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How to trade ICT Concepts in Indian Markets.This is a demonstration of making executions on the MCX on CrudeOil Mini Futures that are INR denominated derivative contracts of the WTI Futures contracts that are traded on the NYMEX.
Any trader in India who wants to trade the ICT concepts on international markets without setting up a foreign brokerage account can try to do so using the Commodities futures traded on the MCX. The price fluctuation of the USDINR leaves you a little bit exposed to some moves. However, most of the time, you can see a near perfect correlated move in both WTI and MCX:CRUDEOILM1!
This is a demonstration using Paper Trading on TradingView.com. Please don't try to randomly trade any strategy using actual money.
Remember you only risk what you can afford to lose in a responsible manner. It's all on you. You can't come after me if you try this with live funds and lose money. This is something to test.
Moving Averages are really powerful. . . !Can you believe they are...
Moving average(MA) is one of the oldest indicator. Lot of people (including me) would reject the idea that such a simple indicator can be of any use in modern day considering availability of advance computer tools.
I came across free training videos of Oliver Velez who explained on how to use it. When I back tested his logic I was really surprised..
Since then I have kept 20SMA and 200SMA as default on my chart. Best part of this concept is, it works on any time frame.!
MA can answer following key questions which helps anyone become good trader/investor..
Q1. Is the stock trending? and What is the direction of trend.?
A1. If 20MA is flat stock is not trending. Direction of 20MA is direction of trend.
Q2. How old is the trend. (if trend has just started I can board it and if it is too old I will not)
A2. If 20MA is not too far from 200MA trend has just started. If 20MA is too far from 200MA be alert trend might be matured.
Q3. Am I buying in value zone so that my SL is small.?
A3. Buy when stock retraces near 20MA.
Q4. Am I exiting at a value where I have got good amount of move. So that my profits are much higher than losses.
A4. Exit when stock is far away from 20MA.
I have marked all above on these chart for easy understanding.
As we can see FAR and NEAR are relative terms. Hence it takes good amount of practice to grasp and trade this concept.
Considering volatility lot of whipsaws can happen in intraday and daily time frame. So I started using it on weekly time frame and started getting good results with holding time of 3~10 weeks.
However once you are confident in your stock selection criteria this is good way to ride a trend.
We can compare trading using MA to flying kite. It is simple but not easy. One need to practice to master the skill.
One need to get feel direction and gust of wind,
Understand behavior of kite and
finally time the action to fly kite.
Hope this post will help you appreciate this oldest indicator...
A simple but very effective strategy that always works on GOLDA easy 1:2 or 1:3 RR with almost above 60-70 % winrate, I am observing this for a long time , eventhough i know this works well, i avoided it for long time because its looked very simple to me on the first place, but then i realised that, not everything is not to be complicated,simplicity is the best.If you follow proper money management with RR, a consistent win this one is sure.
the 30 min or 1 HOUR is only i prefer to use.
its simple 5 MA candle deviation .
How To Trade with Neowave Trading IdeaHello Everyone,
Welcome to you all, this is an educational post in which you will learn how to trade with our neowave trading chart. For better understanding also watch the video which will be available soon.
See the below image
## This is how a Neowave structure looks in which a stock price goes up and down.
##These no 12345, I called them motive waves mean trending direction. As you can see these are in diffrent colors. Each color represent a trend cycle mean for how many days this particular stocks is going up or down.
See the below example
## As you can see in below examples , group of smaller cycles made bigger cycles and bigger cycles made more bigger cycles and so on
Example 1
Example 2
## But this hard to understand for ordinary eyes and neowave coding style is always differ between neowave analyst also. For one neowave analyst one trend is short and for other it can be intraday.it just there perspective. For every other person 12345 is create confusion, hard to tell how long this trend will go up. you just dont know this 12345 is short term cycle or longterm cycle.
