Elliott Waves - the Trading Plan | Forex Indicators Guide
Elliott Waves - the Trading Plan | Forex Indicators Guide
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Elliott Waves Series Part 2 - The Broad Concept
Elliott Waves Series Part 2 - The Broad ConceptYou can find Part 1 here: https://www.reddit.com/Forex/comments/hieuyw/introduction_to_elliott_wave_theory_overview_of/ The primary value that the Wave Principle (from here on out, abbreviated to WP) confers on market analysts is the ability to provide context for market behaviour. Having context is incredibly important. To put it simply, the WP can be thought of as a compass. Whenever you feel lost looking at a chart (ANY chart, ANY market!), the WP will help get you back on track. Clearing Up Some Misconceptions About Elliott Wave Theory:
R.N. Elliott first discovered the WP in the 1930s using charts of the stock market. Many misinformed people believe that the WP works “best” on stocks and has been adapted for use in other markets. This is simply false. To be clear - Elliott discovered the WP. He did not invent the WP. The WP is based on human social nature and therefore it cannot be invented. It has always existed. What Elliott did was to start codifying rules and guidelines around how human social nature can be charted. Ultimately, Elliott’s objective was to be able to predict future human behaviour using the historical record. The expression of human social nature generates forms and patterns. As these forms and patterns repetitive, they have enormous predictive value.
Another major misconception around the WP is that it requires a lot of discretionary analysis, and more often than not, analysts shoehorn price action to fit the Elliott Wave model. In fact, the WP has very clear rules (these rules are inviolate under any circumstance) and guidelines (these guidelines should be adhered to almost 100% of the time). While there is a discretionary element involved in counting waves, properly trained wave analysts will ultimately arrive at a consensus because following the rules and guidelines narrows the possible wave counts very quickly. Very often Wave analysts will have 2 counts at hand in terms of where they think the market is presently situated. These counts are known as the preferred count and the alternative count. These counts are validated and invalidated using price levels derived from Elliott’s rules and guidelines. The most dissent I expect from two educated Wave analysts is that one analyst’s preferred count could be the other’s alternative count. This dissent quickly resolves itself as the price action develops and validates or invalidates one count or the other. This dissent usually occurs based on wave patterns of one higher degree. It is very rare that I have seen dissent on immediate market movements.
I didn’t know this was a major misconception, but someone brought this up in my first post, “I stated that Elliott Theory has better success when working in consolidations or extreme ranging markets.” This is completely false. The WP doesn’t work better or worse regardless of the market or the market conditions. That would be like saying that breathing air only works occasionally. The WP is NOT a strategy, it is the definitive model for charting human herding behaviour. Human behaviour does not show up only in periods of consolidation or range-bound markets. The markets are themselves driven by human behaviour, therefore the WP is always equally applicable. From a trading perspective, the WP is perfectly suited to capturing trends.
Well, what about news events? What about supply and demand theory? What about fundamentals?! Doesn’t any of this stuff matter?? In short, the answer is no. I have previously stated that I am a macro-based investor. This is certainly true. Much of the research I consume has to do with market fundamentals and global-macro analysis. This research helps me form a view that I can overlay with the WP. From a trading perspective, when it comes to actually pulling triggers and taking positions, my decisions are always guided first and foremost by the WP. Here is a fantastic quotation from Bob Prechter on this topic, “Sometimes the market appears to reflect outside conditions and events, but at other times it is entirely detached from what most people assume are causal conditions. The reason is that the market has a law of its own. It is not propelled by the external causality to which one becomes accustomed in the everyday experiences of life. The path of prices is not a product of news. Nor is the market the cyclically rhythmic machine that some declare it to be. Its movement reflects a repetition of forms that is independent both of presumed causal events and of periodicity.”
The Bottom Line: Elliott Wave Theory is the best forecasting tool in existence. It has determined that the market’s progression unfolds in waves. Waves can be thought of as patterns that carry the market in a direction. There are a fixed number of the different kinds of patterns these waves can take. If you really boil this down to its essence, successfully applying the WP is as simple as identifying what kind of wave the market is currently in. I will end this now. The next part will deal with the overriding wave structure that the market is in, the different kinds of waves we will see, and why this wave structure exists in the first place.
What is Forex Trading: Forex Trading is trading currencies from different countries against each other. Forex is an inter-bank market that took shape in 1971 when global trade shifted from fixed exchange rates to floating ones. This is a set of transactions among Forex market agents involving exchange of specified sums of money in a currency unit of any given nation for currency of another nation at an agreed rate as of any specified date. During exchange, the exchange rate of one currency to another currency is determined simply: by supply and demand - exchange to which both parties agree. Actually Forex is the financial game between BULLS and BEARS. The Major currencies pairs are: EUUSD GBP/USD USD/JPY USD/CHF USD/CAD AUD/USD And these are the 6 best Forex Markets. What are Forex Signals? Forex signals are indicators that let you know when it's a good time to buy or sell a currency pair. They provide you with insight as to what's going on in the Forex market without the necessity to monitor Forex trends throughout the day. If you are self-employed or employed by another company, Forex trading is likely a part-time endeavor for you. You won't have time to sit at the computer and monitor the Forex market all day. Forex signals can be delivered to you throughout the day by professional Forex traders to give you a heads-up on what's going on in the market. You can receive the signals, and then place the signals for buy or sell. Forex signals are basically "suggested" buy and sell points with price targets and stop-loss levels delivered by fx signal providers to traders. They may be delivered by email, instant messenger, cellphone, live currency trading systems or direct to your Forex signal metatrader on your desktop. Forex trading is a risky business and it takes some time to master the art of Forex trading signals. There are a number of fx signal providers but before you choose, you need to make sure you have done your homework. Always ask for the Free signals to deliver for 3 to 5 days and test those signals in your Demo Account. The main characteristics of Forex trading signals to be aware of are as follows; Cost: monthly subscription Complexity: Simple "one email a day" OR Full-Service Control: You keep full control OR the signal provider trades your a/c for you Most Forex trade signals charge a very modest subscription fee, usually in the region of USD $80 - $400 per month. If you're new to Forex trading, you probably realize how important it is to make the right trading decisions. One wrong trading move can drastically harm your portfolio while a good move can bring tremendous profits. That's why trading signals are so important. Once you've tried a Forex demo account for practice and created a strategy that works for you, you can add trading signal services as a useful tool in your Forex trading. With online Forex, finding a trading signal service is easier than ever. In their simplest form a Forex trading signal will send you a Forex alert email once a day listing trade set ups for the next 24 hours. Some Forex signal providers offer a free trial service, thus allowing currency traders to sample the signals to assess their worth. This is a helpful step, as it allows the trader to consider the quality and reliability of the signals before paying money. This is a crucial element in the research process, and weeds out the providers who want money upfront as they are not confident in their ability to call profitable trades. This is a good service that you can try for free for 3 to 5 days. Various fx signal providers