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!

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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.

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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.

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.

Swing trading is a popular trading strategy that involves taking advantage of short-term price movements in stocks. Unlike day traders and long-term investors, swing traders aim to profit by taking advantage of price movements within a few days or even a few weeks.
In the following article, we’ll quickly examine the reasons that so many traders choose swing trading as their favorite style, we’ll explore the main factors to consider in order to swing trade successfully and we’ll explain how swing traders go about picking their stock. So… let’s get started!

Is swing trading right for you?

Before answering questions such as this, it is essential for you to analyze and understand your current trading style. You need to Identify your risk appetite, know your exact time availability, and, most importantly, you need to clarify your goals and objectives.
Even if it’s based on a larger timescale than day trading, swing trading still requires active monitoring of the market, as well as quick decision-making. It is crucial for you to have a clear trading plan and you also must have a specific method on which to base your entry and exit price levels, your stop-loss orders, and your profit targets.
If this is at all similar to what you are already doing then yes, sure, swing trading could be an excellent style of trading for you too.

So why do so many traders choose to swing trade?

Swing trading is a common trading method utilized by many financial market participants. Swing trading allows traders to retain positions for several days to weeks, as opposed to day trading, which compels traders to execute trades inside a single trading day. This is probably the factor number one that makes swing trading so appealing to so many traders but… there is more.

Here are three more great reasons:

Flexibility and Time Commitment

Another reason traders opt for swing trading is the flexibility it provides.
Swing traders aren’t tied to their screens all day and have, therefore, more time for all other things life is made of.
Because swing trading strategies typically involve identifying potential price swings over the space of days, traders often use technical analysis to identify entry and exit points in advance and are then able to let their trades run, making swing trading less demanding in terms of time commitment than day trading.

Lower level of stress

Due to the fast speed and continual decision-making required in day trading, traders often found it more stressful than swing trading which, on the other hand, offers a slower pace trading environment and… more time to think.
Swing traders have more time to study markets and make sound decisions. They can also avoid being negatively impacted by unexpected market movements because they often use stop-loss orders to limit possible losses more often than day traders do.

Better Risk Management

Swing trading offers traders the ability to manage risk more effectively compared to day trading. By holding positions for a longer duration, swing traders typically use wider stop-loss levels and take-profit targets. This allows them to manage and withstand short-term market fluctuations and reduces the probability of being stopped out too early. Furthermore, swing traders can adapt their strategies to changing market conditions, allowing for more dynamic risk management.

How do swing traders go about picking the right stock?

Whilst swing traders use similar techniques as day traders to set their entry and exit points (i.e. technical indicators and oscillators, chart and patterns analysis, etc.), there are differences in the methods they use to pick their stock to trade.

When choosing stock, Swing traders must pay particular attention to these four important factors:

Liquidity level

Liquidity refers to the ease with which you can buy or sell a stock without significantly affecting its price. Or at least, that’s what it means if you are an institutional trader with a huge account. For retail traders, this usually means looking for stocks with a high average trading volume, as this ensures there are enough buyers and sellers in the market and a decent level of volume and volatility.

Price trends analysis

To choose stocks for swing trading, analyze price trends to identify potential opportunities. Technical analysis tools, such as moving averages, support and resistance levels, and chart patterns, can help traders in detecting current and future trends.
Look for stocks that have recently seen high levels of volatility, showing signs of upward or downward momentum and, once your bias is formed, use technical and fundamental analysis to set your entry and exit points.

Volatility level

Volatility is a crucial aspect of swing trading. Higher volatility indicates larger price swings, which can offer more significant profit potential. However, higher volatility also implies increased risk. Stocks with significant news, earnings releases, or events scheduled in the near future, tend to be more volatile than others. Consider the volatility of a stock based on historical price movements and news flow to select the suitable ones for your swing trading.

Market News

Keep up to date on market news, economic data, and company-specific events. News and events can have a big impact on the price of a company, generating chances for swing traders. Follow financial news websites, study corporate earnings reports, and keep an eye out for macroeconomic issues that may influence market direction. Being current on market knowledge will allow you to make more informed selections when choosing stocks for swing trading.

Swing Trading Conclusion

If you want to trade stock as a swing trader, you must remember that it requires a combination of technical and fundamental analysis, market trend evaluation, risk management, and being always up to date on market news.
By following the concept described in this article, you will be better equipped to spot potential swing trading opportunities and make informed decisions.

Remember that practice, patience, and continual learning are essential for success in swing trading and all other types of trading.

Hope this helps
Trade on!

The post Thinking of Swing Trading? appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

Do you ever have the feeling of being the constant target of “smart money stop orders hunting”?
Well, you are not alone, and the answer more and more traders are pointing to is ICT concepts.