To solve this i am changing coding style
##As name represent itself its cycles s for short cycles, m for medium cycles and l for longterm cycles.
see the below chart
Now see the below image for another part of neowave which is called correction
## As you know every trending cycles, there comes an consolidation period in which price gives some retracement but never retraced 100 percent of previous trend. This consolidation is represent as correction in neowave.
## This correction comes in same cycles in which the cycles was trend. As you can see short cycles trend in the image, after s5 there comes a flat pattern which is labbeld as SC1, this c stand for correction.same for ther cycles.
These are the list of the cycles which will be labbled in my chart.
See the below chart for complete list.
Now next part is important for you. These are the expected time frame for the repected cycles.
If you love the post than give it a boost and keep following us for more trading idea.
Thank You
How to calculate stock weightage on index. #What is Stock weightage on an index ?
--> Stock weightage on an index is the relative importance of a particular stock in the index. It is calculated by dividing the market capitalization of the stock by the total market capitalization of all the stocks in the index.
-->The weightage of a stock in an index is important because it determines how much the stock will move the index when its price changes. A stock with a higher weightage will have a greater impact on the index's movement than a stock with a lower weightage.
How the stock weightage on an index is calculated ?
-->There are two main methods for calculating stock weightage on an index:
Market capitalization-weighted index: This is the most common method. The weightage of a stock in a market capitalization-weighted index is determined by its market capitalization. This means that the larger the market capitalization of a stock, the higher its weightage in the index. This is the most reliable and popular method to calculate stock weightage on an index.
Price-weighted index: In a price-weighted index, the weightage of a stock is determined by its price. This means that the higher the price of a stock, the higher its weightage in the index.
-->as an example, the stock weightage in Nifty Bank, like in any other index, is calculated using a free-float market capitalization-based method. Here's a simple explanation of how it's done:
Market Capitalization: The market capitalization of a company is the total market value of all its outstanding shares. It is calculated by multiplying the company's share price by the total number of outstanding shares.
Free-Float Market Capitalization : Free-float market capitalization considers only the portion of a company's shares that are available for trading in the open market. It excludes shares held by promoters, governments, and other strategic investors that may not be readily available for trading.
Weightage Calculation: To calculate the weightage of a stock in Nifty Bank, you take its free-float market capitalization and divide it by the sum of the free-float market capitalization of all the stocks in the index.
-->For example:
Let's say Nifty Bank comprises three stocks with the following free-float market capitalization:
Bank A: Rs. 50,000 crore
Bank B: Rs. 30,000 crore
Bank C: Rs. 20,000 crore
Total free-float market capitalization of Nifty Bank = Rs. 50,000 crore + Rs. 30,000 crore + Rs. 20,000 crore = Rs. 100,000 crore
-->Now, to calculate the weightage of each stock:
Bank A weightage = (Rs. 50,000 crore / Rs. 100,000 crore) * 100 = 50%
Bank B weightage = (Rs. 30,000 crore / Rs. 100,000 crore) * 100 = 30%
Bank C weightage = (Rs. 20,000 crore / Rs. 100,000 crore) * 100 = 20%
--> The stock weightage in Nifty Bank will be adjusted periodically based on the changes in the free-float market capitalization of the constituent stocks. As stock prices change in the market, the weightage of individual stocks in the index will also change to reflect their current market value.
All the best !!
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Market cycle psychology🔍 The psychology of the markets is a discipline that studies the different mental scenarios that investors often face when making their investments.
📚 Psychology in the market is one of the major pillars (for many, the primary one) that influences the success of the investor. The other two pillars are capital management and the applied investment system (strategy, routines, etc.).
📊 This cycle most frequently affects beginner investors/traders due to their inexperience and mental vulnerability to market movements.
❓ And you, have you experienced all the stages of this cycle? (🇮🇳)
What is IMBALANCE in the MARKET ? How to TRADE ?What is IMBALANCE in the MARKET ? How to TRADE ?
