LEARN PRICE ACTION SECRET THAT CHANGES UR TRADING JOURNEY

KEY TAKEAWAYS

• The primary market is where securities are created, while the secondary market is where those securities are traded by investors.

• In the primary market, companies sell new stocks and bonds to the public for the first time, such as with an initial public offering (IPO).

• The secondary market is basically the stock market and refers to the New York Stock Exchange, the Nasdaq, and other exchanges worldwide.

• A stock market is a place where investors go to trade equity securities (i.e. shares) issued by corporations.

• The bond market is where investors go to buy and sell debt securities issued by corporations or governments.

• Stocks typically trade on various exchanges, while bonds are mainly sold over the counter rather than in a centralized location.

Importance of Money Management

Money management is the make or break skill set that will impact a trader’s longevity the most. No matter how technically skilled a trader may be, poor money management can cause all kinds of unforced errors resulting in account blow-ups. Money management entails managing risk and leverage. The leverage part is where the danger is the greatest. Even if a trader has an 80% win rate, poor money management on the 20% can wipe out the account. Whereas a trader with a 60% win rate can still remain very profitable with strong money management skills. Proper money management is always a work in progress that is determined by experience, discipline, prudence, preparation and emotional control.

Candlestick charts originated in Japan over 100 years before the West developed the bar and point-and-figure charts. In the 1700s, a Japanese man named Homma discovered that, while there was a link between price and the supply and demand of rice, the markets were strongly influenced by the emotions of traders.

Candlesticks show that emotion by visually representing the size of price moves with different colors. Traders use the candlesticks to make trading decisions based on regularly occurring patterns that help forecast the short-term direction of the price.

One should look for a prior trend:

The prior trend should be bearish when looking for a bullish candlestick pattern and similarly, the prior trend should be bullish if you are looking for a bearish pattern.

Key Takeaways:

• Candlestick charts are a type of technical charts which analyses further price movement similar to the bar charts or line charts.

  
  Candlestick charts are used by traders to determine possible price movement based on past patterns.

• Candlesticks are useful when trading as they show four price points (open, close, high, and low) throughout the period of time the trader specifies.

• Many algorithms are based on the same price information shown in candlestick charts.

• Trading is often dictated by emotion, which can be read in candlestick charts.

KEY TAKEAWAYS

• Trend analysis tries to predict a trend, such as a bull market run, and ride that trend until data suggests a trend reversal, such as a bull-to-bear market.

• Trend analysis is based on the idea that what has happened in the past gives traders an idea of what will happen in the future.

• Trend analysis focuses on three typical time horizons: short-; intermediate-; and long-term.

• Trend trading attempts to capture gains through the analysis of an asset's momentum in a particular direction.

• While no single technical indicator will punch your ticket to market riches, certain strategies have stood the test of time and remain popular tools for trend traders.

Trend Trading Strategies

Trend traders attempt to isolate and extract profit from trends. There are many different trend trading strategies using a variety of indicators:

• Moving Averages: These strategies involve entering into long positions when a short-term moving average crosses above a long-term moving average, and entering short positions when a short-term moving average crosses below a long-term moving average.

• Momentum Indicators: These strategies involve entering into long positions when a security is trending with strong momentum and exiting long positions when a security loses momentum. Often times, the relative strength index (RSI) is used in these strategies.

• Trendlines & Chart Patterns: These strategies involve entering long positions when a security is trending higher and placing a stop-loss below key trendline support levels. If the stock starts to reverse, the position is exited for a profit.

The Importance of Trading Psychology

Many skills are required for trading successfully in the financial markets. They include the abilities to evaluate a company's fundamentals and to determine the direction of a stock's trend. But neither of these technical skills is as important as the trader's mindset.

Containing emotion, thinking quickly, and exercising discipline are components of what we might call trading psychology.

There are two main emotions to understand and keep under control: fear and greed.

Traders often have to think fast and make quick decisions, darting in and out of stocks on short notice. To accomplish this, they need a certain presence of mind. They also need the discipline to stick with their own trading plans and know when to book profits and losses. Emotions simply can't get in the way.

KEY TAKEAWAYS

• Overall investor sentiment frequently drives market performance in directions that are at odds with the fundamentals.

• The successful investor controls fear and greed, the two human emotions that drive that sentiment.

• Understanding this can give you the discipline and objectivity needed to take advantage of others' emotions.

Chart patterns are an integral aspect of technical analysis, but they require some getting used to before they can be used effectively.  A chart pattern is a shape within a price chart that helps to suggest what prices might do next, based on what they have done in the past. Chart patterns are the basis of technical analysis and require a trader to know exactly what they are looking at, as well as what they are looking for.

Types of chart patterns

Chart patterns fall broadly into three categories: continuation patterns, reversal patterns and bilateral patterns.

• A continuation signals that an ongoing trend will continue

• Reversal chart patterns indicate that a trend may be about to change direction

• Bilateral chart patterns let traders know that the price could move either way – meaning the market is highly volatile

Best chart patterns

1. Head and shoulders

2. Double top

3. Double bottom

4. Rounding bottom

5. Cup and handle

6. Pennant or flags

7. Ascending triangle

8. Descending triangle

9. Symmetrical triangle

   So, we will discuss only Important chart patterns which actually works in market.

You can read this article also..

https://www.investopedia.com/articles/technical/112601.asp

chartink.com (you can find all patterns here)

Chart patterns are an important tool which should be utilised as part of your technical analysis. From beginners to professionals, chart patterns play an integral part when looking for market trends and predicting movements. They can be used to analyse all markets including forex, shares, commodities and more.

Chart patterns often form shapes, which can help predetermine price breakouts and reversals. Recognising chart patterns will help you gain a competitive advantage in the market, and using them will increase the value of your future technical analyses. Before starting your chart pattern analysis, it is important to familiarise yourself with the different types of trading charts. It is extremely important to have a basic understanding of candlestick chart pattern to help us in quickly understanding the direction of price movement.

KEY TAKEAWAYS

• Technical analysis is the study of charts and patterns, but can also include aspects of behavioral economics and risk management.

• Simulated or "paper" trading can help traders see how technical indicators work in live markets.

For a trader, two of the most favorite features of candlesticks charts are:

• Each candlestick shows the completion of the specific number of trades during a particular period.

• It also shows that if there was more selling pressure or buying pressure during that particular period.

Candlesticks show emotion visually by representing the size of price moves.

Traders use the candlesticks for making trading decisions which are based on regularly occurring patterns that help in to forecast the short-term direction of the price.

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Only 3 call.. 3 hits..

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