The Inner Circle Trading philosophy has created what is now grown to become one of the most popular trading strategies around.

Unlike more traditional strategies, ICT disregards any momentum or trend indicators (other than those directly derived by price action), focusing instead solely on price action. It was originally created by Michael Huddleston to trade the Forex market but traders are using the same strategies to make profit in all and any market they trade.

In this article, we’ll explore the seven most important concepts this trading philosophy is based upon so that you, as a trader, can evaluate its potential.

ICT. If you haven’t heard of it before, you have now.
Let’s go!

The ICT Methodology

The ICT methodology relies on chart technical analysis and is based on the belief that – by analyzing price action, levels of support and resistance, as well as order blocks – it is possible, in some measure, to identify the specific areas with the greatest concentration of liquidity and therefore, to predict new trends.

ICT methodology and techniques mostly rest on seven key concepts: Liquidity, Displacement, Market Structure Shift, Inducement, Fair Value Gap, Optimal Trade Entry, and Balanced Price Range.

Let’s now take a look at each of these concepts.

 Liquidity

The first and certainly most fundamental concept in the ICT trading methodology is liquidity.
Liquidity comes in two forms: buy-side and sell-side.
The area on the chart where short-selling traders are most likely to place their stop orders is identified as the Buy-Side Liquidity. On the other hand, the opposite is also true of Sell-Side Liquidity which identifies an area where the bullish traders’ stop orders are instead concentrated.
Both the Buy-side and the Sell-side Liquidity are normally found towards the extreme of price volatility ranges – near the tops and bottoms of price patterns – because this, usually, is where most retail traders set their stop-loss orders or decide to close their positions.
The liquidity concept is the most vital part of the ICT methodology because – maybe somewhat more than the others, it attempts to mimic Smart Money’s trading behavior.

By setting their orders at levels with a high number of Retail Traders’ stop-loss orders, Smart Money has a higher probability of getting its orders fulfilled. And being able to predict what Smart Money is going to do next, gives ICT traders an insight into the upcoming trend.

Displacement

Displacement is a strong and sudden move in price either up or down that, on a chart, normally appears as a group of consecutive long candles with small wicks moving in the same direction.

There are two important things to remember about Displacement, according to ICT. The first is that a Displacement usually represents a sudden but powerful increase in buying or selling pressure and that this often occurs when price has reached a Liquidity level.

The second is that a Displacement almost always causes the creation of two things: a  Market Structure Shift and a Fair Value Gap.

Market Structure Shift

By “Market Structure Shift”, ICT traders refer to the point on a chart where the current trend is broken. In other words, it’s the lowest point of a lower low after a series of higher highs and higher lows (in a bullish trend) or the highest point of a higher high that follows a series of lower lows and lower highs.
ICT traders see a Market Structure Shift as the first indicator of a trend change and, if this is confirmed, will often use this point in the chart as the base for their trades.

Inducement

Inducements are found at the extremes of mini-counter-trends within a larger-scale trend. ICT traders consider these movements to be caused by stop-loss hunting actions on lower time frames by – you guessed it – Smart Money.

ICT traders base their trades on the belief that once an Inducement level is reached and the extra liquidity has entered the market, price will then reverse again and continue on its original trend.

Fair Value Gap

More often than not, when a Liquidity level has been breached and the trend has reversed, we are presented with what appears as a “gap” on our charts and this is what ICT traders referred to as a Fair Value Gap.

More specifically, a Fair Value Gap comes in the form of a sequence of three candles with a larger one at the center and a gap between its wicks and those of the adjacent candles.
Fair Value Gaps have the tendency to get filled sometime in the future and this is the very concept ICT traders take advantage of when setting their orders.

Optimal Trade Entry

Once an Inducement has created a Displacement and this, in turn, has created a Market Structure Shift and a Fair Value Gap, ICT traders use Fibonacci levels to identify their Optimal Trade Entry point before executing their trades. Normally Optimal Trade Entry points are found between the 61.8% and 78.6% retracement of an expansion range.

Balanced Price Range

A Balance Price Range is a double Fair Value Gap created by two Displacements of opposite directions in a short period of time.

During a Balance Price Range price often oscillates in range testing and retesting the extremes in both directions in its attempt to fill both Fair Value Gaps. ICT traders aim to trade from this volatility as well as from the belief that price is likely to continue its original trend once the extremes of the Balance Price Range are breached.

Conclusion

The ICT methodology is becoming more and more popular because it seems to be able to give Retail Traders some of the advantages enjoyed by the hands and the minds behind Smart Money.