Imbalance also known as Price Inefficiency is a key factor in Stock market price action Trading.
Look for any candle which has a full body and look for the part of the candle that isn't overlapped by the previous and next candles' wicks. This signifies an imbalance in the market because there were few transactions going on between buyers and sellers.
How to Find?
In order to find imbalances, it consists of 3 candles. In a Bullish Scenario, It is where there is a gap between the top wick of the first candle & the bottom wick of the third candle do not meet. Wise versa for Bearish scenario.
How do you trade with imbalance?
Investors can protect themselves against the volatile price changes that can arise from imbalances by using limit orders when placing trades, rather than market orders. As each trading day draws to a close, imbalances of orders can arise as investors race to lock in shares near the closing price.
Untouched Imbalance level?
When price moves in one direction without filling the imbalance, mostly it tends to come back and fill the gap. Until then price wont go up/down much. Basically It will act as a magnet for the price. So Always find the imbalance areas which is a strong Demand and Supply zone for good trades and predict the market.
Ascending Triangle and it's meaning - understand using HALHow to identify an Ascending Triangle on chart and what does it mean?
Let’s understand this with current chart of NSE:HAL (dated 21-Aug-2023).
• Ascending Triangle is a bullish formation that generally gets formed during the uptrend and confirms the continuation of uptrend.
• Ascending Triangle pattern indicates the accumulation and gives bullish buy indication before breakout.
• NSE:HAL during its uptrend journey created break out from its uptrend channel on 7-Jun-2023.
• However, post that it has gone sideways and started forming an Ascending Triangle.
• Ascending triangle is created when price consolidates in the uptrend direction for some time by facing resistance at same level on the upper side of the triangle. Whereas the bottoms keep increasing.
• Volume starts getting decreasing from the starting point of the triangle.
• At one point, we will get Break Out from triangle with huge volume and uptrend will continue.
How To Trade In Option's By Big Bulls🤑💸✔✔💲🙏#HDFCBANK #BANKNIFTY #NIFTY50 #NIFTY #SENSEX #TATA
Intraday trading involves buying and selling options within the same trading day, rather than holding them for an extended period. By adopting this approach, traders can make profits by capitalizing on the short-term price movements of the underlying asset.22-Apr-2023
Is option buying good for intraday?
Trading intraday options can be a great way to benefit from short-term market fluctuations and make quick money. Before you dive headfirst into the fast-paced world of intraday options, it's important to have a sound strategy with an understanding of risks and rewards.
The long black candlestick is 'the mother' and the small candlestick is 'the baby'. The smaller the second candlestick, the stronger is the reversal signal. The shadows of the second candlestick do not have to be contained within the first candle's body.
Which candle is best for option trading?
Here are the top 5 candlestick patterns that traders must know:
Doji. The Doji pattern is formed when the Open Price and Close Prices are the same or almost the same, and there is Low and High Price, so the candle has nearly nobody with a lower and upper wick. ...
Hanging Man. ...
Hammer. ...
Morning Star and Evening Star.
Technical analysis and options trading can go hand in hand. Many of the best practices for options trading come directly from technical analysis concepts. Technical analysis focuses on price. Fundamental analysis does not solely focus on price.
RBI Forex Reserve Grow is this Good or Bad ?
1st 140 Billion loss hua hai or ab 20 Billion Grow hua hai to hai to abi bhi loss mai
Gover..t abi losss mai hai
baap_of_breakout analysis of multibagger stocksthis analysis is behalf of previous suggested stocks how they performs last week
Symmetrical Triangle Example using Adani EnterpriseNSE:ADANIENT has created a symmetrical triangle on the chart. Most of the time symmetrical triangle is created when stock is moving side ways (neither moving in up trend nor in down trend). Stock can move to any direction once it comes out of triangle hence it requires caution before placing trade. If stock breaks out (on upper side) than we may see up trend from that point. If stock breaks down (on lower side) than we may see down trend from that point.