offer a few complimentary services along with the featured ones. Look for a fx signal company that provides email support, phone assistance and even mentoring to their clients. This is of great value, especially to new traders. They assign their time assisting traders in taking buy/sell decisions. Forex traders depend upon and trust the recommendations of these professional signal providers, while making investing decision in the Forex market Forex signals are not meant to be a magic solution to all your Forex problems. They are designed to inform you about the market. Forex business timing is extremely crucial; a trader can earn millions or lose even more depending upon the his timely or untimely actions. Besides, being the biggest market on the face of earth - it generates business activity of almost 3 trillion USD, it operates around the clock, all over the globe, making it thus impossible for a trader to stay vigilant all the time about market fluctuation and probable changes therein. Therefore a trader needs alarms and indicators to get knowledge about the possible opportunities and probable pitch points. Hence the need for Forex signal or alerts. Basically Forex alert or signal is a communication or intimation to the trader indicating the ripe time to buy/sell and the suitable price to pay/ask. Most of the time, such signals and alerts are provided by trained professionals, either individual or companies. When choosing a Forex signal service, be sure the company offers the type of signal alerts you need. Every person is different. Some require computer or email alerts, while others are not accurate Forex signals are made for both professional traders and although new traders. The best Forex signals trading system is going to cover multiple situations on the Forex market. For instance the best Forex trade signals is going to cover all major currencies like GBP, USD, and EUR at all times the market is open, not only for specific situation. Simply to get the full value of your Forex trade you must know what is happening in regards to all the major currencies. The Forex system should also be able to give you at least 1-3 Forex trading signal alerts a day. Some Forex trading signals are high volume scalpers, calling many trades in a day aiming to profit a handful of pips on each. Others only call a few trades a day, aiming to profit 20 - 80 pips on each single trade. Forex trading signal providers help you in minimizing risks or losses in trading. Forex signals are generally given on a daily updated basis and all are contingent on factual market analysis and behavioral flow and not on mere hearsay and other speculations. The signals are calculated and generated by using different indicators such as trends, moving average, Elliott waves, Bollinger bands, Fibonacci series, etc. In spite of that, some uses strategies like: Pip Maximizer Method 1 Pip Maximizer Method 2 Pip Reversal Method Pip Divergence Method Instant Pip Method Pip Retracement Method Quantum Pip Strategy ... to give profitable and accurate signals. The following question I wish to raise, is the abundant selection of Forex signals from which we can choose. Because of the variety of service providers, they offer different services, of which we must be aware. The first type of Forex signal provider will just send out trade alerts by email, often daily, sometimes at several intervals throughout the day. Thus you need to have a laptop of email receiving device ready at all times, to gain the most from trading Forex signals. The next type to consider are through EA/Expert Advisors. These types of signals are not good at all because those are the computer oriented programs which can ruin your money within a few trades. But fortunately this is not such a big problem today, as more traders have email reading devices. The most crucial aspect concerning the format you receive the signals, is to ensure that you receive them immediately, and have the capability to act on them straight away - so you have to have immediate access to your Forex brokerage account, and place the trade as soon as you humanly can. A unique benefit of trading Forex signals is that it gives guidance and discipline in a Forex currency trader. Forex profit signals service providers send you alerts when the conditions are right for the trade. They use cutting-edge technology which constantly monitor all major currency pairs for generating technical indicators. Forex signal generators produce Forex signals which are indicators of ideal trading opportunities. These are certain algorithmic patterns which have been evident in successful Forex trades throughout the years. These Forex signals are then fed onto the program of Forex automated EA or Expert Advisors. This program will then either make Forex trading decisions for the individual while s/he is away from the computer or advice the individual about what to do. Forex EAs act like wizards which monitor currency ratings through online Forex Trading Platforms. One can look at Forex signals as triggers of commands which allow the automated system to function. Forex signals can immeasurably add to the profits of a Forex trader. How to Receive Forex Signals: Forex signal services are available to provide signals to you around the clock. These services usually have professional Forex traders who monitor the market 24/7 and provide you with up-to-date information. These services often charge a monthly or yearly subscription fee for their services. The methods used to deliver the Forex signals to you can vary from one service to the next. Signals can be sent through email alerts, to your phone or cell phone, through your pager, or even through a pop-up software system that will show a screen on your computer each time a signal is sent. The services also vary in how they present information to you. Some will provide live charts to give you more insight as to what as happening in the market. Time frame for which the Forex trading signals are generated is equally important. Few trading signals can be valid only for a few minutes or an hour; others may have recommendations that are valid for a day or more. If the Forex trading signal providers generate signals for shorter time frame, you need to monitor the market frequently. Some Forex signal service providers offer add-on services like email or mobile alerts. The service provider should have end-to-end technical support for the customers. Even with experienced traders calling your trades, it's prudent risk management to never ever risk more than 3% of your initial capital on any one trade, preferably only 1%. So, if for example your initial capital, (or to put it another way, the maximum you can afford to lose) is let's say 5,000, the position size you take on each trade should be such that if the trade hit your stop loss, your maximum loss would be no more than 1% x 5,000 = 50. Forex signal providers render Forex business quite a bit easy for traders, especially those who are relatively new in the business. Forex signal generation and provision can be either manual or automated and it provides entry/exit points of the trade streak for major or already chosen currency pairs. In manual signal generation system a simple trade signal is provided by the single provider. In automated signal generation system, the Forex system not only intimates and alerts the trade to either enter or exit the trade, but some times makes the deal by operating in synchronization with the trader's bank or broker. Initially Forex signals and alerts used to come in the form of telephone calls and facsimiles. Now as we have stepped into the era of information revolution which has brought forth amazingly advanced digital technology, Forex signals and alerts generation and provision system has also advanced and become much more sophisticated and quick. Now these alerts come in the form of e-mails, SMS (Short Message Service, a way of sending text messages to mobile devices), or desktop software. However with trading Forex signals, there is no such chance to over trade your account. It is absolutely possible to learn the mental aspects of trading, by following a set of rules, and not to deviate from those rules. Many trading Forex signals provide you with a complete set of instructions in order to take the trade. Frequently the signal will have multiple exits, which enable a trader to take money off the table in small steps. So this enables the currency trader to input all of these prices into his trading platform when he gets the signals, and then to switch off the computer. As for any purchase, it is essential that the Forex trader first does his research into the more effective trading Forex signal service for him or her. This involves a lot of careful research, and reading various reviews and testimonials of the service in question. Before I go, in conclusion, the trader is strongly advised to practice using the trading Forex signals on a demo