Remember

These are just seven of the most important ICT concepts; there is much more to learn about ICT as well as about forex trading in general. Keep researching, keep learning, keep following our blog, and keep bringing in those pips!

The post The seven ICT concepts you oughta learn to trade with the big league appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

Every day more and more people around the world choose to educate themselves on the ins and outs of trading and investing in the stock market with the hope of achieving the financial independence we all aspire to. But what is the stock market exactly? What is the difference between trading and investing? And what should I do if I want to become a trader?

Well – you guessed it – this article will try and give an answer to precisely those questions! Let’s start with this Introduction to the Stock Market.

What is the Stock market exactly?

The stock market is the marketplace where individuals and institutions alike can buy and sell ownership shares of publicly traded companies. It is a vital component of the global economy and, within it, serves multiple purposes, for example, it facilitates capital raising for companies and provides investors with opportunities to profit from their success.

The way it works is quite simple to understand:
Companies issue stocks to raise capital which allows them to finance their day-to-day operations and fund growth initiatives. By buying a share of a company’s stock, investors become partial owners and, therefore, have the potential to benefit from the company’s future success.

Think about it;  when you buy a share of a Company, you become somewhat of a co-owner of that company!
(Although that won’t necessarily mean you’ll find yourself sitting in an office with Elon Musk or Tim Cook).

The stock market provides investors with a platform to trade these stocks. It operates through various exchanges, such as the New York Stock Exchange or NASDAQ, where buyers and sellers come together to execute transactions. The stock market creates liquidity, allowing investors to easily buy or sell shares on a daily basis.

As for most things, stock prices fluctuate based on supply and demand. If more people want to buy a particular stock, its price typically rises. On the other hand, if more people were to sell stock rather than buy it then its price would tend to decline.

As you might already know, these price changes are influenced by numerous factors, including company performance, economic indicators, news events, and investor sentiment.

Trading and investing

Market investors that profit from stock volatility and price movement are commonly divided into two groups: long-term investors and traders. Let’s continue our introduction to the stock market to learn the difference in depth:

Long-term Investors

Long-term investors aim to profit from their investments through capital appreciation and dividends.

Capital appreciation occurs when the price of a stock increases over time, allowing investors to sell their shares at a higher price than what they paid to buy them.

Dividends are a portion of a company’s profits that are distributed to shareholders on a regular basis (although not all companies pay dividends).

Traders

Traders, on the other hand, employ a strategy of frequent buying and selling of stocks or other assets to capture short-term price movements either when prices rise or fall.

Trading the stock market is probably the most attractive form of investment in the stock market because it requires a smaller capital and it can provide impressive earnings in a much shorter time.

How do traders and investors know what to buy and what not to buy? Or even sell, for that matter!

Traders and investors make most of their investment decisions based on the results of two commonly used methods: fundamental analysis and technical analysis.
Although traders and long-term investors use both fundamental and technical analysis, they often do so in different measures. Generally, long-term investors would find fundamental analysis more useful to predict the long-term potential of a company, whilst short-term traders would find technical analysis as a more accurate indication of the likelihood of any price movement and of its direction.

Want to know what fundamental analysis and technical analysis are? Well, let me tell you.

Fundamental Analysis

Fundamental analysis is one of the methods used to evaluate the intrinsic value of a stock or an entire company. It involves analyzing financial and non-financial factors to determine the underlying value and potential of an investment.

These are some of the key components of fundamental analysis:

1. Financial Statements: These include the income statement, balance sheet, and cash flow statement. These documents provide insights into the company’s profitability, debt levels, and cash flow generation.
2. Earnings and Revenue: Analysts review a company’s historical and projected earnings and revenue growth. This helps identify trends, potential risks, and the overall financial health of the business.
3. Valuation Ratios: Various ratios, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-book value (P/B), are used to compare a company’s stock price to its financial performance. These ratios provide insights into whether the stock is overvalued or undervalued relative to its peers or historical values.
4. Industry and Market Analysis: Fundamental analysts also consider the industry and market in which a company operates. Understanding industry trends, competitive landscape, and macroeconomic factors helps assess the company’s growth potential and market position.

Technical Analysis

The term “technical analysis” refers to the method of trying to predict future price movements in the stock market based on historical data, such as past prices, trading volumes, and chart patterns. Traders and investors do so based on the belief that patterns and trends in the past can provide useful insights into the future direction of stock prices.

