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Technical analysisThe MACD indicator (or oscillator) is one of the best indicators for identifying trends and reversals in the financial markets. The MACD strategy in its most basic form involves using the crossing of the smoothed out signal line over the MACD line as your entry or exit point for a trade. The best MACD setting for day trading often uses a faster configuration, such as 3-10-16, to capture quick price movements. While the default 12-26-9 is popular, shorter settings can improve sensitivity to intraday trends. Optimal settings vary by strategy and asset volatility.
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MACD TradingMoving average convergence/divergence (MACD) is a technical indicator to help investors identify entry points for buying or selling. The MACD line is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA. The signal line is a nine-period EMA of the MACD line. A common strategy is to buy when the MACD line crosses above the signal line, as this indicates bullish momentum. Another strategy is to sell when it crosses below (which indicates bearish momentum).
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Top Trader SetupThe 3 5 7 rule is a risk management strategy in trading that emphasizes limiting risk on each individual trade to 3% of the trading capital, keeping overall exposure to 5% across all trades, and ensuring that winning trades yield at least 7% more profit than losing trades. What is a good setup for day trading? A good day trading setup includes a powerful computer or laptop, high-resolution monitor or monitors, ergonomic desk and chair, reliable charting software, high-speed internet connection, and access to real-time news feeds and stock scanners.
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MACDIf MACD is above the signal line, the histogram will be above the MACD's baseline or zero line. If MACD is below its signal line, the histogram will be below the MACD's baseline. Traders use the MACD's histogram to identify peaks of bullish or bearish momentum, and to generate overbought/oversold trade signals. The difference between the two lines is represented on the histogram. If the MACD were to be trading above the zero line, it would confirm an uptrend, below this and the indicator would be used to confirm a downtrend.
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Data Trading in optionsOptions data captures information on options contracts, including pricing and trading volumes, useful for investment strategies. Discover our guide and top options data providers. By analysing the information provided in the option chain, traders can identify potential trading opportunities and make informed decisions about buying or selling options contracts. Option chains are used by traders to analyse and evaluate the market's expectations of an asset's future price movements.
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Option chainAn options chain displays all available option contracts for a security, organized by expiration date and strike price. Options chains typically show each contract's bid price, ask price, volume, open interest, and implied volatility (IV). Option chains also allows traders with the option to select the best expiration date for their options trading. The option's expiration date is the day it will stop being tradeable. Traders may use the option chain to identify the expiry date that provides the optimal balance of risk and return for their transaction.
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Journey of Advanced Divergence TradingCommon types of trading are intraday, positional, swing, long-term trading, scalping, and momentum trading. Trading involves exchanging goods or services. In stock trading, investors buy and sell stocks from companies within regulated markets overseen by Indian regulatory bodies. Master these skills and then you'll get a genuine shot at being a trading master. Skills #1 and #2 – Research and Analysis. ... Skill #3 – Adapting Your Market Analysis to Changing Market Conditions. ... Skill #4 – Staying in the Game. ... Skills #5 and #6 – Discipline and Patience. ... Bonus Skill #7 – Record Keeping. ... In the End.
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Professional TradingWhat Is Technical Analysis? Technical analysis is a method of evaluating statistical trends in trading activity, typically involving price movement and volume. It is used to identify trading and investment opportunities. Unlike fundamental analysis, which attempts to evaluate a security's value based on financial information such as sales and earnings, technical analysis focuses on price and volume to draw conclusions about future price movements. Key Takeaways Technical analysis is used to evaluate price trends and patterns and thereby identify potential investments and trading opportunities. Technical analysts believe past trading activity and a security's price changes can be valuable indicators of the security's future price movements. Technical analysis may be contrasted with fundamental analysis, which focuses on a company's financials rather than historical price patterns or stock trends. Technical analysis was introduced by Charles Dow.
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Advanced Technical TradingWhat Is Price Action? Price action is the movement of a security's price plotted over time. Price action forms the basis for all technical analyses of a stock, commodity, or other asset charts. Many short-term traders rely exclusively on price action and the formations and trends extrapolated from it to make trading decisions. Technical analysis as a practice is a derivative of price action since it uses past prices in calculations that can then be used to inform trading decisions. Key Takeaways Price action generally refers to the changes of a security's price over time. Different looks can be applied to a chart to make trends in price action more obvious for traders. This is especially true when analyzing data covering different time periods. Technical analysis formations and chart patterns are derived from price action. Technical analysis tools like moving averages are also calculated from price action and projected into the future to inform trades. Though many use price action to forecast future prices, prior price action does not guarantee future results.
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Technical Analysis Part - 3Volume can confirm divergence signals by indicating the strength and conviction behind price movements. High volume during divergence signals strengthens the reliability of the signal, while low volume may indicate weaker market sentiment. The basic rule of thumb is that an RSI value over 70 indicates a stock is “overbought” and may see its price fall in the future. Meanwhile, an RSI value of 30 or lower can mean that the price could go up. An RSI of 50 is often seen as neutral, meaning the stock has not been either overbought or oversold.
