Fibonacci Retracements are powerful technical analysis tools based on the Fibonacci Sequence which are widely used in the financial trading of virtually any and every asset.
Many traders use technical indicators – and sometimes entire strategies – built upon Fibonacci Retracements, while many others use the retracement levels as a guide to set their stop-loss and take-profit orders. But how can a sequence of numbers discovered in medieval times have any applications in trading today?

In this article, we will explore what Fibonacci retracements are, how they work, and how traders can make them part of their trading strategies.

What is the Fibonacci Sequence?

The Fibonacci Sequence is a mathematical sequence of numbers discovered in India and brought to Europe by Leonardo Fibonacci sometime during the 13th century.
The sequence begins with  0 and 1 and carries on with each following number being the sum of the previous two; so.. 0, 1, 1, 2, 3, 5, 8, 13, 21, and so on.
Mathematically speaking,  the Fibonacci Sequence and the relation between the numbers it contains can be found reflected everywhere in nature (for example in the shape of chicken eggs, many plants, flower petals as well as galaxies, and much more) but the reason it’s so interesting to traders is, intuitively, a different one.

What are the applications of the Fibonacci Retracements in financial trading?

In financial markets, traders use the ratios, derived from the Fibonacci Sequence, to predict the range and the extent of potential price retracements. Prices corresponding to these ratios are referred to as “Fibonacci Retracements”.

There are many ways and variations to use the Fibonacci Retracements and there is a myriad of technical indicators adopting each a slightly different way of showing the retracement levels on the charts -however- they are all more or less based on the same principle and pretty much all work in a very similar way.

Fibonacci retracements are plotted on a price chart as horizontal lines indicating potential support and resistance levels. The two main points used to draw these lines are the Swing High and the Swing Low. The Swing High represents a peak in price, while the Swing Low represents a trough. A retracement is then drawn between these two points, dividing the vertical distance by various Fibonacci ratios.

Traders use the Fibonacci Retracements’ levels to establish potential entry and exit points for their trades as well as their stop-loss and take Profit orders.
Naturally, even when using any Fibonacci retracement indicator, traders would still examine and confront the results of additional technical analysis tools (such as candlestick patterns and trend indicators), to confirm the probability of a reversal or continuation before opening a position.

What are the key Fibonacci Retracement Levels:

Fibonacci retracements rely on percentage levels derived from the Fibonacci sequence. The three most prevalent levels are 38.2%, 50%, and 61.8%. These are thought to represent levels of support or resistance, when price may stall or reverse. Traders also employ additional Fibonacci levels, such as 23.6% and 78.6%, in order to gain better insight into further price movements.

How are Fibonacci Retracements used when trading?

As we said, there are many methods to trade using Fibonacci Retracement; what follows is one of the most basic and most common of such methods.

To use and make Fibonacci Retracements part of your trading strategy, it must be remembered – and we can’t stress this enough – that no strategy should be ever based upon one single indicator and Fibonacci Retracements are no different.

In order to ensure to draw the Fibonacci Retracements in the right direction, a trader needs to consult and compare the results of other market analysis tools (technical and/or fundamental) to identify the current trend and a bias on the likelihood of potential changes.

What’s next?

Once that is done, a trader needs to identify the Swing Points (the high and low points on the price chart that mark the start and the end of significant moves) and use a Fibonacci Retracement tool to draw the lines from the swing low to the Swing High (in an uptrend) or from the swing high to the Swing Low (in a downtrend).

As you draw the line according to the current trend, most Fibonacci Retracement tools will display horizontal lines across the chart; each of these represents a different Fibonacci Sequence ratio and therefore a different Fibonacci Retracement level.

With the Fibonacci Retracement lines across the charts on his or her screen, a trader should now spend some time analyzing how price reacts when approaching each retracement level.
Very often, support and resistance areas can occur near these levels as well as retracement and price reversals.

Before opening a position, a trader should look for confirmation and confluence with other indicators. Confirming signals from multiple sources can strengthen any trading decision. This is why it’s advisable that traders combine Fibonacci Retracements with other technical indicators or chart patterns to increase the probability of the trade being successful

Let’s finish it off!

Once all of the above is done, all a trader needs to do at this point is to follow the results of his analysis and use the Fibonacci Retracement levels to set entry and exit points for his position (as well as stop-loss and take-profit orders) whilst keeping in mind that support and resistance levels, price reversals, bounce-backs, and pull-backs are all likely to occur around the Fibonacci Retracement levels.

Hope this helps!
Happy trades!

The post Fibonacci Retracements appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

Have you ever had the impression of looking at the perfect setup on your screen, placing a trade with confidence, and witnessing price suddenly shooting in the opposite direction, taking out your stop-loss, and then, as if nothing ever happened, returning to the direction you originally predicted?

Well, that could be more than just a mere impression. According to some traders, It could be the result of Stop-Loss Hunting, an act of market manipulation by Smart Money, aimed at creating liquidity by pushing a stock price toward areas with a high concentration of retail stop-orders.

The objective of this article is to explain what it means to hunt stops, who is likely to be doing it, and how you can protect yourself from being stop-hunted.

What is Stop Loss Hunting?

Stop-loss hunting occurs when large market participants, such as institutional investors or powerful traders, intentionally manipulate stock prices causing temporary volatility and price movements able to trigger stop-losses placed by retail traders thus creating liquidity for their own larger trades.

How does Smart Money know where retail traders’ stop-losses are?

Estimating where most retail traders’ stop-loss orders are placed is not that complicated. A great number of them tend to use the same technical analysis strategies and indicators. This means that many traders would often end up placing their stop-loss orders around the same levels (for example, just below the support or just above the resistance levels of a trend). The result is the creation of at least two areas where a high number of Stop-Loss orders are highly concentrated.

When seen on a chart, it becomes quite easy for everyone to predict where these areas are and even more so for Smart Money traders.