Some examples of tools used in technical analysis are:

1. Price trends: Technical analysts study price charts to identify patterns and trends. Common chart patterns include support and resistance levels, trendlines, and chart formations like triangles, and head and shoulders.
2. Indicators: Technical analysts use various indicators to measure price momentum, volatility, and other key factors. Some examples are moving averages, Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), and Bollinger Bands.
3. Support and resistance: These are levels at which stock prices tend to stop falling (support) or rising (resistance). Technical analysts use these levels to identify potential buying or selling opportunities.
4. Candlestick patterns: Candlestick charts display price movements with colored bars or candles of different types. Analysts look for specific candlestick patterns that indicate potential trend reversals or continuation.

Learn more about technical analysis and  find out how to use some of the technical indicators on our blog!

Introduction to the Stock Market – Final Words

To become a trader in the stock market there is much to be learned and much more to be gained. The first step is to decide to pay the trade the respect, dedication, and commitment that it demands…

…the second step is to join and get some serious capital to start earning from the stock market!

Hope this helps,

Now go get your pips!

The post Introduction to the Stock Market – Trading & Investing appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

When it comes to brokers, the choice nowadays is all but unlimited. Online retail brokers compete with one another by providing their customers with lower fees and commissions, narrower spreads, better educational material, more trading instruments, and sleeker trading platforms. However -it is fair to say-  not all brokers are created equal and, as a day trader, it is up to you to find the best broker for you and your trading style.

Need help to choose the right broker for day trade?

Choosing the right trading broker is crucial for several reasons, some more obvious than others but… here are some important points you should definitely consider:

1. Reliability and Trustworthiness

   A reputable broker must ensure the safety and security of your funds and all your personal information. This includes having proper licensing for the Country/Countries they operate in, adhering to regulations, and maintaining transparency in their operations.

2. Trading Platform

   Brokers provide trading platforms that facilitate your transactions. The right broker will offer a reliable and user-friendly platform with excellent order execution, real-time market data, charting tools, and other features that match your trading needs.

   

3. Available Instruments

   You’ll find that different brokers offer various financial instruments for trading, including stocks, bonds, forex, commodities, derivatives, and so much more. Make sure that the broker you choose provides access to the specific markets and instruments you are interested in and intend to trade.

4. Fees and Commissions

   Brokers charge fees and commissions for their services, such as executing trades and managing your accounts. It is important to compare the fees among different brokers to find the most cost-effective option for your trading style and budget.

5. Customer Support

   Good customer service is essential when it comes to resolving any issues or answering your questions. Reliable brokers often offer multiple channels of communication and provide timely and helpful support.

6. Educational Resources

   Whether you are a beginner or an expert trader, educational resources provided by brokers can be valuable. Look for brokers that offer educational materials, tutorials, webinars, and other resources to enhance your trading knowledge and improve your skills.

7. Research Tools

   Another thing quality brokers often offer is access to comprehensive research tools and analysis, including market research reports, economic data, news updates, and technical analysis tools. These tools can assist you in making informed trading decisions.

8. Account Types and Minimum Deposits

   Consider whether the broker offers different types of accounts with varying features to suit your trading goals and financial situation. Also, pay attention to minimum deposit requirements, as some brokers have higher minimums than others.

9. Mobile Trading

   In the era of smartphones, having a mobile trading app is essential for many trading enthusiasts. A reliable broker should offer a mobile trading platform that allows you to monitor your trades and manage your account while on the go.

   

Day Trading Vs. Swing Trading

According to the type of traders they specialize in serving, brokers take into consideration the three aspects that more than others distinguish day traders from swing traders. The trading time frame, the trading strategy, and the frequency of trades.

Trading Timeframe

Day trading involves entering and exiting positions within the same trading day, aiming to profit from intraday price fluctuations. On the other hand, swing trading involves holding positions for a few days to several weeks, aiming to capture larger price moves.

Trading Strategy

Day traders typically rely on technical analysis, such as short-term chart patterns, volume analysis, and intraday indicators, to make quick trading decisions. Swing traders, though they may also use technical analysis, often incorporate fundamental analysis and market sentiment into their decision-making process.

Frequency of Trades

Day traders frequently execute multiple trades throughout the day, often within minutes or hours. Conversely, swing traders take fewer trades, allowing them to spend more time on research and analysis.

So to choose the right Broker for day trading, make sure to also keep in mind these other aspects too:

Margin Requirements

Day trading brokers often require lower margins to accommodate frequent trading activity and large position sizes. Swing trading brokers generally have higher margin requirements due to the longer-term positions.

Brokerage Fees and Commissions

Both day trading and swing trading brokers charge fees for executing trades. However, day trading brokers may offer lower commission rates and discounted fee structures for high-volume traders, considering their higher trading frequency.

Risk Management

Due to their rapid pace, day trading comes with higher inherent risk. Day trading brokers often provide tools and features specifically designed for risk management, such as real-time market data, advanced order types (e.g., stop-loss orders), and margin monitoring. Swing trading brokers may emphasize position sizing strategies and risk-reward analysis.