account first, so that the Forex trader can totally test out the profitability of the signals. This has an supplementary benefit for a complete new, as it will enable the currency trader to become familiar with the trading platform, and reduce the possibility of making any mistakes. Whenever possible, go for a free demo account and then try your forex signals for a few days before becoming a paid member. Forex trading does involve some planning and strategy building so be prepared for a steep learning curve before trading with real money! I'm going to start by telling you some cool facts about the FOREX market. As you may already know, FOREX is the acronym for "The Foreign Exchange Market." This market concerns itself with the buying and selling of the currencies of just about every country on earth. This market is BIG! So big, in fact, it's hard to wrap your mind around the size of it. Listen. The daily average volume of FOREX is: Almost 5 TRILLION Dollars Per Day! I'm going to try to bring that fact home for you: The New York Stock Exchange has a daily volume of approximately 50 billion dollars. That means the FOREX is 100 times larger than the NYSE Actually, the daily volume of the FOREX is triple the size of all other investment markets combined! In spite of its size, the FOREX does not have a physical location or a central exchange. It operates through an electronic network of people, banks and companies that specialize in trading one currency for another. Almost all FOREX trades are executed on the internet by someone sitting at a computer with a high-speed connection. So, if you don't like working with a computer you may as well stop reading... because... you will be left out. Still with me? Good. The Only 24 Hour Financial Market In The Whole World Because the FOREX does not have a physical location or a central exchange, it is able to operate on a 24 hour basis leapfrogging from one time zone to another across the major financial centers of the world. The FOREX market actually follows the sun around the globe... because... as one country is closing for the day, another is just opening up. This market is open 24 hours a day, six days a week from 5:00 PM Sunday (East Coast Time) to 4:00 PM Friday (East Coast Time). This 24 hour access combined with its huge trading volume makes this... The Most Liquid Market On Earth! Except for Saturdays, you can enter or exit the FOREX market anytime night or day. This market has virtually no gaps whatsoever and your stop-loss orders are almost guaranteed. Can you imagine that? The multi-trillion dollar liquidity, combined with 24-hour trading access virtually guarantees your stop-loss orders will be executed without slippage. Just try to get that kind of guarantee from your stockbroker! The stock, futures and options markets cannot offer you this guarantee because the limited trading hours create frequent gap opens. Nearly all Forex brokers make sure their hours of operation coincide with the hours of operation of the global FOREX market. Let's see, what else? Oh, yeah, no one can corner the market. The FOREX market is so huge and has so many global participants that no single individual nor entity... not even a central bank... can control the market for any significant period of time. Plus, There Is No Insider Trading! Because of the vast size of the global FOREX market and its non-centralized nature, there is no chance whatsoever for disruptions caused by insider trading. There is less chance for fraud in the FOREX than in any other investment market. Best of all forex can never become zero but stocks can become zero and majority of the options expire worthless. There are no commissions. Yep, you read it right. No exchange fees, no closing fees, no government fees, no brokerage fees. This all adds up to a very low retail transaction cost. If you select your broker properly, your round-trip transaction cost could be as low as .07 percent. And know this, a very desirable by-product of extremely high liquidity is almost instantaneous transactions executed with blinding speed. You can leverage your trades by a factor of 50 to 1, 100 to 1 and even 400 to 1. Not only that, you can trade with a very low margin with relative safety compared to the disastrous potential of margin trading found in other financial markets. Also it is tax free income if the country you reside has no capital gain tax. And finally, if you get really great at currency trading, your potential financial reward is so big it can make your head swim!
Forex trading is the simultaneous buying of one currency and selling of another… Read more
Before trading currencies, an investor has to understand the basic terminology of the forex market… Read more
Fundamental analysis is the study of the overall economic, financial, political… Read more
Technical analysis is the study of prices over time, with charts being the primary tool… Read more
The term ‘trend’ describes the current direction of the financial instrument… Read more
What is a Technical Indicator
Technical Indicators are a result of mathematical calculations/algorithms… Read more
As an investment, gold is the most popular of the precious metals… Read more
A market order is an order to open a buy or sell position at… Read more We complete our education centre with a breakdown of Gold Trading and details of the different Order Types. You can also review our glossary to find brief definitions of various trading and financial terms you may encounter. Once you have familiarised yourself with the information and concepts, you can open a Demo Trading Account to practice what you have learnt and build on your knowledge and understanding of how to trade successfully. Treat your demo account as you would your real account. Aprender a operar con Forex | Lernen Sie Forex zu handeln
What is Forex? Think the stock market is huge? Think again. Learn about the LARGEST financial market in the world and how to trade in it.
What Is Forex?Learn about this massively huge financial market where fiat currencies are traded.
What Is Traded In Forex?Currencies are the name of the game. Yes, you can buy and sell currencies against each other as a short-term trade, long-term investment, or something in-between.
Buying And Selling Currency PairsThe first thing that you need to know about forex trading is that currencies are traded in pairs; you can’t buy or sell a currency without another.
Know Your Forex History!If it wasn’t for the Bretton Woods System (and the great Al Gore), there would be no retail forex trading! Time to brush up on your history!
When Can You Trade Forex? Now that you know who participates in the forex market, it’s time to learn when you can trade!
Forex Trading SessionsJust because the forex market is open 24 hours a day doesn’t mean it’s always active! See how the forex market is broken up into four major trading sessions and which ones provides the most opportunities.
When Can You Trade Forex: Tokyo SessionGodzilla, Nintendo, and sushi! What’s not to like about Tokyo?!? The Tokyo session is sometimes referred to as the Asian session, which is also the session where we start fresh every day!
When Can You Trade Forex: London SessionNot only is London the home of Big Ben, David Beckham, and the Queen, but it’s also considered the forex capital of the world–raking in about 30% of all forex transactions every day!
When Can You Trade Forex: New York SessionNew York baby! The concrete jungle where forex dreams are made of! Just like Asia and Europe, the U.S. is considered one of the top financial centers in the world, so it definitely sees its fair share of action–and then some!
Types of Forex Orders“Would you like pips with that?” Okay, not that type of order, but buying and selling currencies can be just as simple with a little practice.
Demo Trade Your Way to SuccessCurrency market behavior is constantly evolving. Trade on demo first to get a lot of the rookie mistakes out of the way before risking live capital. There are no take-backs in the real market.
Forex Trading is NOT a Get-Rich-Quick SchemeWhile possible if you’re a trading genius with ice in your veins and you’re luckier than a lottery winner, building wealth through trading takes time and practice to build the skills and experience needed to be successful.
Slightly different flavour here, which I hope will be insightful to those who take the time to read. Tonight I'm going to talk about my learnings in this market so far; my biggest mistakes; how you can avoid making them yourself; and the strategy I intend to follow from now on. It’s a long old read, but it contains months worth of knowledge, which could only be gained from first-hand experience. So pour yourself a drink, settle in, and let me take you through a brief history of my first two months in crypto.
TL;DR: Been in crypto 2 months, after years trading forex. Learnt a lot, and passing on the knowledge. Hope it helps some of you to become better investors.