U.S. Dollar Index (DXY)The US Dollar Index (also known as DXY or USDX) measures the value of the US dollar against a basket of foreign currencies. Therefore, it provides us with an insight into whether the dollar is strengthening or weakening compared to other major currencies.
This index has a positive correlation with currency pairs where the dollar is the base currency. Conversely, there is an inverse correlation.
The DXY or USDX measures the exchange rate of the US dollar against 6 currencies. The currency with the most weight in its composition is the euro.
It is a key indicator in analyzing the value of the dollar to determine its trend. Additionally, it can be used to study the global macroeconomic situation, as well as to gauge the level of economic and financial uncertainty at a particular moment. (🇮🇳)
Freedom From Trading MistakesHi Friends Good evening hope all are you fine, So first of all Wishing all of you a very Happy Independence Day, here I am doing a short writeup on Trading related mistakes very commonly did by me or a common trader on the occasion of Independence day from whom I want to be free now!
So always I wondering that why I or common traders could not make it and after deep thinking on trading methods and trading psychology I found some mistakes from what I want to get rid of now sharing below.
⚡⚡⚡⚡ Don’t trade if your emotions aren’t aligning with what is on the screen.
If we are not super happy about entering, and you don’t fully accept the loss, don’t take the trade and Don’t ‘force’ something to work because it won’t.
Trade as if you are looking for buys and sells in your markup, This removes mental bias, and effectively emotion in trading.
⚡⚡⚡⚡ We focused too much on technical analysis.
You know that trading is 90% psychology, 10% technical, yet you don't focus on it.
Why is psychology so important, but people focus on technical analysis so much more? Because backtesting and focusing on the technical provide us with instant gratification. It feels good knowing what returns you would have gotten on that trade, over the past weeks, months, or even years. It's feels good to instantly know what you will get out of your backtesting session.
⚡ ⚡ ⚡ ⚡ Never chase missed entries.
Let’s say the market is in a nice healthy trend, making a series of higher highs and higher lows. And when you overlay the 20-day moving average over it, you notice the market bounce off the moving average quite a few times. You then get a buy signal near the moving average, but unfortunately, you missed the entry and are just watching the market go up without making any money from it.
Now, when you look at the chart, the market is very far away from the 20-day moving average. So even though the market is currently in an uptrend, ideally you don’t want to be buying now because, from looking at your analysis, the market tends to pull back to the 20-day moving average. If you impulsively buy when the price is very far away from the 20-day moving average, when the price is overstretched and the market has been overbought, there’s a high probability the market will reverse or pullback, and you will most likely get stopped out.
We all miss entries and opportunities; it is completely normal to do so, and sometimes the market can give you a second chance to enter by coming back to your original level. If it does not and you completely miss the move, do not dwell on it; dust it off and move on. The markets are not going anywhere, and plenty more opportunities will come your way.
⚡⚡⚡⚡Overtrading
To avoid overtrading just we have to create a well Defined trading plan with setting the daily or weekly trade limits, so if you are observing that you are doing overtrading or compulsory trading just take a break make some strict rules and try to comeback with a committed risk management plan.
⚡⚡⚡⚡Respect your losses
Don't try to argue with market if your trades are going in wrong direction always respect your stop loss and understand that is the most important part of your trade from which you can avoid the vanish of capital and trade capabilities because small losses always prevent from big losses to us. And somehow you should follow your targets too like a disciplined trader likewise if you are trading with 1:2 RR and after two consecutive stop loss if you will sit till target you will get back to your capital almost so never try to come out early believe your trading system.
Key Takeaway-:
Trading system is also like our health system which needs a checkup after sometime so that we can know the problems in time and get Freedom from it.
Best Regards- Amit Rajan
Happy Independence Day 2023
Jai Hind Jai Bharat
Head and ShoulderDistinct and clear patterns are usually good for learning price action.