How does Smart Money manipulate prices when hunting stops?

Large market participants often have huge amounts of capital to manage and, although it might sound counterintuitive, this does present some disadvantages compared to retail traders.

Smart Money traders can find it difficult to place large orders and see them fulfilled at the desired price. More often than not, they find themselves having to split big trades into smaller ones, place their orders across longer intervals of time, and distribute them amongst different brokers. However, these operations require time and it still can’t guarantee that any slippage would be limited.

Because their capital is so large, Smart Money traders can “sacrify” a small portion of it to rapidly buy or sell a large number of shares within one or two trades to push a stock price toward retail traders’ stop-loss and drive it far enough to trigger as many of them as possible.

Once triggered, stop-loss orders convert into market orders, and all positions are liquidated at the next available price. This means that when stop-losses below the support line are triggered, there will be a further sudden increase in selling pressure and price will keep dropping lower, whilst when the stop-losses above the resistance line are triggered, the opposite is true. It is at this point that Smart Money traders can take advantage of the abundance of liquidity and a lower price at which to open a long position or a higher price at which to place a short one.

The primary reasons behind stop-loss hunting are creating liquidity in the market to execute larger trades and obtaining a more favorable price at which to trade. By triggering stop-loss orders, these market participants aim to take advantage of the chain reaction created by so many stop-loss orders being triggered at the same time, whilst gaining a better price that enables them to accumulate or offload stock more efficiently.

What can you do to protect your trades from stop hunters?

Now that we have discussed what Stop Hunting is and why some larger market participants choose to adopt it as a strategy (despite clear laws forbidding it), it is only natural that traders ask themselves if there is anything at all they could be doing to avoid falling in a Smart Money’s stop-hunt trap, and… of course there is.

According to ICT’s Smart Money Concept, the consequences of Stop Hunting can be disastrous for traders who fail to manage their risk properly as well as for those who fail to realize that “Stop Hunts are real, can happen, and do happen”.

Traders use stop-loss orders as a risk management tool to protect their trades and investments. However, this reliance on stop-losses creates a vulnerability that can be exploited. Larger market participants may intentionally drive prices up or down to trigger these stop losses, causing panic buying and selling and causing further downward or upward pressure on a security’s value.

So… what are the recommendations to avoid being stop-hunted?

• Stay away from the mass

  One of the first things a trader should do is to learn technical analysis with particular emphasis on support and resistance levels. This knowledge will make it easy to estimate where most retail traders’ stop-loss orders are likely to be placed and the levels that price could attempt to breach during a Stop-Loss Hunt. A trader who chooses to place a stop-loss should do so well away from such an area.

  Traders can avoid falling victim to stop-loss hunting by using customized stop-loss levels for their positions, by placing stop losses at prices less likely to be hit by normal market fluctuations plus a little extra distance to also mitigate the risks associated with stop-loss hunting.

• Monitor market liquidity

  In the Stock Market, Market Liquidity refers to the ease with which a stock can be traded (bought or sold) without affecting the price. Keeping track of market liquidity conditions is crucial.

  During times of low liquidity, the risk of stop-loss hunting may increase. By paying attention to factors such as trading volume, bid-ask spreads, and market order imbalances, traders can get an insight into the liquidity level of the stock they are trading and adjust their strategies accordingly.

• Use different methods and strategies to set your stop-loss orders

  Many traders use specific technical indicators to set their stop-loss orders and this, amongst other things, can prevent them from falling victim to any stop-hunt taking place. The ATR is one such indicator.
  

  The ATR (Average True Range) is a technical indicator that measures the volatility of a security by indicating the average of the true range of a security over a specific period.

  Traders know that normal price fluctuation tends to remain within the ATR value and use this information to set their stop-loss orders accordingly. A stop-loss set at 1.5xATR or even 2xATR, for example, would give ample space to tolerate a stop-hunt without it breaching the stop-loss and automatically close the trade at a loss.

• Trade with the Smart Money

  If the concept of finding the market maker manipulation is understood, then the next move will be to find those levels, wait for the stop hunt to occur, and use that to your advantage.

Conclusion

Stop-loss Hunting is a practice used by Smart Money to take advantage of the stop-loss orders placed by retail traders. Understanding how it is done and why, and trying to take precautions by setting our Stop-loss order differently, can help us to reduce our risk and protect our capital.

So remember:

By being aware of support and resistance levels, using customized stop-loss, and avoiding smaller time frames in times of low liquidity,  it becomes possible to reduce our exposure to the risk of Stop-Hunting.

Hope this helps.

Trade on, traders.

The post Stop Loss Hunting appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

Michael T., 31 years old, from the USA.

Michael has successfully passed our Ultra Trading Capital program, and he is now TTP’s funded trader managing a $260K account, or as we call it, he is a true “Stock Star”.

Every time he reaches 5 consecutive winning days, we will boost his buying power and max exposure.

We spoke with Michael about his trading plan, insights, and lessons gained while trading in the markets and our platform as a funded trader.

Michael’s evaluation statistics

Q&A With Michael

Tell us a little bit about yourself

My name is Michael. I have degrees in finance, economics, and accounting. Went the trader route on my search for freedom and wealth. I gained my passion for markets during the medical marijuana penny stock boom around 2012 and haven’t looked back.

How long have you been trading?

I’ve been a full-time Trader for 11 years

Briefly describe your trading plan and how it contributes to your success

Every day I am looking at my watchlists, scanners, news, internet, and trading friends ideas to see if there are any of my setups available to trade. This has helped bring some consistency during ever changing market conditions.

How did you adjust risk management to your trading personality?

By allowing myself to risk more on high quality trades while still having a max loss and usually trading at least a few ideas a day.