CHAPTER 1: New market; new opportunity
I came into crypto with a real excitement. Finally a market that resonates with me. The ability to buy into something I believe in - something that could change the world for the better - and to make money along the way. I was excited that I could apply my trading background, something that not many in the market possess, to my advantage. I was excited at the prospect of being on the curve of early adoption, in a market that had demonstrably meteoric potential. But I was patient. I knew that I would be risking a substantial amount of money in this space, and potentially other peoples’ too, so I had to approach it sensibly. I was going to invest (hold long-term) the vast majority and day trade just a small portion. I spent many weeks researching before considering pulling the trigger even once. I didn’t come into this without a plan. But looking back on it now, it really was only scratching the surface on what a serious investment strategy should be.
CHAPTER 2: Early Strategy
In brief, my plan was to research a load of coins that I’d heard have good potential – solid projects which make unique & warranted use of blockchain technology; are disruptive to their industry; are developed by a competent & active team; and are backed by a loyal community. I shortlisted maybe 40 coins through articles, videos and general conversation, and I added them to my watchlist. Admittedly I became a bit lax in completing the deep level of research I told myself I’d do for each – scrutinizing the whitepaper became skimming the whitepaper, which then became watching a video analysis, which then became “oh that sounds interesting I’ll keep an eye on it”. But this was just a watchlist. And still an educated one.
I knew that I wanted to wait for an inevitable dip in Bitcoin’s value to enter the market, but it just wasn’t coming. $6k, $8k, $10k… the bullish momentum couldn’t be tamed. Was I missing out? Was Bitcoin going to continue its parabolic move while I sit here waiting for a dip that could never come?
LEARNING 1: There are an unlimited number of opportunities
At this stage I was ready to get involved, and I’d scouted a few alt coins that had good technical entry points approaching. Do I need to keep waiting for a good Bitcoin price even when there’s a good alt price? In short, if you’re confident enough about a trade, it doesn’t really matter what price you pay to get the BTC (or other major alt coin) needed to trade it, as long as you believe that your trade will outweigh any potential drop in Bitcoin’s value. If your trade goes up 100% and BTC’s value drops 50%, at that point you’re break even. Plus if you keep holding and BTC returns back to its previous value, now you’re in 100% profit. For me this meant that even after buying some Bitcoin at its ATH (all-time high) and having it correct over 40%, I was still in profit, because this particular trade was up over 100%. More on this later.
So I bought some Bitcoin! Not all at once – generally a decent strategy is called dollar-cost averaging. In essence, buying a little bit every week at whatever the price at the time is, so that your entry price averages out over time. A better strategy is to only buy if it’s at a good price, or when you need it for a trade setup – not just arbitrarily every week even if the price is high. But I digress, I had some Bitcoin now and I wanted to diversify. Time to buy some alts.
LEARNING 2: Every trade is a decision to have the coin you’re buying instead of the coin you’re using to buy it
If an alt coin is gaining value against Bitcoin, it’s better to be holding that alt coin than Bitcoin. And if it’s losing value against Bitcoin, you’d be better off keeping it as BTC. Simple, but easy to forget when you load up Coinmarketcap and see all of the price changes in USD. You’ve gone up by 4% today – great! But BTC went up 10%, so you’d have been better off holding BTC. Buying a coin is an active decision that you make to hold the coin you’re buying instead of the coin you’re selling for it, for the period of time until you close that position. So if I buy 1000 XEM using BTC, that XEM/BTC trade is me saying “I think that XEM will increase in value at a greater rate than BTC will”. If both of them increase in value but BTC does it faster, that was a sub-optimal decision.
LEARNING 3: Satoshis are your friend. Accumulate as many of them as possible
So how does one measure profit on a trade? It’s intuitive to think of it in fiat terms – how many £££ did I make? Something tangible. But really everything should be measured in the smallest unit of Bitcoin (1 satoshi = 0.00000001 BTC). It’s easier to migrate to this way of thinking if you think of your total investment as the total amount of BTC (or the other major alt coin) that you were able to buy with it. Say I invested £1000 in crypto, and with that I managed to buy 0.1 BTC – that’s my total investment. If I want to diversify and put 10% of that into each of my favourite alt coins, I’d buy 0.01 BTC worth of each of them. Let’s say Litecoin was one of them and I got 1 LTC for my 0.01 BTC. Litecoin’s rocket then fuelled up and started on its journey to the moon, and I decide to bank my profit. I now trade it back for 0.015 BTC. From 0.01 BTC to 0.015 BTC is a profit of 0.005 BTC, or 500,000 satoshis!
“But why not just measure it in £££ - that’s far less complicated?!”
Well here’s the kicker. Let’s say Bitcoin’s value plummeted over the course of that trade. I’ve got more BTC, but because the value of each one decreased, I may still have lost money. So does that mean that trade was a bad decision? Not at all. That trade was a decision between BTC and LTC, and you made the right call. LTC held its value better than BTC did, so you would have lost more if you didn’t take the trade. Profit measured in satoshis allows you to strip away the financial layer and answer the most important question – “was it a good decision to make that trade?” A gain in satoshis is always a win. A gain in £££ is not.
Taking that same scenario in which I’ve got an equal amount of my 10 favourite alt coins. Let’s say 9 out of 10 of them stay at exactly the same value, but the other one shoots to the moon on a lambo all the way to 100%. Woohoo! Shame that was only 1/10 of my portfolio - overall it’s worth 10% more now – but if I’d have invested all my money in that one coin I’d be up 100% overall. Now I’m certainly not advocating putting all your eggs in one basket. Rather, in reference to my previous learning, this helped me realised another very important point.
LEARNING 4: Understanding opportunity cost is a must
Any trade I make is not only a decision between the two coins I’m trading; it’s also a decision to buy that coin instead of any of the other coins I might be interested in. I have 0.1 BTC to spend and 10 alts I want to spend it on – should I just divide it equally? Not necessarily. If you’re super confident about a couple of them, but not so much on the others, spreading it equally doesn’t sound like such a good plan after all does it? Take your time analysing each trade / investment and rank them in order of confidence. In order of potential (risk:reward if you’re a trader). Invest more in the ones you’re more confident in. It’s a really basic point, but one that’s so often forgotten when there are so many exciting prospects out there. Holding a particular coin doesn’t just cost the price that you paid for it, it costs the opportunity to buy something else instead. One of the first things I learnt in trading was to cut your losers short and let your winners run. Why should crypto be any different? Even when you’re in a trade, every moment is an active decision to keep holding it instead of trading it for something else. Don’t blindly HODL hoping for a bad decision to improve, when there are better decisions you can take to re-coup that loss. Equally, don’t sell for a loss just because the value goes down. Re-analyse. Has anything changed? If every reason you had to buy it in the first place still applies, HODL. If something’s changed, including your confidence in it compared to other cryptos, consider switching it for a better opportunity.
So I learnt all of this in my first month – December 2017. Did I make optimal decisions all the time? Absolutely not, but with cryptos riding to all-time highs, my investors were very happy, as was I. It’s not often that you can get a 100% return on investment in just one month in a market. But it’s easy to profit in a bull market.
