANT to, but because they LOVE to.
Finding a niche ❤️
The greats do not become great by working hard; they work hard because they find a great niche: a field that captures their talents, interests, and imagination. The best pitcher in the world might make a terrible hitter.
If you're early on in your journey (or lost), something to consider is trying to find a niche that you truly resonate with. A great deal of importance is placed on niches in other professions and institutionally within finance, as hospitals and banks have rotational programs to expose newcomers to different types of experiences.
Why then, don't individual traders do this? A great way to center your thinking is by constructing a rotational program for yourself. Here's a list of the most popular asset classes & trading styles. Give each a google , or look for ideas here on TradingView, and see what you resonate with most strongly. Set yourself up for long term mastery by actually finding something you love doing day in and day out.
Liquid Asset Classes:
-Stocks
-Currencies
-Cryptocurrencies
-Futures
-Fixed Income
-Volatility
Styles (Timeframe):
-Intraday - holding time is seconds to hours
-Swing - holding time is days to weeks
-Position - holding time is weeks to months
Which holding style fits with your temperament? What topics do you like learning about?
The Learning Process ✅
In trading and in life, we often hear that "Practice makes perfect". A better saying may be "Perfect practice makes perfect". How practice time is structured makes the difference between a performer who has five years of experience and someone who has one year of experience repeated five times over. So; how should you structure your practice?
In performance psychology, there's a concept known as a "learning loop". It has three parts.
Performance -> Feedback -> Learning (repeated).
This is crucial because feedback is the key to improvement. Trading is a solo sport, which means that figuring out how to incorporate a feedback process that allows for reflection is absolutely critical.
P/L is feedback, but there can be some problems with it singularly as your feedback mechanism. Even the best traders who execute the best looking trades can be on the opposite side of variance on given days. The process is king. Get feedback from your performance that doesn't have to do with P/L so you can track the inputs to your decision making. Some traders take copious notes, some record their screens, and some record data points that aren't P/L related (hours slept, hydration, mood, etc).
(We have a "notes" feature built into the charts you can use for this purpose.)
If you gather up all of these items together to create a long-term blueprint for building mastery, it should look something like this:
1.) Find out what you truly love about trading
2.) Explore it more deeply
3.) Stick with it through time and allow your intrinsic enjoyment to motivate you through the ups and downs
4.) Structure your performance through that time in such a way that you can generate feedback for yourself
5.) Incorporate that feedback to continually improve your process. Allow learning loops to be your engine of long-term performance.
Hope you enjoyed reading, and stay safe out there!
- Team TradingView