Describe a key moment in your trading career

I worked at a prop firm in 2015-2016. My only trading strategy at the time was not working and I blew up my account there. That forced me to grow as a trader and figure out what went wrong. It also forced me to really think about how I could set myself up for success in the long run in this business. For me, that involved doing things outside of trading so that I could learn without relying on income from trading to pay my bills.

How long did it take for you to become a consistent trader, and what aspects did you change for that?

5 years. Hardest part was scraping money together to keep trading.

What is your mental/psychological strength, and how did you develop it

Stress management. We are the ones who beat ourselves up and add more stress to our lives, which makes it hard to fix, but is also empowering. Taking ownership of this has been more important than learning anything new about trading and markets.

What was your strategy for successfully passing the evaluation phase?

I traded a pretty wide variety of ideas, both long and short, so I can’t put it on one thing.

How is trading for Funded Trades Now For You different from trading by yourself?

You have resources at your disposal to help you learn and by being a funded trader you have the ability to withdraw some profits while still growing your account/keeping the same amount of buying power.

What would you recommend to someone who is just starting with us?

Find the right direction on your path. I would recommend different things to different people depending on their circumstances.

Share online resources that were/are significant in your trading development. Names and links are appreciated.

Reminiscences of a stock operator is my favorite trading book as it came recommended by my former prop firm bosses. Countless books, podcasts, articles, and working with other traders have also been key.

The post FTNFU $260k Funded Trader – “You can withdraw profits and grow your account simultaneously” appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

In past articles, we have discussed some of the most important economic indicators that traders, investors, and other stakeholders are known to pay great attention to; the “Initial Jobless Claims” is undoubtedly one of them.

The report reveals the number of people who have recently become unemployed and are applying for unemployment benefits. By analyzing the records and figures the Initial Jobless Claims provides, market participants and policymakers can gain valuable insight into both the health of the labor market and the state of the overall economy.

In this article, we’ll explain what the Initial Jobless Claims report is and why it is considered so important.

What Are Initial Jobless Claims?

As we just explained above, Initial Jobless Claims refer to the number of people who filed a claim for unemployment benefits with their state’s unemployment office for the first time after losing their job. These claims are a key component of the weekly Economic Indicators Report which, in the US, is published by the Department of Labor.

Considering the fact that the employment levels are usually sensible to economic expansions and retractions, it becomes easy to see how the Initial Jobless Claims report is seen and used as a barometer not only for the state of the labor market but also for the overall national economic condition.

Analysts and policymakers rely on this data to make informed decisions regarding economic policies, social safety nets, and business strategies. By closely monitoring initial jobless claims, all interested parties can gain insights into the impacts of economic events, such as recessions and unexpected crises such as the recent global pandemics, and can devise appropriate measures to mitigate their effects.

Why the Initial Jobless Claims are so important for traders and investors?

The importance of the IJC to traders and investors derives from the fact that it can be viewed not only as an indicator of the current economic situation but also as an insight into what is likely to happen next.

Let’s take a minute to analyze this better.

The most direct and immediate use of the Initial Jobless Claims report is as an indicator of economic health.

High numbers of initial jobless claims are often associated with a weakening labor market and can indicate an economic downturn, a slowing down, or, in extreme cases, a recession. Whilst, on the other hand, a decline in claims can signal improving employment prospects and overall economic growth.

Initial jobless claims can act and it can be seen as an early warning system for related economic issues.

Clearly, an increase in jobless claims is seldom a good sign; it may foreshadow an imminent contraction in consumer spending followed by poorer market conditions and reduced economic growth.

The Initial Jobless Claims report is also considered of great importance for the impact that it can have on consumer confidence which, in turn, can have a major effect on the economy. After all, it is only natural that unemployment creates uncertainty and that can turn into financial stress for individuals and their families. This again can (and often does)  lead to a decrease in consumer spending, which, of course, is a significant driving force for economic growth. It is because of this that, Initial Jobless Claims have a direct influence on consumer confidence, overall economic stability, and, ironically, on future unemployment level and jobless claims too.

What effect does the New Jobless Claims report have on the stock market?

When interpreting initial jobless claims, it is important to put the figures into context within the bigger picture. You must look beyond a single week’s data, as these can be influenced by various factors (i.e. seasonal fluctuations, reforms, weather conditions,  etc.) or administrative problems. You should focus instead on indicators such as the four-week moving average (the average of initial claims over the previous four weeks) to get a better understanding of the overall status and dynamics of the labor market.

The relationship between the initial jobless claims and the stock market is often complicated because it is based on different factors with different timelines. The effect that one has on the other is not always easy to predict but there are, nonetheless, factors that it is useful to consider; here are a few.

The first thing that feels the impact of the Initial Jobless Claims report is market sentiment. Higher-than-expected jobless claims may lead to a decline in investor confidence, potentially causing stock prices to fall and, naturally, the opposite is true too.

As we just discussed, Initial Jobless Claims can provide insight into the health of the labor market and the overall economy. If jobless claims increase significantly, for example, it may be seen as revealing economic weakness or as a reason to prepare for “under-expectation” corporate earnings in the near future. Both these scenarios often lead to falling stock prices.

In past articles, we explained that the main functions of the Federal Banks are to safeguard the value of the US Dollar and the level of employment in the Country. It is only natural then that: high jobless claims may persuade the FED to adopt expansionary monetary policies, such as lowering interest rates or implementing asset purchase programs.

Usually, when the FED decides to act this way, traders can expect a positive response from the market, as a lower interest rate may make stocks more attractive than other assets.

It is important to also consider the impact New Jobless Sales can have on specific industries.
As discussed, changes in jobless claims numbers can directly influence market and consumer confidence; sectors heavily reliant on consumer spending, such as retail and travel, hospitality, and entertainment are more easily influenced and their stock prices may show greater volatility in response to jobless claims data.