CHAPTER 3: It’s not all sunshine and lambos
It was around the end of December in which things started to get a bit too parabolic, and I was naturally suspicious of how long this could last. But you find yourself, inexperienced in a new market, eager to see how far you can ride the wave. The fear of missing out on further exponential gains becomes as much of a psychological challenge as taking a loss. In short, you get greedy. Highs that I had once been ecstatic with, a few days later became lows. I told my investors not to expect anything like this in future months. In my monthly summary I said “we are in perhaps the most bullish market the world has ever seen”, and I estimated that we had “a maximum of 1-2 more weeks to ride this momentum”. Prophetic, no? Well it’s easy to make predictions that come true – even a broken clock is right twice a day. What’s difficult is having enough conviction to take your own advice.
LEARNING 5: Make your rules and stick to them, no matter what
This is without a doubt the biggest thing I’ve learnt over the months. If one day you set yourself a target of £X profit – a level you’d be really happy to achieve, be that on a trade or overall – take it. Cash out as soon as you reach it and buy yourself something nice. Make it tangible. It’s easy for the world of online trading to feel gamified, but remember what you’re staking – this is real money. But it’s easier said than done. If you rise suddenly to that target I can tell you your first thought will be “whoa look at it go, I’m gonna see how much further it can get before I cash in”, rather than “mission accomplished, time to get out”. Humans are greedy. We want to take shortcuts – to our dreams, to wealth – but this isn’t a get rich quick scheme. If someone told you they could get you 10%/month gain on your savings (that triples your money every year) you’d probably bite their hand off. So why in crypto would you not be chuffed with 50%, or 20%, or 10%? Don’t move the goalposts. Decide in advance when to take profit and take it.
First off, it’s always a good idea to take out your initial investment at a level after which you’d be psychologically happy if the market goes down or up. For example, if I took out my initial investment (say £1000) when it went up 50% to £1500, and then the market went lunar and doubled the next month, I’d personally feel a bit annoyed at myself for not leaving more money in. That £1000 would’ve been £3000 had I kept it invested…shit. However if I took out my initial investment when it went up 200% - I’d now have £2000 left of my £3000 investment, and if it doubled the next month, I’d be happy with the stake I had remaining, not regretting my decision. That level can only be decided by you, based on your attitude towards risk. Obviously the higher that value is before you cash out your profits, the greater the risk you’re taking since it may never reach that level. Taking out your investment as soon as you’re happy to is a good move because from then on in you’re riding on pure profits. If the market were to crash to zero, you’d still be break even, so it’s much easier to detach yourself from the emotions involved (and we all know how emotional this market is). And if you’re a technical trader, rejoice at the fact that this market is hugely technical, and you can very often predict good levels to get out at – often doubled with buying back in cheaper. I highly recommend for everyone to spend some time learning to analyse charts - even at a basic level. It works. And for heaven's sake if you're day trading don't do what I did and "neglect" to apply basic trading principles like setting a stop loss and sizing each position at maximum ~1% risk. You can call it investing; you can call it speculative buying; but at the end of the day that's just gambling. Don't be lazy. Don't be wreckless. Apply what you've learnt in other markets - crypto is no different.
And for context, no I did not take my own advice. The correction shocked me. Not the fact that it happened, but the fact that it happened so hard and fast. At first I thought it was a healthy dip, and that the uptrend would resume soon enough – no reason to sell. But then the bears took over, and we were in a full on downwards movement. News emerged from South East Asia which caused a great deal of negative sentiment, and Bitcoin’s value tumbled (even when some of the speculation was later deemed invalid), and with that I realised how inherently linked to Bitcoin that all other cryptocurrencies are. You may dislike Bitcoin - the slow transactions; the high fees – but you can’t argue how critically important it is to this market.
LEARNING 6: 40+% market corrections are normal in crypto, but they still hurt
I neglected to mention earlier, but I have a background in trading forex. I understand market patterns, cyclicity and technical analysis such as Elliott Wave Theory and Fibonacci ratios. It is foolish to think that charts will continue indefinitely in a given direction – there will always be corrections and reversals. All through the correction we’ve started this year with, I have remained very optimistic. Nothing at all has changed to make any of the leading crypto projects less credible or via as future industry disruptors. This is why it’s important to do your own research on coins you invest in – so that you’re psychologically happy holding them long term through price corrections. But I’ll be honest, when Bitcoin broke down through several technical support levels a few days ago, I became apprehensive. Not even close to panic, or tempted to sell. After all I am investing long term, and I still see this as a requisite correction in a much larger up-trend. Or at least the upside potential of that outcome is comfortably worth the risk for me – it’s the opportunity of a lifetime. But even as an experienced trader, doubts can set in. All of the profits I had gained in month 1 were gone, and I have now slightly dipped into loss. As I say, I’m not selling, and my analysis is still very bullish. But HODLing is not always the best strategy.
LEARNING 7: When things are looking bearish, consider the trade to fiat
With the benefit of hindsight, and now having dedicated substantially more time to learning Elliot Wave Theory and studying crypto charts, there were a number of points at which you could have predicted a big ol’ correction was on the cards, before it fully developed. A quick ‘n dirty rule of thumb, for those of you who don’t know how to read charts, is: “Don’t buy into a parabolic market or at an all-time high – it’ll likely correct soon”. But I’d also like to add an addendum to what is a common mantra in the crypto community: “Buy the dip” – this is for day trading. If you’re intending to hold a coin long term, zoom right out and look at the entire coin’s price history. Wait for a macro scale correction, not a micro scale dip. A lot of people got excited the other day at Bitcoin rising 10% - I saw tonnes of calls saying “the correction is over” or “Bitcoin to the moon” – but when you zoom out, we’re still in a downtrend with room to go lower, and substantial resistance to get through before we can rise to new highs. Play the long game and look for long-term signals. And if you are in that subset of people who can predict an imminent correction, or indeed if you’re halfway through a correction with a good chance of it continuing, the best decision may well be to get out of the market until it’s over. Trade your positions back to fiat, and wait for clear recovery to the upside. It’s much more difficult to trade profitably in a down-trend. Most of us could have doubled our BTC holdings just by getting out of crypto before the correction and buying back in cheaper now. So make sure you have an exit plan. Know the steps that you’d need to take to get your money off exchanges / wallets and back into your bank account. Getting out of crypto doesn’t have to be a permanent move. There’s no harm in waiting things out until you’re confident again. After all, refer back to Learning 1 – there are always more opportunities.
CHAPTER 4: Moving forwards
At last, filled with learnings and plenty of inactive time spent refining my strategy, I’ve gone back to my technical analysis roots and really analysed why I’m in my positions.
LEARNING 8: Never stop analysing. You will make mistakes. Learn from them.