Overall, choosing the right day trading broker ensures you have a positive trading experience with access to the markets, reliable platforms, responsive customer support, and fair trading conditions… but… there is more…
…there is better!

“And what could possibly be better than even the best day trading broker out there?”

I hear you asking.

Well, in just three words, a:
STOCKS PROP TRADING FIRM.
Even better, a GOOD prop-trading firm.

Prop-trading firms have revolutionized retail trading and literally flipped it upside down.

There are many reasons why traders are migrating to prop trading firms. Arguably, the most important would be capital.
The number one obstacle most traders face is the lack of sufficient capital (only equal to the risk of losing it) but, no matter how many great services, tools, instruments, or other benefits a broker can offer, an abundance of money for you to invest is not going to be one of them.

By sharing their capital with each of their traders, prop-trading firms can diversify their investments whilst increasing their traders profit and eliminating their losses.

It sounds great, I know. And that’s not even all of it!

In fact, as if that wasn’t enough, Funded Trades Now For You (currently amongst the leading prop-trading firms for Forex Traders) went that special extra mile and offers its traders even more!
Yes, even more cash to invest. Even more stock to trade. Even more conveneint profit-sharing rates. Even more high quality educational material (including super-insightful interviews), and even more, more, more.

Don’t believe me?
Check it yourself!

To find out more on why a Good Prop Trading Firm is better than a retail broker read this article about Prop Traders vs. Brokers

Find more about all the benefits and the perks of becoming a funded trader at Funded Trades Now For You.

Don’t say we didn’t tell you!

The post How to Choose the Best Broker for your Day Trading? appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

So, you’ve decided to to and trade stocks, but you only have little money to invest in this venture? Don’t worry, because in this article, we will guide you on how to invest in stocks for beginners with little money, plus, we’ll let you in on a secret that few traders know, and stock-brokers definitely don’t want you to! So stay put.

Understanding the Basics of Stock Investing

First, just to make sure you’re in the loop, we’ll grasp the fundamental principles of forex trading: Stocks represent ownership shares in companies, and trading in them offers the potential for long-term growth and wealth accumulation. Key concepts such as stock prices, market capitalization, dividends, and stock exchanges play a vital role in understanding how stocks function. Get a grip of these basics and you’ll gain a solid foundation towards investment decisions, even with the little money you have.

Setting Financial Goals

When investing in stocks with limited funds, defining your objectives and determining your risk tolerance are key. Establish clear goals, such as quitting your current job, buying a red Tesla or saving up for the Millennium Falcon lego set, and align your investments accordingly. When you know what you want, what you really really want, it makes the path to reach it – clearer.

Determining Your Risk Tolerance

Now this is a crucial point. Before diving into the world of trading, it’s important to evaluate how comfortable you are with potential ups and downs in the market. Consider the possibility of temporary losses and how you would handle them. As a simple guideline, think about the “X3 rule.” Ask yourself if you would still be okay if you experienced three consecutive days of losses. Would you be able to maintain a clear mindset and make logical decisions, or would it throw you into a whirlwind of emotions? Understanding your risk tolerance and emotional resilience can help you make informed investment choices. 

Educating Yourself

Think you can quit school and start trading stocks? Think again my friend, because skipping classes in trading will only make you lose money. Educating yourself is paramount. Learn about stock market terminology, trading options, and research techniques to make informed decisions and maximize the potential of your investments. Don’t be a slacker!

Learning the Stock Market Terminology

Familiarize yourself with terms like “dividends,” “market capitalization,” and “price-to-earnings ratio.” Building a solid foundation of stock market vocabulary will enable you to navigate investment discussions, comprehend financial news, and make informed decisions about your trading.

Understanding Different Investment Options

It’s essential to grasp various investment options. Explore individual stocks, exchange-traded funds (ETFs), and index funds to diversify your portfolio. Only after you understand these options can you make informed choices based on your trading goals and risk tolerance.

Researching Companies and Industries

Conduct thorough research on companies and industries. Analyze financial statements, evaluate competitive advantages, and stay updated on industry trends. This knowledge empowers beginners to make informed investment decisions and identify potential opportunities for growth. They say knowledge is power, but in this case knowledge is money.

Investing vs. Trading

Do you know the difference between investing and trading? If you don’t – read on. If you do – read on, just in case.

Investing involves a long-term approach, aiming to build wealth gradually. Trading, on the other hand, focuses on short-term profit-taking through frequent buying and selling. On a practical level – investing can take years of waiting and hoping, while trading is an ongoing activity, with ups and downs happening on an hourly basis.