For day traders in particular, it’s important to consider that the stock market’s reaction to jobless claims is very reliant on expectations and, in particular, to the way the newly released numbers compare to forecasts. If the actual jobless claims figure is better or worse than expected, it may affect market sentiment and stock prices in either a positive or negative way.

Note that…

It’s important to note that the stock market is influenced by a wide range of factors, including economic indicators, geopolitical events, company-specific news, and investor sentiment. Therefore, while initial jobless claims can be a factor, they are just one among many that constantly influence the stock market’s movement.

`Adding this knowledge to your technical analysis can give you a competitive edge and help you to improve your trading strategy.

Thanks for following us and, as always, I hope this helps.

The post Initial Jobless Claims – How it Affects the Stock Market appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

In a past article – “The Seven ICT Concepts You Oughta Learn” – we talked about Inner Circle Trading’s (ICT) very own trading strategy and the seven concepts upon which it has been created.

In that same article, we said ICT’s seven concepts were Liquidity, Displacement, Market Structure Shift, Inducement, Fair Value Gap, Optimal Trade Entry, and Balance Price Range. Today, we are going to take a closer look at one of these concepts: the Market Structure Shift. We’ll explain what it is and how it is used within the ICT trading strategy.

What is a “Market Structure Shift”?

Whatever your skill level, as a trader, you are probably already used to watching charts and analyzing the flow of trends and patterns before your eyes and that alone is a great starting point to understand and easily spot Market Structure Shifts (MSS).

MSS are ICT traders’ way to identify an imminent reversal in a stock price and enter the market within the Fair Value Gap that the MSS helps to highlight.
The easiest way to describe the formation of an MSS would be to say that, as the name suggests, an MSS is the point in time (as well as on the charts) where the current trend or pattern suddenly changes.

In practical terms, however, it can be described as the level at which price extends past the last lowest low following a succession of higher highs and higher lows (in a bullish trend) or the last lower high following a succession of lower highs and lower lows (in a bearish trend).

ICT traders see a Market Structure Shift as the first indication of a trend change and, if this is confirmed, will often use this point to identify the right area in the chart to set entry and exit points upon which to base their trade. Once ICT traders have established and recognized the current trend, they need to keep monitoring the chart waiting for a break in the status quo and a Market Structure Shift is how this usually manifests.

Keep in mind that for an MSS to be recognized as such, price must break past a swing high or low with a full-bodied candle (rather than with just its wick); only in this case, the MSS  would be considered as signaling a potential change in the price direction. When confronted with any other scenarios (i.e. when it is the candle’s wick, rather than its body, that extends past the previous lower low or higher high), ICT traders would wait for other confirmation knowing that they might be in front of a simple Liquidity Grab rather than an actual Market Structure Shift. Liquidity Grabs, on the other hand, often result in just a brief pullback and do not offer any indication of an imminent reversal. As the name suggests, Liquidity Grabs are quick price movements created by smart money’s attempt to push a stock price to areas where traders’ stop loss levels are likely to be highly concentrated.

All in all, being able to recognize MSS properly makes it easier for traders to spot great trading opportunities, get a better insight into potential trend changes, and set better entry and exit points.

ICT’s Smart Money Concept Strategy includes a variety of tools and methods that can be used to spot and identify genuine MSS and good trade opportunities in the stock market; the three most effective and most popular amongst these are Order Blocks, Fair Value Gaps, and the good old RSI.

Order Blocks

Order Blocks show up as the footprint left behind by large market players in areas where they entered and/or exited the market in significantly large volumes. The importance of these zones derives from the fact that they can often become turning points for price movement direction. The ability to identify these areas gives ICT traders an advantage in being able to set suitable entry and exit points for their trades.

Fair Value Gaps

When clarity is concerned, arguably one of the easiest ways to establish that a genuine Market Structure Shift has taken place is the occurrence of a Fair Value Gap (FVG) or even a Double Fair Value Gap (DFVG).

When looking at a chart, a Fair Value Gap is represented by the space created by a stock price shifting between two points without any trading taking place in between. These gaps will be filled in the future more often than not and can reveal the market’s momentum and provide insight into potential future shifts.

By keeping an eye on where price extends past the last opposite swing point and leaves behind a Fair Value Gap, it becomes possible to try and predict a new trend change.

Relative Strenght Index

Some ICT traders prefer to use technical indicators to identify Market Structure Shifts and, among these, one that stands out for effectiveness and popularity is the Relative Strength Index indicator (RSI). A stock is considered to be overbought when the RSI shows a value equal to or higher than a value of 70 or oversold when it shows a value equal to or inferior then 30. It’s a hint that the market’s current trend may be exhausted. If and when one of these two scenarios coincides with a Market Structure Shift, traders would be faced with a strong indication that price movement may be about to change direction. Usually, traders would take advantage of the situation to place their trades on the right side of the market’s new course.

How to trade a Market Structure Shift

Trading an MSS begins – quite obviously – by identifying and confirming the presence of an MSS itself.

At the end of a bearish trend, the MSS is confirmed when the first higher high closes above the previous lower high (bullish MSS). On the other hand, at the end of a bullish trend, the MSS is confirmed when the first lower low closes below the previous higher low (bearish MSS).

Once the MSS is confirmed, traders will look for entry opportunities within the corresponding Fair Value Gap. They can then use Fibonacci levels to set their stop-loss and take profit levels. Those who prefer to set these levels manually would often place the stop-loss at the lowest level preceding a bullish MSS or at the highest level preceding a bearish MSS and their profit targets close to the highest level of the previous market trend before a bullish MSS or close to the lowest point of the previous market trend before a bearish  MSS.

Whichever way they choose to go about it, the simple act of learning to identify Market Structure Shifts would give traders the advantage they need to recognize imminent trend changes, reversals, and good trade opportunities and, of course, the same can be true for you.

As always, I hope this helps you to enrich your skills, improve your technique, and trade more effectively and successfully.