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Technical Analysis Part - 2The RSI provides immediate signals for buying and selling, helping you understand whether an asset is overbought or oversold. RSI readings below 30 signal buy opportunities, indicating the asset is undervalued. Conversely, RSI readings above 70 signal sell opportunities, suggesting the asset is overvalued. Volume can confirm divergence signals by indicating the strength and conviction behind price movements. High volume during divergence signals strengthens the reliability of the signal, while low volume may indicate weaker market sentiment.
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Technical Analysis Part - 1An RSI divergence occurs when price moves in the opposite direction of the RSI. In other words, a chart might display a change in momentum before a corresponding change in price. A bullish divergence occurs when the RSI displays an oversold reading followed by a higher low that appears with lower lows in the price. The RSI provides immediate signals for buying and selling, helping you understand whether an asset is overbought or oversold. RSI readings below 30 signal buy opportunities, indicating the asset is undervalued. Conversely, RSI readings above 70 signal sell opportunities, suggesting the asset is overvalued.
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Technical Analysis Part - 4The MACD is a momentum indicator that can be used to anticipate changes in market sentiment. However, it is not foolproof: experienced traders look to other metrics, such as trading volume, for a more complete perspective on market sentiment. Key Takeaways The moving average convergence divergence (MACD) is a popular momentum indicator that is used in technical analysis. The MACD is calculated by comparing exponential moving averages in a security's price. The MACD line is charted alongside a nine-day moving average of the MACD line, called the signal line, and a histogram representing the difference between these two curves. Traders use the MACD histogram to anticipate changes in market momentum. MACD analysis can still generate false price predictions. Experienced traders use additional metrics and fundamental analysis to support their forecasts.
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Professional Trading MindsetOne of the most important psychological characteristics of winning traders is the ability to accept (1) risk and (2) the fact that you may well be wrong more often than you are right in initiating trades. Winning traders understand that trade management is actually a more important skill than market analysis. How to trade professionally? Start with a clear and concise plan with proven strategies and then leverage the 20 rules that follow. Stick to Your Discipline. ... Lose the Crowd. ... Engage Your Trading Plan. ... Don't Cut Corners. ... Avoid the Obvious. ... Don't Break Your Rules. ... Avoid Market Gurus. ... Use Your Intuition.
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Technical Class 1 #SMC1In finance, technical analysis is an analysis methodology for analysing and forecasting the direction of prices through the study of past market data, primarily price and volume. Technical analysis is a means of examining and predicting price movements in the financial markets, by using historical price charts and market statistics. It is based on the idea that if a trader can identify previous market patterns, they can form a fairly accurate prediction of future price trajectories.
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Option chainAn option chain is a comprehensive list that shows you all available option contracts for a given stock. These are sorted by their expiration date, which is the last day you can trade or use the option, and strike price, which is the price at which you can buy (call) or sell (put) the stock. An option chain is a valuable tool for traders who want to make informed decisions about their investments. It provides information on the strike price, expiration date, and the price of each option.
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Silver DivergenceDivergence and Gold/Silver Ratio Gold and silver are thought to move together, and often they do. There are periods where the Gold Trust (GLD) and Silver Trust (SLV) move in opposite directions and periods where one metal outperforms the other. Gold is currently outperforming silver. Such discrepancies occur and are monitored by the gold/silver ratio. The gold/silver ratio shows how many ounces of silver it takes to buy an ounce of gold. Since 1975, the average is near 60; right now it stands near 80 ($1,187 divided by $14.99). While gold outperformance, or silver's underperformance relative to gold, was very noticeable in early 2016, this has actually been going on for a long time. The outperformance has become even more pronounced since 2016. To start 2016, gold traded at $1,069 and silver at $13.80 -- the gold/silver ratio of 77.5. As of Oct. 2018, it's at 80. Gold prices have risen relative to silver prices quite steadily for years. This is mainly due to silver price weakness since peaking near $50 in 2011 (when silver outperformed gold).
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Trading Medicine Part 21. Long call. In this option trading strategy, the trader buys a call — referred to as “going long” a call — and expects the stock price to exceed the strike price by expiration. The upside on this trade is uncapped and traders can earn many times their initial investment if the stock soars. Options contracts are considered risky due to their complex nature, but investors who know how options work can reduce their risk. Various risk levels expose investors to loss of premiums, gains, and market value loss.
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Trading Medicine Options are a type of contract that gives the buyer the right to buy or sell a security at a specified price at some point in the future. An option holder is essentially paying a premium for the right to buy or sell the security within a certain time frame. Is option trading profitable? Options trading is a risky endeavor but can be profitable if done correctly. There is no guarantee that any particular trading strategy will be consistently successful, but a few methods have proven to be effective more often than not.
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PCR Part - 1What is PCR in share market? A Put-Call Ratio is a technical indicator used in derivative markets. It gauges market sentiment by comparing the open interest or trading volume of put options to call options. A high ratio generally suggests a bearish outlook, while a low ratio indicates a bullish sentiment. A PCR value below 1 is indicative of the fact that more Call options are being purchased relative to the Put options which signals that investors are anticipating a bullish outlook for the markets ahead.
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