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MARKEY CYCLES PSYCHOLOGY | EMOTIONS & COGNITIVE BIASES All markets go through cycles of expansion and contraction. 📈When a market is in an expansion phase (an uptrend), there is a sentiment of optimism, belief, and greed. Typically, these are the main emotions that lead to a strong buying activity. Sometimes, a strong sense of greed and belief overtakes the market in such a way that a financial bubble can form. In such a scenario, many investors become irrational, losing sight of the actual value and buying an asset only because they believe the market will continue to rise. They get greedy and irrational by the impressive bullish movement, expecting to make huge profits. As the market gets heavily overbought, the local top is created. In general, this is considered to be the point of the highest risk. In some cases, the market will start a sideways movement while smart money steadily sells the asset. This is also called the distribution stage. However, some markets don't present a clear distribution stage, and the downtrend starts sharply after the top is reached. ➖➖➖➖➖➖➖➖➖ 📉 When the market starts reversing, the euphoric mood can quickly turn into complacency, as many traders refuse to admit that the uptrend came to an end. As prices continue to fall, the market sentiment quickly moves to the bearish side. It often includes feelings of anxiety, denial, and panic. In this context, by the anxiety we mean the moment when bullish biased market participants start to question why the price is falling, which soon leads to the denial stage. The denial period is marked by a sense of unacceptance. Many investors keep holding their losing positions, either because "it's too late to sell" or because they want still believe that "the market will come back soon." But as the prices drop even lower, the selling wave gets stronger. At this point, fear and panic often lead to what is called a market capitulation (when holders give up and sell their assets close to the local bottom). Eventually, the downtrend stops as the volatility decreases and the market stabilizes. Typically, the market experiences sideways movements before feelings of hope and optimism start arising again. Such a sideways period is called the accumulation stage. ❤️Please, support this idea with a like and comment!❤️ ⬇️Subscribe to my social networks!⬇️
OANDA:XAUUSDEducation
by VasilyTrader
2
MegaPhone PatternWhat is Megaphone Pattern? Megaphone pattern is a pattern which consists of minimum two higher highs and two lower lows. The pattern is generally formed when the market is highly volatile in nature and traders are not confident about the market direction. Normally this pattern is visible when the market is at its top or bottom. The greater the time frame is better the pattern will work. However, traders love this pattern when it is formed in a daily or weekly time frame. Key Points :- * Megaphone pattern is a pattern that consists of minimum of higher highs and two lower lows. *The pattern is generally formed when the market is highly volatile in nature and traders are not confident about the market direction. *Megaphone pattern is known to give multiple trading opportunities to the trader. *This pattern also can be traded when it fails but is necessary to identify the failure perfectly. *Sometimes only pattern is not enough to take best trading decisions you may need multiple indicators to identify better entry and exit points. How to identify the Megaphone pattern ?? * Generally, Megaphone Pattern consists 5 different swings. But the swing has to have minimum two higher highs and two lower lows. A trend line is drawn by connecting point 1 and point 3 while point 2 and 4 are also joined together to draw a line. These two lines create a shape which looks like a megaphone or inverted symmetric triangle. Below are a few characteristics of Megaphone trading pattern: *Volume plays an important role when it comes to the recognition of this pattern. *In the Megaphone Top, volume usually peaks along with prices. *An increase in the volume, on the day of the pattern confirmation is a strong indicator. Theoretical ways to trade the Megaphone pattern: Megaphone pattern is known to give multiple trading opportunities to the trader. A trader can trade Megaphone pattern as Breakout Trades Swings trades (while making higher highs and lower lows) When the Price fails to give a breakout. Breakout Trades: When the price breaks the trend line after making the 5th swings and closes outside the pattern boundary, a breakout is confirmed. Breakout may happen in positive or in a negative direction. Depending upon the market condition and the position of the pattern in the chart, bullish and bearish breakout happens. After a prolonged bull run, when this pattern is formed at the top and the price closes below its lower trend line, then it acts as a trend reversal pattern. But, if the price closes above the higher trend line and makes new higher highs in the chart then it will be termed as a Continuation Pattern. Traders can take a trade when price closes outside the pattern boundary (in whichever direction) to get the best possible confirmation of the breakout. For educational Purpose Mega phone Pattern Under construction stocks are below- * V Guard Industries *Solar Industries Limited. *Blue Star Limited. *Rattan India . Kindly Let us Know if you have any Questions. Thank You
NSE:ULTRACEMCOEducation
by PrasantaP
6
Reliance Industries Momentum Scenario continuationReliance moved according to scenario considered So now possibility could be a sideways movement between trend line support and resistance. And if breakout happens downward then possibility of trend could be till support between 1600 to 1680. And if breakout happens upward then possibility of trend could be till resistance around green trend line and arch near 2200. Since established trend is downtrend I believe a possible downward breakout.
NSE:RELIANCEEducation
by Parth_agrawal
YOUR EDGE: THE ORB STRATEGYWhat would be trading without an edge? Would it be like tossing a coin with 50% chances of getting a head or a tail. I dun think so. I think it would be around 25%, that too if you dun mess with your trades. So what is an edge? In broader sense, the edge is your trading plan which includes predefined entries and exits. In narrower sense, it is technical analysis (TA). In my opinion TA is just a part of your edge -- trading plan. Your edge would help you to define the three elements of the trade, that is, When, What and How. Which means What should I trade? When should I trade? and How should I trade? It's lame that most part of our learning concentrates on just 'How' element. Whereas most of us (even the experienced traders) find it very difficult to deal with 'What' part of the edge, that is, what should I trade today? In this article I am going to introduce to you the Opening Range Breakout (ORB) strategy. I would try to elaborate all the above three elements of the ORB edge. The ORB Plan Layout How While there are many versions of ORB, I personally prefer the first 5 min version. Let the stock trade for the first 5 min. Just Mark the high and the low. What I prefer this strategy in top Gainers (not losers). Just wait for a few minutes after the market opens and look for top gainers on NSE website (I would like you to prefer if you have filters on your own software). Choose the gainers which have been trading outside the previous day's range. When Place a buy stop order above the high of the chosen stocks and sleep until it is hit :) As soon as it is hit place a stop below the low of the first 5 min bar. Hunt for your targets: Look for 1:1 or 1:2 target depending on the stop loss. If the stop is wide then go for just 1:1 or else go for 1:2 Tips for short plays: This strategy works well on long trades rather than on the short side. As on the short side the action, most of the times, is very huge in the first 5 min bar which increases the risk on the trade. However you may apply ORB on the short side If the action is not very strong on the first bar and the stock actually develops a range for the first 30 minutes or so and then breaks it. Money management: There could be another full post on this topic but I will introduce a shortcut formula here to decide on the no. of shares you should trade in any setup. Say you have a capital of 50,000 and you want to risk 2% on one trade. So the risk comes out to be 1000. Means you can risk 1000 on one trade. Let's say the stop loss on your setup comes out to be 5. Just divide the stop by the risk and that's the no. of shares you should trade. In this case 1000/5=200 shares. So No. of shares to be traded=Risk/Stop I hope you like this post and make some money out of it. I would surely post some of the trades that I took last week with this strategy. Trade safe, Stay healthy.
NSE:NIFTYEducation
by Bravetotrade
10