Swing Trading vs. Day Trading

Swing trading involves holding stocks for a few days to weeks, capitalizing on price fluctuations. Day trading involves buying and selling stocks on the same trading day. Which kind of trading is more suitable for you? Choose the strategy that aligns with your risk tolerance.

Ask yourself if you are more aggressive in your trading, if you like to be more active, or if you prefer to take it slow. How do you usually deal with losing and making money, and would you be okay if you lost X% of the funds in your account?

Day trading is for you if you like sitting in front of your computer and being active in your trading, making real-time decisions, challenging yourself with this style of trading, and swing is more subtle. It is suitable for you if you have less time for trading, maybe if you are engaged in your job, or if you want to take it easier.

Choosing the Right Brokerage Account

You should learn the different types of brokerage account available and carefully consider the fees and commissions involved. Also, remember that secret I told you about? Well it’s coming up…

Types of Brokerage Accounts

In the world of stocks, there are various types of brokerage accounts to suit different needs. Common options include individual brokerage accounts for personal trading, retirement accounts like IRAs for long-term investing, and margin accounts for borrowing funds to leverage investment opportunities.

Comparing Brokerage Platforms

When comparing brokerage platforms, it is crucial to consider factors such as the platform’s user interface, available research and analysis tools, customer support, trading fees, account minimums, and the range of investment options offered. A thorough evaluation of these features can help traders find a brokerage platform that aligns with their trading style and trading goals.

Your trading style will determine the broker or the platform you would like to use. For example, if you’re a scalper, you would look for a fast execution platform/broker and a right layout and hotkeys to be able to work efficiently. If you’re a short seller in your core, I’d suggest looking for a broker that can provide you with shortable stocks, locate quickly HTB (hard to borrow) and have low extra fees such as locating fees.

Considering Fees and Commissions

This is an important aspect when choosing a brokerage account. You should carefully examine the fee structure associated with the account, including trading commissions, account maintenance fees, and any additional charges. It’s essential to compare the fee schedules of different brokers to find a balance between competitive pricing and the services offered. Evaluating the impact of these fees on investment returns is crucial, as higher fees can eat into profits over time. Additionally, it’s worth considering if the broker offers commission-free trading for certain securities or has discounted rates for frequent traders.

Stock Broker Alternative – Stock Trading Prop Firm

As promised – we’re letting you in on a secret: As of 2022 there’s a new option for Forex Traders, a perfect solution for both new and experienced traders that lets you invest less money and gain more buying power than brokers can provide. This option is prop trading for Forex Traders. This model of trading that has been previously only available for Forex traders is now open to Forex Traders as well when opening an account with “Funded Trades Now For You” stock prop firm. You can invest as little as $97 for a trading account and get additional benefits such as courses, support, free use of advanced scanners and a trading app.

Trading Strategies for Beginners

Now that you’ve got yourself an account, let’s dwell on the 3 most important strategies for beginners trading stocks:

Dollar-Cost Averaging

Dollar-Cost Averaging is a forex trading strategy where taders invest a fixed amount regularly over time, regardless of market conditions. This approach reduces the impact of short-term market volatility and eliminates the need for trying to time the market.

This strategy is recomended for beginner traders because of its simplicity. The concept is that you buy the same asset every month regardless of its state and without deep analysis, as long as you believe that it will reach new highs in time. This strategy will usualy be applied on stocks with low beta (which means that they ‘re correlated with the market indices (companies like AAPL, AMD, etc.). Another option is to apply the DCA on the ETFs of the market such as QQQ (Nasdaq), SPY (S&P 500).

Strategy breakdown

In order to execute this strategy the best possible way, you should first look for an asset that has a potantiel to grow over time.
To find this asset you should look for positve indicators that will supoprt your decicion making such as:

• Company forecast sales / revenue
• New products
• Penetrating to new markets
• New C-level / board members

Pull backs

As you are probably aware, the market and basically any asset move in waves, and after a move to the upside, there will be a correction of the price, or as we call it, a pullback.
A classic pullback – a technical pullback, will be one that moves in the opposite direction of the previous move, but not more than 50% out of it.

The idea of this strategy is to look for a buy signal after the end of the correction and join the ‘bigger picture’ trend.

Beginner traders will find this type of strategy easy to identify and understand due to its clear price movements. As a result, they often choose to trade it during the initial months of their trading career.

Strategy breakdown

• Find a stock that moves in an up / down trend (make sure the trend is not over-extended)
• Wait until the price pulls back to the support/resistance level (the stronger the level the better. If you’re a day trader you should mark the levels from the 1H/4H charts, if you swing trading you should mark the levels from a 3 days / weekly chart)
• Once price holds support/resistance level look for a reversal candle/pattern/consolidation.
  *You can always use an indicator such as Exponential Moving Average to give you more indication that there are buyers on that support level.