To start trading today join Funded Trades Now For You now!

The post ICT Concepts Explained – Market Structure Shift appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

“Don’t swing for the fences. You’ve got a lot of time!”

Patricia has successfully passed our Super Trading Capital program, and she is now TTP’s funded trader managing a $80K account, or as we call it, she is a true “Stock Star”.

Every time she reaches 5 consecutive winning days, we will boost her buying power and max exposure.

We spoke with Patricia about her trading plan, insights, and lessons gained while trading in the markets and our platform as a funded trader.

Patricia’s evaluation statistics

Q&A With Patricia

Tell us a little bit about yourself

My name is Patricia. I’m originally from Germany but came to the USA in 2008 to run track. I lived in NYC for almost 10 years before I moved to the Westcoast.
I am also the mom of a one year old. Trying to get back into competitive running.

How long have you been trading?

I’ve been a part-time Trader for 1.5 years

Briefly describe your trading plan and how it contributes to your success

I’m a short biased trader regarding small caps. In the Morning I am looking at my scanners and make a plan based on fundamentals and technicals.
Then I place my order with the appropriate risk management and usually step away.

Share with us a challenge you faced in your trading career and how you overcame it

I started trading when I was 6 months pregnant.
It was quite challenging with a newborn to trade in the mornings. She usually woke up 4 times at night and especially when the market opened, haha.
I definitely had to really focus and multitask during these short hours in the mornings. That was definitely a huge challenge!

How did you adjust risk management to your trading personality?

I’m an impatient person. Trading taught me to step away and not focus on the fluctuations. It drove myself crazy!

Describe a key moment in your trading career

adjusting risk management to my trading was definitely a key moment!

How long did it take for you to become a consistent trader, and what aspects did you change for that?

I’d say a year . Looking into fundamentals AND technicals and not just scalp everything right and left.

What is your mental/psychological strength, and how did you develop it

I’m quick in decision making once a stock fits my criteria. I don’t dwell in should I or should I not. By the time I’m dwelling, the stock already moved too much.
Also the fact I’m not looking at the screen much once my trade has been placed.
Emotions are shut out at that point.

What was your strategy for successfully passing the evaluation phase?

Taking profits early and applying tight risk management.

How is trading for Funded Trades Now For You different from trading by yourself?

It makes me more accountable with TTP. It’s a full support system and I love it.

What would you recommend to someone who is just starting with us?

Start small, don’t swing for the fences. You’ve got a lot of time!

Share online resources that were/are significant in your trading development. Names and links are appreciated.

I’ve been listening to hundreds of audiobooks and podcasts.
That came in handy because my baby had to take lots of naps and she liked car naps in the newborn phase. So I basically drove around for two hours at a time and listened to lots of things.
“Market Wizards”, “Trading in the Zone”, “Best loser wins” and podcasts such as “Chat with Traders” were my go to where I actually heard about you:)

Would you like to share anything else with us?

Just super stoked to work with you!

The post FTNFU $80k Funded Trader – “With TTP, I feel more accountable, and have a full-system support” appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

So… which one is it then?
Is penny forex trading a scam or a legitimate way to maximize and diversify our trading portfolio?

Well… you guessed it, that is the question we’ll try and answer for you in this article.
Let’s get going!

First of all…

What is penny forex trading in the first place?

Penny forex trading is a type of speculative trading in which traders buy and sell low-priced stocks, typically under $5 per share. These stocks are frequently linked with small or new companies with low market-cap and are traded on over-the-counter (OTC) or specifically small-cap exchanges.

Penny Forex Traders often use a variety of tactics and strategies to profit from these low-priced stocks’ price swings. Whilst some traders concentrate on short-term market volatility, hoping to profit from short-term momentum plays or price swings. Others buy in penny stocks with the expectation that a specific stock will experience tremendous growth in the future, potentially resulting in a huge profit.

What are some of the advantages and disadvantages of penny forex trading?

These are the three main advantages of penny forex trading:

Low entry barrier

Arguably, the biggest advantage of trading penny stocks is the low barrier to entry. These stocks often cost less than $5 a share, making them accessible to investors with smaller budgets. The low cost can be attractive for aspiring traders and investors seeking to gain exposure to the stock market without significant financial commitments.

Volatility and liquidity

Penny stocks are known for their volatility, and volatility, as we all know, creates opportunities for quick price changes. If things go according to plan, the larger the price movement, the larger the profit; it’s understandable then that the penny stocks’ is many traders’ favorite market.

Potential for high returns

Penny stocks are known for being able to offer high returns on investment. Because of their low price, even a slight upward rise might result in significant percentage returns. If timed correctly, the possibility for big returns can be very very attractive to traders searching for higher profits in a shorter time.

And these are some of the disadvantages:

High risk

While the prospect of high returns is appealing to everyone, trading penny stocks comes with a higher level of risk, and that is not appealing to everyone just as much.
Penny stocks often have no track record, making them difficult and challenging to analyze and evaluate. Determining their long-term viability sometimes becomes more a matter of opinion than clear indicators. And, as if this wasn’t enough already, penny stocks are vulnerable to manipulation and fraudulent activity, offering fertile grounds for possible fraudulent behavior.

Lack of information and transparency

Due to their small market capitalization and limited following, penny stock companies often provide minimal information and transparency. Traders and investors may struggle to find accurate financial data, making it really hard for traders to make good and informed decisions. This lack of reliable information can contribute to increased risks when trading penny stocks.

Low liquidity

Penny stocks have lower trading volumes than standard stock and that, sometimes, can lead to illiquidity. The lower volume can make it difficult to buy or sell shares at the chosen time and at the target price and annoying (and at times, expensive) slippage is often the result.

Price and news manipulation

These two last points – low liquidity and limited information low-cap companies – combined make very fertile ground for fraud and manipulation.