Current H&S formed in bank nifty ticks all checkboxes.
1. It is formed after reasonable up trend.
2. Pattern appears clean.
3. Target is reaching a logical level of 200dma
4. Most of positive news are gone by and interest rate reduction is still 2~3 quarters delayed.
This may not be total trend reversal but around 4% downside is possible. While such move may not be useful for swing traders, it can create good buying opportunity in your favorite banking stock.
Importance of Chart PatternsFor those looking to master the stock market, understanding chart patterns is essential. And if you have reached a point where you are out of trading ideas or stuck in a traders’ block, this article is just for you.
Chart patterns are formed by the movement of prices over time, and these can be of two types: Continuous patterns which indicate that price movement will continue in the direction of the trend and Reversal patterns which indicate a potential change in the direction of the trend.
There is no universal pattern which can help you in every situation. Hence, it is important to know what each pattern indicates and how you can spot them in a price movement.
In a series of these articles we will talk about all such important patterns that a trader must know about.
In this article, we look at Head and Shoulders
The head and shoulders pattern is a reliable reversal pattern that forms after an uptrend. The pattern is named for its resemblance to a head and two shoulders. The left and right shoulders are typically at or near the same price level, and the head is higher. When the price breaks below the neckline, it signals a bearish reversal.
Look out for the following sequence:
Left shoulder: A price rise followed by a peak, followed by a decline.
Head: A price rise again forming a higher peak than the previous one.
Right shoulder: A decline of price again, followed by a rise to form the right peak, which is lower than the head.
For example : take a look at the chart pattern for TCS to understand how price movement took place from the month of August 2019 to February 2020 forming three peaks, in the sequence we just discussed.
Anchored vwap in day trading...All the anchored vwaps are dynamic support and resitance. There is no need to draw support resistabnce zones. But do not take any trade blindly. Please combine anchored vwap lables with price action. For more confirmation you can use intraday vwap indicator with three standard deviations. Or you can add order flow analysis also. According to my observation market is imbalance in between 19755.65 to 19736.1 . For day trading you can use 1 minute timeframe chart also.
Support and Resistance- Flipping Roles⚡In simple terms, support is a level where demand overcomes supply, while resistance is a level where supply overcomes demand. In the market, different types of traders participate, and I have broadly categorized them into four groups based on their behavior.
⚡You may have heard that once a support level is broken, it tends to act as a resistance level, and vice versa. This phenomenon occurs because the roles of support and resistance flip, influenced by the psychology of traders at these levels.
⚡Let's illustrate this with an example. Consider Group A, a set of buyers who bought a stock at 80. The stock price rises to 100 but faces some resistance. At this point, Group B, consisting of short sellers, enters the market and starts selling the stock near 100, with their stop-loss orders placed just above 100. Thus there is supply present at this level.
⚡The price consolidates within a narrow range and eventually breaks out above 100. Group A is delighted as they bought at a good price, but Group B becomes unhappy. Some members of Group B exit the trade as their stop-loss orders get triggered, while others continue to hold in hope of a favorable outcome.
⚡Now, another group of traders, Group C, known as breakout traders, becomes active above 100. Their buy orders, combined with the buy-stop orders from Group B, add momentum to the upward movement, pushing the price up to 110.
⚡As the buying pressure eases, and short-term traders take profits, the market starts to pull back, eventually reaching the old resistance area around 100.
⚡Many pullback traders look for buying opportunities near this level. Additionally, members of Group B, who shorted at 100, realize their mistake and start buying to close their short positions at breakeven. Some of them also reverse their positions. Other buyers who were waiting on the sidelines also start entering the market. All these buy orders create a strong demand.
⚡Notice that once there was significant supply at 100 and now there is significant demand. If this demand is substantial enough, the price resumes its upward movement, illustrating how changes in market sentiment impact a participant's psychology and consequently affect the nature of support and resistance levels.
