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Option and Database tradingTo study an option chain, focus on the current market price, displayed in the centre. Analyse the built-up data to understand market direction based on recent changes in open interest and price. ITM call options are typically highlighted in yellow, making it easier to distinguish them from other options. The put-call ratio measures trading volume using put options versus call options. Instead of the absolute value of the put-call ratio, the changes in its value indicate a change in overall market sentiment.
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by SkyTradingZone
How our MIND fools us?Mental Blind Spots in Trading: How to Overcome Them Trading is not just about strategies, indicators, and market analysis. The real battle often takes place in the mind. Even the most skilled traders can suffer from mental blind spots—cognitive biases and psychological weaknesses that lead to costly mistakes. In this article, we will explore the most common mental blind spots in trading and how to overcome them. 1. Confirmation Bias This is the tendency to seek out information that supports our existing beliefs while ignoring contradictory evidence. Traders often fall into this trap by only looking at indicators or news that align with their bias, leading to poor decision-making. Solution: Challenge your own assumptions by analyzing both bullish and bearish scenarios. Follow traders with different perspectives and keep a trading journal to track how bias affects your decisions. 2. Overconfidence Bias Overconfidence can make traders take excessive risks, believing they are better than they actually are. A few successful trades can create a false sense of invincibility, leading to reckless decision-making. Solution: Stay humble and let data guide your decisions. Set risk management rules and never risk more than a fixed percentage of your capital on a single trade. 3. Loss Aversion Many traders hate losing more than they love winning. This fear of loss often leads to holding onto losing trades for too long, hoping they will turn around, instead of cutting losses early. Solution: Accept losses as part of the game. Use stop-loss orders and develop a mindset that focuses on probabilities rather than emotions. 4. Recency Bias This occurs when traders give too much weight to recent events while ignoring the bigger picture. If a trader has just experienced a streak of losses, they may become overly cautious, missing good opportunities. On the other hand, after a winning streak, they may become overconfident. Solution: Stick to your trading plan and base your decisions on long-term patterns rather than short-term fluctuations. Reviewing historical performance can help maintain perspective. 5. Anchoring Bias Traders often fixate on a particular price level, such as the entry price, and refuse to accept new information that contradicts their original thesis. This can result in missed opportunities or holding onto bad trades. Solution: Be flexible in your approach. Market conditions change, and adapting to new data is crucial for long-term success. 6. Gambler’s Fallacy Many traders believe that after a series of losses, a win is "due" or that after a streak of wins, a loss must be around the corner. This flawed thinking can lead to irrational trade sizing and poor decision-making. Solution: Remember that each trade is independent of the last. Stick to a consistent strategy and risk management plan instead of making emotional adjustments. 7. Endowment Effect This bias occurs when traders overvalue the assets they own simply because they own them. It leads to irrational decision-making, such as refusing to sell a losing trade because of emotional attachment. Solution: Treat each trade objectively. Focus on technical and fundamental factors rather than personal attachment to a trade. Final Thoughts: Mental blind spots in trading can be dangerous if left unchecked. Recognizing these biases and actively working to minimize their impact can significantly improve your trading performance. Develop self-awareness, keep a trading journal, and continuously refine your approach. In the end, mastering the psychological aspect of trading is just as important as mastering technical and fundamental analysis.
NSE:NIFTYEducation
by keshevdugar
2
Advanced Technical ConceptOn the other hand, hidden divergence occurs when the price makes a lower low, but the RSI indicator makes a higher low, signaling a potential trend continuation. RSI Divergence occurs when the price movement and the RSI indicator move in opposite directions, signaling a potential reversal in the current trend. Divergence within RSI through price movements is a powerful indication that there will be reversals in the market. There are two types of divergences: bullish divergences and bearish divergences. 1. Bullish divergence
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by SkyTradingZone
Video For Traders Options trading is a type of financial trading that allows investors to buy or sell the right to purchase or sell an underlying asset at a fixed price, at a future date. Options trading operates on the basis that the buyer has the option to exercise the contract but is not under any obligation to do so. Trading options offers a number of benefits for an active trader: Options can offer high returns and do so over a short period, allowing you to multiply your money quickly if your wager is right. With options, it can cost less to get the same exposure to a stock's price movement than it does to buy the stock directly.