The small price and the low level of liquidity (caused by the limited number of buyers and sellers) mean that it is possible for groups of ill-intentioned fraudsters to increase the price of stock merely by buying it in large quantities. At the same time, the lack of sufficient information makes it hard for investors and traders to establish if these price increases are justifiable by the company operations or just the results of manipulation. The less-experienced traders often rely on internet influencers and “second-hand” analysis without realizing that, many a time, fraudsters would be one step ahead and often divulge fake news and information with the intention of strengthening public confidence in the penny stock they intend to manipulate.
Many influencers have already fallen “victim” to the SEC for exactly this kind of behavior.

Once the hype is built and the penny stock reaches the desired price, the manipulators would sell the many shares in their possession for a large profit in a very short period of time. The price of that stock would consequently drop rapidly and drastically leaving genuine traders and investors “holding the bag” (virtually worthless stock).
This process is called “pump and dump” manipulation and it’s the most common type of fraud present in the penny stock market.

Here are three penny forex trading strategies you can adopt right now

Momentum Trading

Momentum trading focuses on identifying penny stocks that are experiencing significant price movements and jumping in on the trend (trying to do so before it ends).

To use this strategy, penny Forex Traders often look for stocks with high trading volumes and sudden increases in volume and increases or decreases in price. They aim to profit from short-term price movements by buying stocks on the upswing and selling them quickly for a profit.

Catalyst trading

Penny Forex Traders pay great attention to actual and potential catalysts that may drive the stock price. This can include earnings releases, corporate news, regulatory approvals, or industry developments. Timing your trades around anticipated catalysts can help you take advantage and profit from short-term price movements and fluctuations

Short selling

Short selling is by far the most used strategy when it comes to the penny stock market.

As in any market, the process of short selling consists in borrowing shares from the broker and selling them immediately hoping to be able to rebuy them later at a lower price and returning them to the lander whilst pocketing the profit.

Given that the Penny Stock market is characterized by minor companies and lower market cap, it can sometimes be easier to spot stocks destined to decline than stocks that show promise and potential; this is probably why so many traders chose short-selling as their go-to strategy when it comes to penny stock.

Keeping up with news regarding both the company and the industry in which it operates is vital for a short-seller. Penny stock companies are way more vulnerable to micro and macro changes in the economic and social environments than other stocks. Any event that could obstruct the operation of a company (such as higher oil prices, reduction in material availability, and so on) as well as a sudden and unjustified stock price increase is often taken as an indication that a price drop is about to take place. Short-sellers would then go ahead borrowing and selling shares with the intention of rebuying them later as we explained above.

It is important to note that short-selling comes with a higher degree of risk. This is because it involves borrowed money that must be repaid whether your trade is a successful one or not. Also, stock prices could theoretically rise indefinitely which means short sellers face potentially unlimited losses.

Here are 3 good tips for penny stocks trading:

1. Be Thorough with your penny stock research

   The most important aspect of penny forex trading is the research.
   Research and analyze your pick of stocks extensively. Look for companies with solid financials, good management teams, and strong potential for future growth. Keep yourself updated with news, press releases, and industry and company developments that could affect the stock’s performance one way or the other.
   It is only by conducting meticulous research, that you can identify stocks with the potential to offer your well-deserved rewards.

2. Keep an eye on volume and liquidity

   Keep monitoring the average daily trading volume of your penny stock of choice.
   Stocks with low average volumes may experience wider bid-ask spreads, making it quite difficult to execute trades at your target price. Try to avoid illiquid stocks or you might have to hold on to them a little longer than you wish and intend.

3. Stay away from stock with excessive (and dubious) promotional activity

   Be wary of penny stocks that have aggressive promotional campaigns or pump-and-dump schemes. These manipulative tactics can artificially inflate stock prices, making it risky for traders who may get caught up in the hype. Critical evaluation is key here.

If only…

It seems pretty clear that penny forex trading can be a high-risk, high-reward way of doing things. While the lure of potential quick profits may be appealing, it is vital also to consider the risks associated with trading in the penny stock market.

If only there was a way to diversify our portfolio and take advantage of the huge rewards penny stocks are able to offer whilst also minimizing the risk of losing our own money at the same time…

Oh, but wait! There is!

Funded Trades Now For You is currently the only prop firm that allows its traders to dip their fingers in the penny stock and, just as they do for standard stock, they’ll share the profit with you but they will also protect you and your finances from any loss by taking it onto themselves. So you see, traders can still get all of the potentially amazing benefits without running any unnecessary risk.

Penny Stock Trading – Conclusion

The penny stock market is characterized by low-cap companies and low-price shares. This means that the market is easy to manipulate and often it is.

However, it can hardly be called a scam. The participating companies are generally genuine and just trying to grow. With the right mindset, thorough research, a good trading strategy, and a strong partner such as Funded Trades Now For You, it is certainly possible to take advantage of the market’s high volatility and make good good profits.

Really hope this helps.

Trade on, traders!

The post Penny Stock Trading – Scam or Legit? appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

Hey guys, I’m Michael Katz, and I’m here to share some valuable insights on a topic that’s absolutely notorious in the world of trading – risk management. I’ve spent the last 15 years perfecting my risk management strategies. I want to help you understand the crucial role risk management plays in trading, whether you’re just starting out or looking to fine-tune your approach.

Trading as a Business

Before we dive into the charts and discuss specific trades, let’s start by establishing a fundamental principle: trading is akin to running a business. Whether you’re a day trader, swing trader, or a long-term investor, you’re essentially building your own trading business. This business involves various forms of investment and, you guessed it, risk.

Think about it for a moment. When you set up your trading station, you invest in hardware, such as computers and screens, and you pay for an internet connection. These are essential tools for your trading business. But here’s the catch – if the market doesn’t yield returns, you’re risking your investment in these tools.