Breakouts

It is probably the oldest type of strategy that has ever been used by active traders.

In this type of strategy, we will look to trade an asset that builds momentum towards a break of a new high (or short-sell it).
The crucial part in order to succeed in this type of strategy will be to find the right asset to trade on, an asset that shows strength and developing momentum (the heartbeat of the stock, the pace of the movement).

Strategy breakdown

• Find a stock that has been watched by many traders today / last few days/weeks (in most cases it will be major news that drives it)
• Look for a strong and fast move to the upside (the same can apply for short selling)
• After the strong move, you should see the price consolidate at the top 30% of the previous move
• Once it’s ready, the stock should breakthrough that consolidation and continue to climb for a new high/upper resistance level.

Developing a Long-Term Mindset

Developing a long-term mindset is super important for Forex Traders. It involves focusing on the fundamental value of investments, understanding that short-term market fluctuations are inevitable. Emphasizing patience, discipline, and a strategic approach enables traders to make informed decisions and ride out market volatility for potential long-term gains.

What I’m trying to say, is simply: look at the big picture. don’t let the bumps on the road slow you down, the destination is still the same destination. Here’s how to do that-

The Importance of Patience in Stock Trading

Be patient and stay patient. Patience is vital in forex trading as it allows traders to wait for the right opportunities and avoid impulsive decisions. It enables them to withstand market fluctuations, stick to their trading plan, and potentially benefit from long-term growth and higher returns.

Avoiding Emotional Decision-Making

Emotions like fear and greed can cloud judgment and lead to impulsive actions. By maintaining a rational mindset, traders can make disciplined decisions based on analysis and strategy, increasing the likelihood of long-term success.

I suggest meditating before the opening bell, this will help you moderate your mood, control your adrenaline, which will affect your decision making in real time. Another option is to visualize the trading session. This technique is used by pro traders for many years and also used in other performance-based fields. The idea is to close your eyes and visualize the trade the you are executing, feel what it will be like when you click on the mouse key, when you make a decision to take some profits out of the table, and how do you react if it will go against you. Once you see the full picture it will be much easier to make a logical decision and not let the emotional aspects trigger your behavior.

Staying Informed and Adapting to Market Conditions

Always be informed and adaptive to the market conditions. Regularly monitoring news, economic indicators, and company updates will help you, as a trader, make informed decisions. This adaptiveness allows for flexibility in adjusting strategies and maximizing potential opportunities for success.

Managing Risk

Managing risk is THE important skill to have in forex trading. I can’t stretch that enough, never underestimate risk management.  Implementing risk management strategies, such as setting stop-loss orders and diversifying the portfolio, helps protect against significant losses. By carefully assessing and mitigating risks, you can safeguard your capital, preserve long-term sustainability, and improve your chances of achieving consistent profitability. Risk management includes:

Setting Stop-Loss Orders

Setting stop-loss involves placing an order to automatically sell a stock if its price drops to a predetermined level. This strategy helps limit potential losses by allowing traders to exit positions before losses escalate. It adds discipline to trading and protects against unforeseen market downturns.

Understanding Market Volatility

Understanding market volatility in stocks involves being aware of price fluctuations and instability, allowing traders to adjust strategies, manage risk effectively, and make informed decisions in response to market conditions.

Monitoring and Adjusting Your Portfolio

Regularly reviewing the performance of your holdings, analyzing market trends, and considering changes in your investment goals can help identify opportunities and risks. By making adjustments to your portfolio, you can optimize your tradings and adapt to evolving market conditions. Remember, forex trading is not a “set and forget” game, watch your portfolio if you want it to thrive. Here are some ways to monitor you portfolio:

Tracking Performance and Making Adjustments

Utilizing Trading Journals Software

It’s 2023 and Forex Traders today have tools that weren’t available to traders before. Use these tools, it can only upgrade your trading. They offer real-time updates, performance analysis, and historical data on individual stocks and the overall portfolio. Portfolio tracking tools enable traders to make informed decisions, identify trends, and optimize their trading strategy for better risk management and potential profitability. Do yourself a favor and familiarize yourself with at least one of these tools.

Today there are 3 different software providers for trading journals:

• TraderSync
• TraderVue
• TradeZilla

Each one of them has its own unique features but they all serve the same purpose of analyzing your trades, giving you a better understanding of your trading stats and with the right analysis you will be able to find your edge as a trader in the market.

The prices for a monthly use of these programs range from $30 to $80, depending on the plan you choose.