Does my portfolio need to be this diverse? Are my invested amounts proportional to my confidence in them? Probably not, so I’ve taken this opportunity to start shifting around. Don’t be precious about losses – losing is a natural part of trading – you only need one 10:1 winning trade to offset ten losing ones. So take some losses and make some mistakes. I’m sure glad I did, because it’s made me a much more confident and competent investor today.
And since everyone always looks around for opinions on the market, I will leave you with one bit of bullish technical insight on our King, Bitcoin. Basic Elliot Wave Theory says that markets move in ebbs and flows – 5 waves in the direction of the trend, followed by 3 waves of correction. And these waves are fractal in nature, meaning that a full 5-wave pattern forms a single larger wave within a higher degree pattern. All that being said, IF Bitcoin’s run up to its ATH in December constitutes a completed 5-wave pattern, we could consider that history as Wave 1 of a larger up-trend. Using Fibonacci extension ratios that appear in all markets (including crypto, very prominently, even with BTC), we can project the likely extensions of the Wave 3 that would come after we’re done correcting here. Based on analysis run by eSignal, a popular trading platform, the length of Wave 3 will likely reach either 1.62, 2.62 or 4.25 times the length of Wave 1. That means our Wave 3 high would take the price of a single Bitcoin to roughly $32,000, $64,000 or $98,000.
Technical analysis is very subjective, this is merely one possible outcome. But ask yourself, if you had the chance to invest in something with global reach that could make a 5x or even 10x return on your investment, what would you risk for that opportunity?
Thanks for taking the time to read, and I hope this helps some of you.
08-11 00:53 - 'How would be your Trading without EMOTION? Auto&Manaul trade Platform' (self.Bitcoin) by /u/Cryptovici removed from /r/Bitcoin within 13-23min
''' Hello to #daytraders #cryptotraders I am Victor, I am a professional daytrader in forex and crypto, All of you professional knows you need to calculate a lot of factors like lose, profit, etc. I put my trading rules to trade win 3time and lose 1time The #profit / #loss ratio can be an overly simplistic way of looking at performance because it fails to take into account the probabilities of gains or losses for the trades. A concept called average profitability per #trade (APPT) can be more insightful. APPT is the average amount a trader can expect to win or lose per trade. APPT is the difference between a) the product of the probability of win and average win; and b) the product of the probability of loss and average loss. As an example, take 10 trades, three of which were profitable and seven were losing. The win probability, therefore, is 30% and loss probability is 70%. Further, assume that the average winning trade was $600 and the average losing trade was $300. APPT is (30% x $600) less (70% x 300), or -$30. Thus, even though the profit/loss ratio was 2:1 ($600:$300), the trading strategy is a losing one in terms of probability. By the way, I am using Elliott waves, Volume, Delta Strategy for my technical analysis apart of math calculations to Auto-trade with Moonbot. #Daytrading #cryptotrade #cryptodaytrade #cryptocurrency #bitcoin #binance #binancetrade #traderbinance #binanceexchange #Trading #Tradingcrypto #cryptotrading ''' How would be your Trading without EMOTION? Auto&Manaul trade Platform Go1dfish undelete link unreddit undelete link Author: Cryptovici
Favorite Trading Tools of a 30 year Commodity, Stock & Option Trader...
VOLUME is my number one favorite indicator. If there is no volume in the market then there is no liquidity. A trader needs be able to easily flow in and out of the market. If movement exists on an exchanges' 1-minute chart then there is volume flow. MACD (Moving Average Convergence Divergence) is my next favorite indicator. In my trading class I refer to the MACD lines as a "fast dolphin" and "slow dolphin" diving in and out of the ocean surface. The position of one "dolphin" over the other, whether above Sea Level ( 0 ) or below Sea Level ( 0 ) is an indication of where the price is headed. SMAX: My third favorite indicator is the Simple Moving Average Cross; MA or SMA or SMAX. From my days in Forex I happened upon a trading strategy called the Rule of 9. The Rule of 9 claimed to be able to foretell a turn in the market by the consecutive occurrence of the sum of the daily high minus the daily low. Without going into the meat & potatoes of the exact formula, I discovered a couple of young men duplicated this theory by using the Simple Moving Averages of 8 & 10 and waiting for the crossing points. How to read the 8 / 10 SMA: When the candlestick is riding on top of the 8 MA then the price activity is in an uptrend. When the candle pulls up and away from the 8 MA then a reversal might be around the corner? When the candle of an uptrend closes BELOW the 8 MA, this could indicate a reversal in the trend. When the candles (plural) consecutively close below the 8 MA AND the 10 MA has crossed below the 8 MA then a reversal is more than likely occurring. The same can be said for a downtrend. As long as the candlestick is touching the 8 MA then the trend will continue, but as soon as the candle pulls away from the 8 MA a reversal could be around the corner. When these indicators are combined (MACD & 8 / 10 SMA) extremely strong indicators exist to help you determine Entry & Exit points to produce more successful trades. Every one of these indicators can be back-tested on Binance Advanced Charts for competency. These indicators work with potent accuracy on all Time Frames for any particular coin. MACD continued: When the "dolphins" are below the Sea Level or the MACD Level of "0" then a Bearish Market is the "sentiment" of the market. When the dolphins are above the Sea Level then a Bullish sentiment exists in the market. When these "dolphin paths" are exceedingly high or exceedingly low then a reversal is imminent. FOR "TRUE SENTIMENT" OF THE OVERALL MARKET, CLICK OUT TO BROADER TIME FRAMES SUCH AS THE ONE DAY AND ONE WEEK CHARTS. The overall "sentiment" of the market can be better understood by "stepping back" and looking a the "big picture". TREND LINES also play in integral part of a price reversal. A trend line is another strong indicator to use in conjunction with the 8 / 10 SMA and the MACD. CANDLESTICK identification can also aid you in identifying a reversal. Investopedia offers a nice description of candlestick identities and what market sentiment each candlestick usually implies. I've studied Charles Dow Theory, Elliott Wave Theory, Ted Warren's Manipulation Theory, W.D. Gann Theory, Munehisa Homma and I've studied Leonardo Fibonacci. These are each interesting reads, but none has clearly helped me identify a trend reversal like the aforementioned indicators have helped me identify trend reversals. Binance offers each of these tools for the trader's use. Thank you for your comments, questions and credits to this post. Chart Analyst
Learning Bitcoin Trading? Here's some Basic Technical Analysis Tools & Essential Knowledge to help!