Furthermore, when you open a trading account, whether it’s worth $10,000, $50,000, or more, you’re committing capital to the markets. This capital is at risk the moment you make your first trade. Before you even click that mouse key to execute a trade, you must understand that you’re risking your money.

Determining Your Risk Tolerance

So, how do you embark on this trading journey with the right mindset? The key is to have an open and honest conversation with yourself, and possibly your spouse, about how much capital you’re willing to invest and, more importantly, how much of it you’re willing to lose.

Let’s say you open an account with $50,000. At what point would you decide that trading might not be for you? When you’ve lost $20,000, $30,000, or $40,000? Knowing your risk tolerance is critical, and it’s a decision you must make before you even make your first trade.

Losses are an integral part of trading; it’s just how the game works. But with the right mentality and preparation, you can better cope with these inevitable losses. The goal is to make more money than you lose, but you must accept that losing is part of the process.

Applying Risk Management Strategies

Now, let’s shift our focus to how you can apply risk management strategies in your day-to-day trading. I’ve developed and refined these strategies over the years, and they form the backbone of our approach at Funded Trades Now For You.

Day Trading, Swing Trading, and Long-Term Investment

First, it’s important to recognize that risk management strategies may vary depending on your trading style. There are three primary trading styles: day trading, swing trading, and long-term investment.

• Day Trading: In day trading, you open and close positions within the same trading day. To apply risk management here, we allocate a daily loss budget. Let’s say you’ve opened an account with $50,000. Out of this, you might decide to risk 3% per day, which amounts to $1,500. This daily loss limit sets the stage for how much you can risk on each trade.
• Swing Trading: Swing trading involves holding positions for a few weeks to a few months. Your risk management approach should be similar but adjusted for a longer timeframe.
• Long-Term Investment: For long-term investments that extend beyond a year, the risk management process is also relevant. You should decide how much you’re willing to lose over the course of a quarter, half a year, or longer and allocate your risk accordingly.

The key is to divide your allocated risk into chunks that you can apply to individual trades.

Allocating Risk to Trades

To apply risk management effectively, you’ll need to determine how much of your daily or long-term loss budget you’re willing to risk on a specific trade. I like to use a scale based on the quality of the setup.

• A+ Setup: When you’re presented with an exceptional trade setup, where all the stars align, you might decide to risk 30% of your daily loss budget. For instance, if you’ve allocated $1,500 for daily losses, you could risk $450 on an A+ setup.
• B+ Setup: In situations where your confidence in the trade is slightly lower, you can reduce your risk. You might opt to risk 10% of your daily loss budget, or $150 in this example.
• Fills and Testing: Sometimes, you’ll enter trades where you’re not entirely sure of the outcome. These can be considered as fills or test trades. In such cases, you might only risk a small portion of your daily loss budget to gauge the market’s response.

Managing Trades

While risk management is crucial, it’s equally important to understand how to manage your trades effectively. This is where you can significantly impact your success as a trader.

For example, you might start a trade by entering a position and then add to it as the trade develops in your favor. However, it’s essential to be strategic about your entries and exits, considering factors such as support and resistance levels and historical data.

In some cases, it may be prudent to take partial profits along the way, especially if the trade is moving in your favor. This can help you secure gains and reduce overall risk.

Progress and Adjustments

As you gain experience and build confidence in your trading abilities, you can consider making adjustments to your risk management approach. If you notice consistent progress and profitability, you might feel comfortable increasing the amount you’re willing to risk per trade or per day.

Remember that risk management is a dynamic process. You can adapt and fine-tune your approach as you gain experience and understanding of the markets.

Risk Management – Conclusion

In conclusion, risk management is a cornerstone of successful trading. It’s the key to ensuring you can weather the inevitable losses and emerge as a profitable trader. Whether you’re a day trader, swing trader, or long-term investor, the principles of risk management apply to all.

So, before you start clicking those mouse keys to make money, sit down, determine your risk tolerance, and allocate your risk according to the quality of each trade setup. Manage your trades effectively and be open to adjusting your approach as you progress in your trading journey.

I hope these insights help you on your path to becoming a successful trader. If you have any questions or want to delve deeper into risk management strategies, feel free to reach out. Trading can be a challenging endeavor, but with the right risk management techniques, you can increase your odds of success.

Remember, trading is not about avoiding losses entirely; it’s about ensuring that your wins outweigh your losses in the end. Good luck, and may your trading journey be a profitable one!

The post Mastering Risk Management in Trading: Your Path to Success appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

Clement T., 38 years old, from Hong Kong.

Clement has successfully passed our Extra Trading Capital program, and he is now TTP’s funded trader managing a $20K account, or as we call it, he is a true “Stock Star”.

Every time he reaches 5 consecutive winning days, we will boost his buying power and max exposure.

We spoke with Clement about his trading plan, insights, and lessons gained while trading in the markets and our platform as a funded trader.

Clement’s evaluation statistics

Q&A’s With Clement

Tell us a little bit about yourself

My name is Clement. I’m a registered nurse and I like playing basketball.

How long have you been trading?

I’ve been a part-time Trader for 2 years

Briefly describe your trading plan and how it contributes to your success

I’m a short-biased trader and mainly focus on penny stocks with a high risk of dilution. But everything leading to success is about risk management and trading psychology. Stay humble and stay hungry for the market.

Share with us a challenge you faced in your trading career and how you overcame it

There was a huge drawdown sometimes in your career because of the market cycle. I just kept backtesting my strategy and let the statistics strengthen my conviction about the way I traded.

How did you adjust risk management to your trading personality?

I set a max loss with my broker, which is about 2% of my account size. So when it hits, just walk away and enjoy my life with family.

Describe a key moment in your trading career

The key moment was when I realized trading psychology is the most important part of trading when reading the book called “Trading in the Zone”. After that, I focused on risk management instead of making complicated trading strategies.