* Now is a good time to let you know that in addition to the many benefits of a having a prop account at Funded Trades Now For You, with most plans you also get a free use of TraderSync!

Reviewing and Rebalancing Your Investments

Regularly assess your portfolio as it allows you to identify overexposed or underperforming assets. Rebalancing involves adjusting your allocation to maintain desired risk levels. This practice helps optimize your portfolio, align it with your trading goals, and adapt to changing market conditions for better long-term performance and profits.

Conclusion

Trading stocks is a long-term game (yes, even if you’re a day trader), and since we’re talking about a performance-based field, we want to continue to grow and improve over time.
To do that we must engage with learning and real-time experience, so we can gather trading data and analyze those results.
Your path to becoming a profitable trader will demand you to take it seriously.

I hope that after reading this you have more confidence about trading in stock with little money. I urge you to educate yourself, set clear goals, and use the right tools for the correct moves.

The post Invest in Stocks with Little Money appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

The peace at which the national GDP increases is, naturally, of great interest to the FED and to all traders and investors.
The capability to offer insights into the exchange of products and services across markets makes the GDP Growth Rate an excellent indicator of the condition of the Country’s economy.
In this article, we’ll find out what the GDP is and why its growth is so important.

What is GDP and what does it include?

The simplest way to explain the GDP is to describe it as the way we measure the monetary value of all products and services produced within a country and sold to the final consumer in a given time period.  

GDP is universally recognized as the most representative indicator of the size of a Country’s economy while the GDP Growth Rate is best suited to offer an insight into its economy’s health.
In the US, GDP figures are calculated and released quarterly by the Bureau of Economic Analysis. Generally, a GDP Growth Rate of 2%-3% is considered ideal but any rate above zero would show an economy is growing whilst a negative rate would indicate a contracting economy.

The FED pays a great deal of attention to the GDP Growth Rate figures as it is inversely correlated to the unemployment rate; a growing economy is more likely to require a greater workforce.

As a trader, you too should pay the same level of attention to every GDP figure released keeping in mind that any surprise result can easily and drastically move virtually all markets.

What exactly is included in GDP calculations?

There are four distinct elements within an economy that need to be considered when calculating national GDP and GDP Growth Rate. These are Consumption, Government Spending, Investments, and Net Exports.

GDP = C + G + I + NX

C: Consumption.
“Consumption” is consumer spending and it includes all general day-to-day personal and business expenses.

Let’s take for example a person going to the ice cream parlor to treat himself after a hard day at work.
The price he pays for the ice cream will be included in the GDP figure as well as the parlor’s staff’s wage, energy bills, and rent. Of course, also part of GDP calculations is the value of the ice cream’s ingredients, the cost of the fuel necessary to drive to the shop, the wage this person has earned, and the services he or she has provided during the hard day at work and… well, you get the idea.

G: Government Spending

The Government spending figure includes all its expenses at the federal, State, and local agencies levels. Health care and defense spending are part of the national GDP as well as the cost of constantly improving and maintaining infrastructure and those related to the legislative, judicial, and executive branches of the Government.

It is important to note that national Debt, national debt repayment, and transfer payments such as Social Security are NOT included in the GDP calculation.

I: Investments

When it comes to GDP calculation, the term “investment” refers to the value of all business investments in new capital goods such as land, buildings, and equipment. It does also include large personal investments such as home buying but NOT investments made in stock, bonds, or any other financial market.

NX: Net Exports

Simply put, Net Export is the difference between the Nation’s imports and exports value.

A Country that exports more than it imports (in value terms) would have a positive Net Export (called a “trade surplus”). In the opposite scenario, a Country would have a negative Net Export (called a “trade deficit”).

The two economies

The fact that investments in the financial market are not included in GDP calculation can often give the impression of the existence of two economies within a Country.
The GDP figures reflect what is generally referred to as “the real economy” whilst financial investments can be seen as one of its byproducts; one with such a great amount of capital involvement to be able to create a “second economy.

The “two economies” are strictly correlated and, usually, when one flourishes, the other often follows. However, it is important to remember that while GDP calculations only take into consideration the current state of the economy, markets trading and investment are made based on future expectations. This means that the real economy and the markets don’t always move in parallel lines; the two can differ enormously in performance, results, and degrees of success. During the Covid pandemic, for example, the US saw a drastic reduction in GDP (caused primarily by work and movement limitations) whist the Stock market reaches its all-time high with companies such as Apple, Amazon, Microsoft, and Alphabet breaking the $1 trillion market-cap level (and then some).

Always keep an eye out for every GDP release and, of course,  for our next article too.
Hope this helps.

Read and learn more about the fundamentals on our blog

Join Funded Trades Now For You now to trade the next GDP data

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