Getting Started Back when I was learning more about Forex trading, I went to Forex school at Babypips (http://www.babypips.com/school), and learnt some of the fundamentals of chart reading and trading, such as reading candles and trading concepts. Unfortunately, I dropped out somewhere through Elementary School, after they lost me with all kinds of different indicators I could not see the use for. On the other hand, I still do think Babypips is a fantastic resource, especially for beginners who are keen to learn how to trade and better understand the Bitcoin market. More recently, since I made my first few panic buys and sells and lost some Bitcoins trading, I have been picking up again on Technical Analysis and Trading strategies. I’m not an expert at this, and neither should you take my words as investment advice, but I’m here to share some of my thoughts on Bitcoin trading, and I hope it is of great help to you! If you have any questions, feel free to tweet me at @onemanatatime. Learn the Basics of Trading If you’re a beginner trader, first thing you should learn is to read charts. Chart patterns (http://www.investopedia.com/university/charts/charts1.asp) signal to traders that the price of a security is likely to move in one direction or another when the pattern is complete. I’d like to bring your attention three chart patterns that will appear very often. I also took the time to show you how these relate to Bitcoin trading with the charting tools I use on TradingView (https://www.tradingview.comonemanatatime). Enjoy!
Secondly, another analysis tool I think is very useful, is the Fibonacci Extension (http://www.youtube.com/watch?v=dsomgrotZUg). Fibonacci is pretty tough to understand, and more so to chart with Bitcoin due to the lack of available tools which allow for it. But in essence, the Fibonacci sequence is a unique string of numbers which adds the sum of the two numbers before it, and is the deravitive of the Golden Ratio. People like to call them the “magic” numbers, and very aptly so, as they’re present all throughout Nature. Lastly, I’d like to share a trading pattern called the Elliott Wave Principle (http://en.wikipedia.org/wiki/Elliott_wave_principle). It emphasizes an understanding of Investor Psychology, and explains why prices fluctuate in zig-zag patterns. If you thought Fibonacci was tough to understand, let’s have Babypips put this in perspective. Babypips teaches Fibonacci in Elementary school Grade 3, whereas Elliott Wave is taught in “Summer School”. In that sense, Eliott Wave would be a great concept to learn and understand, as a supplement to your foundational understanding. Click on the links above to read and learn more about both theories! Bitcoin Trading By now, you’d probably be saying: “Sure, these resources all give me a good basic understanding of trading markets, but how does that apply to Bitcoin?” Since learning the fundamentals, I’ve been looking around for good resources to learn Bitcoin Trading from but with not much luck. Here I’ll be sharing some handy videos to guide you on your Bitcoin trading journey. I didn’t get around to learning proper Bitcoin trading strategies, until early December when I chanced upon ... Abstract from my personal blog post on www.CryptoCoinsNews.com and on www.AlunaCrypto.blogspot.com. http://www.cryptocoinsnews.com/2014/01/08/embarking-bitcoin-trading-journey-learn-basic-technical-analysis/ http://alunacrypto.blogspot.nl/2014/01/embarking-on-my-bitcoin-trading-journey.html Click the links to read the rest of the post, including past Bitcoin price analysis examples, as well as today's prediction. EDIT: I've been asked a few times about which platform I'm using day trade on Bitcoin. So here's for those of you interested: "I use BitFinex, they offer Margin Trading and Liquidy Swaps ontop of a normal Exchange. I just started yesterday but its great and I'm so excited about the Margin Trading options available, and been playing around with it all day long! Made 0.11 BTC on my first trade. ;) Sign up with my referral code now and enjoy 10% off your trading fees for the first 30 days! With Referral Code: [REMOVED -- ask me for referral code to enjoy offer] Without Referral Code: https://www.bitfinex.com/ Also follow me on twitter @onemanatatime for my latest Bitcoin predictions. Cheers & trade safe."
Fundamental Analysis I believe that for an Altcoin to be worth anything at all, it MUST first have technical aspects which are built with the future in mind. This is what solely determines if a cryptocurrency has the potential for the mid to long term. Even with 5 new altcoins launching everyday, you barely see 1 a month that can last even the mid-term. Then, after that I judge the coins based on 7 mediating factors; developers, community, branding/marketing, popularity/virality, novelty, infrastructure, and liquidity. For more about fundamental analysis and an explanation of these factors, read up on the first few sections in my previous post about picking and trading the next profitable altcoin. In this post, I will focus more on technical analysis and trading strategies instead. With so many coins out there, I like to use these above factors to weed out all the weaker shitcoins, and focus on altcoins which are substantially different from others, and more importantly, provide more value than other cryptocurrencies. After which, I use Technical Analysis to judge entry/exit positions for trading them. What else do you think makes a cryptocurrency fundamentally better than another, and more sustainable as a currency? Technical Analysis Many will probably agree when I say that the Altcoins market is akin to the "penny stocks" of cryptocurrencies. In this sense, most altcoin markets have much lower liquidity, but have much higher volatility. Since there are over 200 different cryptocurrency markets to date, I prefer to narrow down my list of altcoins to a small handful, and buy under-valued coins or trade the breakouts. You're going to find it really tough to be watching more than 5 altcoins at the same time, so I highly suggest keeping your list small, and adapt your watchlist to the fast changing markets. If you're new to technical analysis, here's a really good beginner's video on daytrading Penny Stocks, which also explains the basics of chart reading and an introduction to basic trading jargon that I'll be using throughout this post. The important concepts to take note of are resistances & supports, breakouts that coincide with high volume, and the general idea that "what goes up must come down". See video here: http://www.youtube.com/watch?v=HYK2a77TjvU So after you get the basics sorted out, you should be ready to learn how to trade! I'm gonna break this intermediate technical analysis tutorial down into five main portions, and have compiled videos from other trading experts to give even beginners a better overall idea, and teach you all you need to know to devise your own Bitcoin & Altcoins trading strategy. 1. Top Down Analysis Firstly, lets look at the top down analysis method of reading charts. I always begin by trying to understand the market from a bird eye's view. Compare both charts from a long term period (e.g. 1d) against one from a shorter period (e.g. 15m) to get a holistic view of the market. This will help give you a general perspective of market trends, while peaks & troughs give you an idea of market resistances & supports. Use these basic resistance & support levels to judge entry/exit prices. In general, previous high and low points are new resistances or support depending on where the price is, and points where u can see big breakouts will be the new short term resistance/support. To get a better idea of what I mean, watch these videos by Jason Stapleton who explains top down analysis, resistances & supports, and structure. http://www.youtube.com/watch?v=M9yCc7lD21Q https://www.youtube.com/watch?v=tJmMU-8yicM 2. Retracements The concept of retracements is, in my opinion, the most important one that any trading enthusiast must grasp in order to understand how the markets flow. In essence, a retracement is a temporary price movement against the established trend, and helps us understand that the markets move in wave patterns as highlighted by the Elliott Wave Theory. One way to look at it, as highlighted by this video below, is that most price-actions follow a pullback rule to fibonacci retracement levels (38%, 50%, 62%). http://www.youtube.com/watch?v=7VSWqM0jfIQ The most important concept to take away from this is "what goes up must come down"; that price movements in one direction are always followed by retracements in the opposite direction. Of course, not all movements will follow the same pullbacks, and these levels should only be used as a guide. Here's another video: "Understanding Fibonacci retracement lines: https://www.youtube.com/watch?v=KzHjxPxGzMw". So the question then is, how will we know if this counter-movement price action is a retracement or a reversal? There is no way to say for certain...