⚡The reverse is true for how a support level, once broken down, turns into a resistance level.
⚡I hope you found this tutorial helpful. Please stay tuned for more educational content in the future. Feel free to show your support by liking this post.
Disclaimer: Practical knowledge
Chart pattern: ChannelA channel is a pattern used in the technical analysis of financial markets that defines the movement of the price of an asset between the upper and lower lines of the pattern (parallel lines). Channels can be bullish, bearish, or sideways.
They are reversal patterns, meaning they indicate a signal for a change in trend.
When it comes to trading them, there are different ways to do so. We can trade within the channel, aiming for the opposite end of the line we are situated on. Alternatively, we can trade the trend change. The trend change can be traded once the channel is broken, either within it or by waiting for the price to break the pattern. This latter option is riskier, but it can lead to greater profits as the trading begins at a point with a higher projected movement. (🇮🇳)
7 Expert Risk Management Techniques for TradingRisk management refers to the techniques used to identify, evaluate, and mitigate the potential risks associated with trading and investing. Whether you are a day trader, swing trader, or scalper, effective risk management can help you minimize losses and protect your hard-earned money all while maximizing potential profits.
Let's take a look at the top 7 risk management techniques for trading! 👌
Have a Trading Plan
⦿ Many traders jump into the market without a thorough understanding of how it works and what it takes to be successful. You should have a detailed trading plan in place before making any trades. A well-designed trading plan is an essential tool for effective risk management.
⦿ A trading plan acts as a roadmap, laying out a set of guidelines/rules that can help traders avoid impulsive decisions. It is crucial because it requires you to think deeply about your approach before you begin risking real money. Having a plan can help you stay calm under stress as your plan will have specific steps to take for anything the market throws at you.
⦿ It is essential to clearly define your trading goals and objectives. Are you aiming for short-term gains or long-term wealth generation? Are you focused on a specific asset class or trading strategy? Setting specific and measurable goals helps you stay focused and evaluate your progress.
⦿ Another important part is to describe the trading strategy you will employ to enter and exit trades. This includes the types of analysis you will employ (technical, fundamental, or a combination), indicators or patterns you will rely on, and any specific rules for trade execution. Determine your risk tolerance, set appropriate position sizing rules, and establish stop-loss levels to limit potential losses.
The Risk/reward ratio
⦿ When you are planning to open a trade, you should analyze beforehand how much money you are risking in that particular trade and what the expected positive outcome is. Here is a useful chart with some examples to understand this concept:
⦿ As you can see from the data above, a trader with a higher RR (risk-reward ratio) and a low win rate can still be profitable.
⦿ Let’s examine this a little more by looking at a profitable example with a 20% success rate, a RR ratio of 1:5, and a capital of $500. In this example, you would have 1 winning trade with a profit of $500. The losses on the other 4 trades would be a total of $400. So the profit would be $100.
⦿ An unprofitable RR ratio would be to risk, for example, $500 with a success rate of 20% and a risk/reward ratio of 1:1. That is, only 1 out of 5 trades would be successful. So you would make $100 in 1 winning trade but in the other 4, you would have lost a total of -$400.
⦿ As a trader, you need to find the perfect balance between how much money you’re willing to risk, the profits you’ll attempt to make, and the losses you’ll accept. This is not an easy task, but it is the foundation of risk management and the Long & Short Position Tools are essential.
You can use our 'Long Position' and 'Short Position' drawing tools in the Forecasting and measurement tools to determine this ratio.
Stop Loss/Take Profit orders
⦿ Stop Loss and Take Profit work differently depending on whether you are a day trader, swing trader, or long-term trader and the type of asset.
⦿ The most important thing is not to deviate from your strategy as long as you have a good trading strategy. For example, one of the biggest mistakes here is to change your stop loss thinking that the losses will recover... and often they never do.
⦿ The same thing happens with take profits, you may see that the asset is "going to the moon" and you decide to modify your take profit, but the thing about markets is that there are moments of overvaluation and then the price moves sharply against the last trend.