NSE:BANKNIFTYEducation
by SkyTradingZone
Advanced Patterns Trading Chart patterns are visual representations of price movements used in technical analysis to predict future market behavior, categorized as continuation, reversal, or bilateral, and can signal potential trend continuation, reversal, or volatility. Top Picks: The Most Successful, Profitable, and Reliable Chart Patterns Head and Shoulders Pattern. Double Tops and Double Bottom. Cup and Handle. Ascending/Descending Triangles. Bullish and Bearish Flags. Wedge Patterns (Rising/Falling Wedges) Triple Tops and Triple Bottoms. Symmetrical Triangles.
NSE:BANKNIFTYEducation
by SkyTradingZone
Advanced Swing Trading Strategy with Pcr Part-1So, an average put-call ratio of 0.7 for equities is considered a good basis for evaluating sentiment. In general: A rising put-call ratio, or a ratio greater than 0.7 or exceeding 1, means that equity traders are buying more puts than calls. It suggests that bearish sentiment is building in the market. The Put-Call Ratio (PCR) is a popular technical indicator used by investors to assess market sentiment. It is calculated by dividing the volume or open interest of put options by call options over a specific time period. A higher PCR suggests bearish sentiment, while a lower PCR indicates bullish sentiment.
NSE:BANKNIFTYEducation
by SkyTradingZone
Divergence Trading With ProfessionalsDivergence in an uptrend occurs when price makes a higher high but the indicator does not. In a downtrend, divergence occurs when price makes a lower low, but the indicator does not. When divergence is spotted, there is a higher probability of a price retracement. Divergence signals tend to be more accurate on the longer time frames. You get fewer false signals. This means fewer trades but if you structure your trade well, then your profit potential can be huge. Divergences on shorter time frames will occur more frequently but are less reliable.
NSE:BANKNIFTYEducation
by SkyTradingZone
Advanced Swing Trading Strategy with Pcr Part-2The Put-Call Ratio (PCR) is a popular technical indicator used by investors to assess market sentiment. It is calculated by dividing the volume or open interest of put options by call options over a specific time period. A higher PCR suggests bearish sentiment, while a lower PCR indicates bullish sentiment. So, an average put-call ratio of 0.7 for equities is considered a good basis for evaluating sentiment. In general: A rising put-call ratio, or a ratio greater than 0.7 or exceeding 1, means that equity traders are buying more puts than calls. It suggests that bearish sentiment is building in the market.
NSE:BANKNIFTYEducation
by SkyTradingZone
2
All Financial MarketIn India, there exists broadly two types of Financial Markets which are further classified : Money Market is a market that deals with short-term funds. The capital market is a market that deals with long-sighted funds. Lenders and borrowers can trade funds through the financial system. Different types of financial markets include stock markets, bond markets, forex markets, and commodities markets. Stock markets facilitate the buying and selling of company shares, while bond markets deal with debt securities. Forex markets enable currency exchange, and commodities markets trade physical goods.29 Aug 2024
NSE:BANKNIFTYEducation
by SkyTradingZone
Trading with Professionals Identifying the trend. This is the first step in technical analysis for traders because trading strategies can either follow the trend or go against the trend. ... Drawing support and resistance levels. ... Establishing entry and exit points. ... Position sizing and risk management. What exactly are the two types of technical analysis? Chart patterns and technical (statistical) indicators are the two main types of technical analysis. Chart patterns are a subjective type of technical analysis in which technicians use certain patterns to indicate regions of support and resistance on a chart.
NSE:BANKNIFTYEducation
by SkyTradingZone