How long did it take for you to become a consistent trader, and what aspects did you change for that?

I think it took me a year to become a consistent trader. The way I changed was just to focus on risk management and be patient for a good setup instead of doing lots of random trade

What is your mental/psychological strength, and how did you develop it

Never be satisfied with your current situation. Persevere with your goal in order to improve every aspect of your trading.

What was your strategy for successfully passing the evaluation phase?

Keep losing tight and let the winners go. focus only on 1 or 2 best setups in my playbook.

How is trading for Funded Trades Now For You different from trading by yourself?

I really appreciate the tight risk management of TTP.

What would you recommend to someone who is just starting with us?

Simply, Yes.

Share online resources that were/are significant in your trading development. Names and links are appreciated.

youtu channel (RTF trading)

The post FTNFU $160k Funded Trader – “TTP’s risk management helped me become a consistent trader” appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

At Funded Trades Now For You, we always strive to produce articles that can help traders become more and more successful by introducing concepts and techniques that might be new or unclear to some people. We spoke about both fundamental issues such as GDP, Unemployment, the FED, the New Home Sales report, and much more (all of which you can find on our blog page) and different aspects of technical analysis such as candlestick and chart patterns clearly explained in our ebook (and you can also find that on our website).
We intend to carry on in these steps and provide even more value to our traders as we go on because helping traders, both economically and educationally, is excartly what we do!

That being said and with no further ado, let’s talk about today’s topic: Reading the Tape.

What does “reading the tape” mean in trading?

When traders talk about “reading the tape”, they are referring to a technique that involves analyzing and interpreting the information displayed on what is still called a “ticker tape”, which – even in today’s electronic format – represents movements in stock prices and trading volumes in real-time. It does that by displaying a continuous stream of data, including price updates, bid and ask prices, trade volume, and other very relevant information.

When traders “read the tape”, they observe and analyze data to gain a better insight and understanding of current market trends, price movements, and investor sentiment. It’s a matter of looking for patterns, significant price movements, or changes in trading volume that could indicate potential opportunities to meet Mr. Profit.

The three main factors you should look out for when reading the tape.

Price Movements:

Monitor how prices are changing in real-time. Look out for significant increases or decreases, breakouts from key levels, or even reversals.
These price movements can provide you with important indications of market sentiment and potential trading opportunities.

Trading Volume:

Observe the volume of trades taking place. You can get a pretty good idea of the interest level and participation in a particular stock or market.
Unusually high volume could indicate strong buying or selling pressure, potentially signaling a trend continuation in some cases or a reversal in others.

And…

Order Flow:

Pay attention to the bid and ask sizes and prices. You will be better positioned to understand the current market’s supply and demand dynamics.
Large or aggressive orders can indicate institutional buying or selling, which might influence price movements and offer you another chance to meet the same Mr. Profit from earlier.

Five “Tape Reading Tactics” to get you started.

Here are five of the most popular Tape Reading Tactics you can start familiarizing yourself with right now.

“Order Book Analysis” tactic.

Analyze the depth and size of the order book. This can help you identify areas of support and resistance that you can then draw on your chart. Look out for large buy or sell orders (“icebergs”); they often indicate significant buying or selling pressure which could confirm or reverse the current trend.

“Time and Sales Analysis” tactic.

Monitor the time and sales data, which displays real-time trade executions. Analyzing the speed and volume of the trades that you see, can provide you with a very interesting insight into market sentiment and potential short-term price movements.

“Volume Profile Analysis” tactic.

Make a point of examining the volume profile, which shows the trading volume at different price levels over a specified period. This analysis can help you to identify areas on the chart with a high level of trading activity which – again – you can use to determine potential level of support and resistance.

“Level 2 Data Analysis” tactic.

Simply put, the Level 2 Data Analysis tactic consists of analyzing information regarding the bid and ask prices and the order sizes outside of the best bid and ask. You can monitor the level 2 data to identify potential areas of interest, such as heavy buying or selling pressure at specific price levels.

“Tape Reading Pattern” tactic.

Experienced tape readers often develop their own set of patterns based on historical price and order flow data. These patterns may indicate potential reversals, breakouts, or the presence of institutional buying/selling. With time you’ll be able to do that in an expert manner too but, for now, nothing stops you from giving it a go and trying things out.

Could Tape Reading be a good strategy for you?

What do the studies say?

Numerous studies have been conducted on Tape Reading. These studies were mainly aimed at establishing whether Tape Reading offers any actual trading advantages compared to other techniques and strategies and, if so, to whom

It turns out, Tape Reading absolutely does offer numerous benefits. It can put traders in a much better position to “have a real-time feel” for exactly what is going on in the market right whilst it is going on!
Studies on Tape Reading also suggest that it is not a “do-it-all” strategy and that it’s not suitable for everyone. Tape Reading, as powerful as it might be, does come with its limitations (and what doesn’t?).
Interpreting the order flow’, for example, can be a very subjective business as different traders might interpret the same data differently. It can also be very hard, whilst Tape Reading, to distinguish and separate useful signals from the general chaos of random fluctuations.

Another thing that the Reading the Tape studies suggest is that this strategy is way more effective when it’s adopted and used in conjunction with at least another signalling method. Either a technical or a fundamental indicator would be appropriate. It is when different strategies or indicators confirm one another that Reading the Tape provides the best benefits.

Summary

Determining if tape reading is the best form of trading for you involves understanding the nature of tape reading and assessing how it aligns with your trading goals, personality, skill set, and risk tolerance.

Remember, trading is highly individualistic, and what works for one person may not work for another. Exploring different trading strategies and adjusting based on your strengths, preferences, and goals is essential for finding the most suitable approach for you.

Once again, hope this helps.
Trade on, traders!

The post Reading The Tape – This you NEED to know appeared first on Funded Trades Now For You - Stock Trading Prop Firm.