⦿ There is an alternative strategy to this, which is to use exit partials, that is closing half of your position in order to reduce the risk of your losses, or to take some profits during an outstanding run. Also remember that each asset has a different volatility, so while a stop loss of -3% is normal for a swing trading move in one asset, in other more volatile assets the stop loss would be -10%. You do not want to get caught in the middle of a regular price movement.
⦿ Finally, you can use a trailing stop, which essentially secures some profits while still having the potential to capture better performance.
Trade with TP, SL, and Trailing Stop
Selection of Assets and Time intervals
⦿ Choosing the right assets involves careful consideration of various factors such as accessibility, liquidity, volatility, correlation, and your preference in terms of time zones and expertise. Each asset possesses distinct characteristics and behaviors, and understanding these nuances is vital. It is essential to conduct thorough research and analysis to identify assets that align with your trading strategy and risk appetite.
⦿ Equally important is selecting the appropriate time intervals for your trading. Time intervals refer to the duration of your trades, which can span from short-term intraday trades to long-term investments. Each time interval has its own advantages and disadvantages, depending on your trading style and objectives.
⦿ Shorter time intervals, such as minutes or hours, are often associated with more frequent trades and higher volatility. Traders who prefer these intervals are typically looking to capitalize on short-term price fluctuations and execute quick trades. Conversely, longer time intervals, such as days, weeks, or months, prove more suitable for investors and swing traders aiming to capture broader market trends and significant price movements.
⦿ Take into account factors such as your time availability for trading, risk tolerance, and preferred analysis methods. Technical traders often utilize shorter time intervals, focusing on charts, indicators, and patterns, while fundamental investors may opt for longer intervals to account for macroeconomic trends and company fundamentals.
For example, If you are a swing trader with a low knack for volatility, then you can trade in assets such as stocks or Gold and ditch highly volatile assets such as crypto.
⦿ Remember that there is no one-size-fits-all approach, and your choices should align with your trading style, goals, and risk management strategy.
Here is a chart of Tesla from the perspective of a day trader, a swing trader, and an investor:
Backtesting
⦿ Backtesting plays a crucial role in risk management by enabling traders to assess the effectiveness of their trading strategies using historical market data. It involves the application of predefined rules and indicators to past price data, allowing traders to simulate how their trading strategies would have performed in the past.
⦿ During the backtesting process, traders analyze various performance metrics of their strategies, such as profitability, risk-adjusted returns, drawdowns, and win rates. This analysis helps identify the strengths and weaknesses of the strategies, allowing traders to refine them and make necessary adjustments based on the insights gained from the backtesting results.
⦿ The primary objective of backtesting is to evaluate the profitability and feasibility of a trading strategy before implementing it in live market conditions. By utilizing historical data, traders can gain valuable insights into the potential risks and rewards associated with their strategies, enabling them to manage their risk accordingly.
⦿ However, it's important to note the limitations of backtesting. While historical data provides valuable information, it cannot guarantee future performance, as market conditions are subject to change. Market dynamics, liquidity, and unforeseen events can significantly impact the actual performance of a strategy.
⦿ There are plenty of ways to backtest a strategy. You can run a manual test using Bar Replay to trade historical market events or Paper Trading to trade real examples. Those with coding skills can create a strategy using Pine Script and run automated tests on TradingView.
Here is an example of the Moving Averages Crossover strategy using Pine Script:
Margin allocation
We are not fortune tellers, so we cannot predict how assets will be affected by sudden major events. If the worst happens to us and we have all of our capital in a particular trade, the game is over.
There are classic rules such as the maximum allocation percentage of 1% per trade (e.g. in a $20,000 portfolio this means that it cannot be risked +$200 per trade). This can vary depending on your trading strategy, but it will definitely help you manage the risk in your portfolio.