3. Trading on Volume Another important concept you need to understand is that large price movements almost always coincide with high trading volume. With this in mind, this is where the liquidity of an altcoin also comes into play; the higher the trade volume of an altcoin, the lower the spreads, and the more likely you will be able to make some profitable trades from it. In general, the trade volume is a good indicator of, and is proportional to the popularity of the altcoin at the current time. Apart from the actual trading volume itself, another good indicator is the change in volume over time; if you realize that the trading volume of an altcoin has been steadily increasing over the last few days, it could be an indication that a big price movement is coming up. 4. Breakout Patterns The last concept I want to share is breakout patterns. Although most people are familiar with this concept, many do not know how to profit from them. This is one of the best tools to use for planning your entry positions, while there are various ways to do so, which are highlighted by these first two videos below: https://www.youtube.com/watch?v=6YZ4ORz-UJ0 http://www.youtube.com/watch?v=3gN-6D8nH0E 5. Advanced Trading Strategies Now comes the fun part: how can we take all that we've learnt so far and put into good use for trading Bitcoin/Altcoins? Here are some pointers for you:
What we've learnt is more of a tool to make better entry and exit positions.
Keep in mind trading the bitcoin & altcoin markets as you watch the rest of these more advanced videos, and I hope you'll be able to gain some insights to build up your Bitcoins & Altcoins trading strategy.
Granted, forex & equities trading is much different from bitcoin or altcoin markets. However, the fundamentals are the same, and you should learn to draw lessons from the strategies talked about in the videos to supplement your bitcoin/altcoins trading strategy.
In the next videos, more advanced trading strategies and chart patterns will be shared. These strategies may seem very specific, but my goal is to give you better understanding of how these analysis tools are used, and to give you an idea of how different tools can be used to develop a single trading setup. The specifics are not important; what I hope to achieve is to open up your minds to new ideas, expand your trading knowledge, and ultimately encourage you to explore a diverse variety of trading strategies. Read up more on some of the main ideas discussed:
The online metatrader platform is the platform of choice for almost all Forex traders. Even traders that are not currently using it, know what the platform is and its capabilities. The platform is offering three types of charts that are possible to be used when analyzing the market: a line chart, a bar chart, and candlesticks chart. A line chart shows a simple line that rises and falls together with the price of a currency pair. It has little or no importance in the technical analysis of a market. Bar charts show bars in a time frame that have the high and the low of that time frame, as well as the opening and closing level. This is enough for trading theories to be developed and for traders to try to interpret and forecast future prices based on how a bar chart is looking like. A bar chart on the monthly chart means that each bar represents one month and the high and the low in that bar, as well as the opening and the closing prices, are the ones corresponding to that timeframe, the monthly time frame. What to do with MetaTrader platform For this reason, the trading theories developed based on interpreting bar charts are considering the time frames used in the analysis. From the daily chart above to the weekly and monthly, the trading style is suited for swing trading and investing, while lower time frames are favored by traders that scalp their way in a trading session. A candlestick chart is, by far, the most popular chart type used by retail traders. There are multiple candlestick patterns that can be interpreted and used, thanks to the Japanese Candlesticks techniques. The Western world was surprised to find out that the Japanese have their own way to predict future prices: patterns based on candlesticks. Up until this moment, it was believed that the classic patterns like the head and shoulders, the rising and falling wedges and others alike, are the only approach to technical analysis. Trading theories like Elliott Waves and other were not even invented when the Japanese candlesticks became popular. The candlestick techniques are mostly used to forecast reversal after strong trends. A candlestick has two part: the body and the shadow. The body is being marked by the space between the opening and the closing price. If the closing price is higher than the opening price, the candle is bullish, and typically it is colored in green, as this is the color associated with a market advance. If the closing price is lower than the opening one, the candle is a bearish one and it is associated with the red color. The hammer is the most popular Japanese candlestick pattern. It is formed out of a single candle, and the body of a hammer can be either red or green, without influencing its outcome. As a rule of thumb, the hammer is a bullish pattern, and this means it appears at the end of bearish trends. A bearish trend that ends with a hammer will most likely reverse, as the hammer shows bulls are stepping in. Typically, a hammer is having a very long shadow. The bigger the shadow, the more powerful the pattern is. The opposite of a hammer is called a hanging man, and the idea behind trading and interpreting it is the same like in the case of a hammer, with the only distinction that the hammer calls for long trades to be taken, while a hanging man is a bearish pattern and shorts should be traded. The idea behind this article was to get you familiar with the Japanese candlestick techniques and the hammer is the most representative of them all. Other patterns fit in this category as well, but they should be the subject of a different topic.
Elliott wave – forex trader’s ultimate guide! Are you looking for a trading method that can seem to help you look into the future! Stick around and I will show you how the Elliott Wave principle proposes to do just that. Also, how an Elliott Wave trader applies the theory to trading, successfully and profitably. In this Elliott wave blog post, The step-by-step guide to planning your trades with Elliot waves: Step 1 A downtrend ends with Wave 5. Besides the end of the wave 5 in a downtrend, we also want to see the first indication of a trend reversal - an establishment of a new Higher High. The Elliott Wave Principle offers rules and guidelines that you can use to add confidence to your wave count. Elliott Wave International's Senior Analyst Jeffrey Kennedy spent years designing his own technique to improve his accuracy. He came up with the Jeffrey Kennedy Channeling Technique, which he uses to confirm his wave counts. The Elliott wave theory, ( or some call it the Elliott Wave Principle) Elliott wave analysis and how to trade Elliott Waves can be a mind boggling trading concept to understand especially for a new forex trader.. You see, I consider myself pretty good when it comes to price action forex technical analysis but when it comes to Elliott waves, even the “old dog” gets lost sometimes… In the above example, we demonstrated the use of Elliott Waves patterns combined with Fibonacci Retracement, Zig Zag Indicator and 20-period Simple Moving Average. My personal preference for trading Elliott Waves is to trade it using a combination of Elliott Wave counts and Fibonacci levels exclusively.
Elliott Wave Theory has been around since the 1930’s and is used successfully by a number of technical analysts. Here IGTV discusses the principles of wave theory with IG client Adrian Ryan. Simple, ready to use explanations of Fibonacci and Elliott Wave theory and application, Powerful Forex trading psychology tactics that enable you to exploit fear and greed,Forex Trading Using ... This are the Elliott waves in action. Read More. ... Best FX Trading Strategies (THE Top Strategy for Forex Trading) - Duration: 32:00. No Nonsense Forex 1,799,777 views. 32:00. ... We use wave analysis, elliott wave theory basics, forex technical tools to analyse the market structure and can forcast the market direction with a high degree of accuracy . Elliott wave theory tips and strategies. Know and understand how to use the best wave trading strategies for day trading and swing trading. This is a free educational video.