Diversification and hedging
⦿ It is very important not to put all your eggs in one basket. Something you learn over the years in the financial markets is that the unexpected can always happen. Yes, you can make +1000% in one particular trade, but then you can lose everything in the next trade.
⦿ One way to avoid the cold sweats of panic is to diversify and hedge. Some stock traders buy commodities that are negatively correlated with stocks, others have a portfolio of +30 stocks from different sectors with bonds and hedge their stocks during downtrends, and others buy an ETF of the S&P 500 and the top 10 market cap cryptos.
⦿ There are unlimited possible combinations when diversifying your portfolio. At the end of the day, the most important thing to understand is that you need to protect your capital, and using the assets available to you a trader can hedge and/or diversify to avoid letting one trade ruin an entire portfolio.
Thank you for reading this idea on risk management!
We hope it helps new traders plan and prepare for the long run. If you're an expert trader, we hope this was a reminder about the basics.
Join the conversation and leave your comments below with your favorite risk management technique! 🙌
- TradingView Team
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What makes a Resistance Potential OneResistance and support are faces of a same coin the concept is same , if price reverses its direction after getting closer to a particular level or zone we call it resistance or support level or zone.
When you start learning about it more you will find that it is the most basic approach to analyze a price action, then you mix it up with trend line which is again nothing but a tilted support and resistances, concept is same.
Trading such levels & zone require an approach where you can benefit maximum from the upcoming move and the trade you take should have the potential to give you a good risk to reward ratio.
If you see, resistance and support are everyday happenings , they occurs so much times that taking a bet on every setup will make our trading random ,so filtering those blurry , OK-ok, less potential setup is very very important .
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Here I am giving you some of my observation over filtering such setups.
First do not try to make support and resistance everywhere , try to avoid making inside a range , can only make such resistances and support if they form on a large time frame or over a long period. This will filter out your 40% setups.
Second Let the support and resistance test 3 or more touches , when price behaves in an ideal way more than three times the level or zone become very crucial and price can tend to give you a big and sharp rally (see the direction still can be any side as it is not always breakdown it can also be a big reversal).
Third See the overall trend and recent price pattern , better if the setup is in order to the overall trend, reversals should also be in sync with overall trend as in this USD/INR chart the overall trend is bullish & the pattern is a bullish flag which is again a bullish one.
Fourth Volume formation when price reaches to a support or resistance if a spike in volume is there then you can say a big players is also betting on those levels or zones in big quantity (note : they betting in which direction you can't guess like that).
You can take entry at breakout and make your stop loss at the support simple....
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Intraday trading involves buying and selling options within the same trading day, rather than holding them for an extended period. By adopting this approach, traders can make profits by capitalizing on the short-term price movements of the underlying asset.22-Apr-2023
Is option buying good for intraday?
Trading intraday options can be a great way to benefit from short-term market fluctuations and make quick money. Before you dive headfirst into the fast-paced world of intraday options, it's important to have a sound strategy with an understanding of risks and rewards.
The long black candlestick is 'the mother' and the small candlestick is 'the baby'. The smaller the second candlestick, the stronger is the reversal signal. The shadows of the second candlestick do not have to be contained within the first candle's body.
Which candle is best for option trading?
Here are the top 5 candlestick patterns that traders must know:
Doji. The Doji pattern is formed when the Open Price and Close Prices are the same or almost the same, and there is Low and High Price, so the candle has nearly nobody with a lower and upper wick. ...
Hanging Man. ...
Hammer. ...
Morning Star and Evening Star.
Technical analysis and options trading can go hand in hand. Many of the best practices for options trading come directly from technical analysis concepts. Technical analysis focuses on price. Fundamental analysis does not solely focus on price.
RBI Forex Reserve Grow is this Good or Bad ?
1st 140 Billion loss hua hai or ab 20 Billion Grow hua hai to hai to abi bhi loss mai
Gover..t abi losss mai hai
