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Wilder originally developed the ATR for commodities, although the indicator can also be used for stocks and indices. Simply put, a stock experiencing a high level of volatility has a higher ATR, and a low volatility stock has a lower ATR.
The ATR may be used by market technicians to enter and exit trades, and is a useful tool to add to a trading system. It was created to allow traders to more accurately measure the daily volatility of an asset by using simple calculations. The indicator does not indicate the price direction; rather it is used primarily to measure volatility caused by gaps and limit up or down moves. The ATR is fairly simple to calculate and only needs historical price data.
The ATR is commonly used as an exit method that can be applied no matter how the entry decision is made. One popular technique is known as the "chandelier exit" and was developed by Chuck LeBeau. The chandelier exit places a trailing stop under the highest high the stock reached since you entered the trade. The distance between the highest high and the stop level is defined as some multiple times the ATR.
For example, we can subtract three times the value of the ATR from the highest high since we entered the trade.
The ATR can also give a trader an indication of what size trade to put on in derivatives markets. It is possible to use the ATR approach to position sizing that accounts for an individual trader's own willingness to accept risk as well as the volatility of the underlying market.
28 2022-06-10 16:54:06 (edited by SolidECN 2022-06-10 16:54:15)
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29 2022-06-12 07:56:17 (edited by SolidECN 2022-06-12 07:57:30)
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Altcoins are generally defined as all cryptocurrencies other than Bitcoin (BTC). However, some people consider altcoins to be all crytocurrencies other than Bitcoin and Ethereum (ETH) because most cryptocurrencies are forked from one of the two. Some altcoins use different consensus mechanisms to validate transactions and open new blocks, or attempt to distinguish themselves from Bitcoin and Ethereum by providing new or additional capabilities or purposes.
Most altcoins are designed and released by developers who have a different vision or use for their tokens or cryptocurrency. Learn more about altcoins and what makes them different from Bitcoin.
The term altcoin refers to all cryptocurrencies other than Bitcoin (and for some people, Ethereum).
There are tens of thousands of altcoins on the market.
Altcoins come in several types based on what they were designed for.
The future value of altcoins is impossible to predict, but if the blockchain they were designed for continues to be used and developed, the altcoins will continue to exist.
Understanding Altcoins
"Altcoin" is a combination of the two words "alternative" and "coin." It is generally used to include all cryptocurrencies and tokens that are not Bitcoin. Altcoins belong to the blockchains they were explicitly designed for. Many are forks—a splitting of a blockchain that is not compatible with the original chain—from Bitcoin and Ethereum. These forks generally have more than one reason for occurring. Most of the time, a group of developers disagree with others and leave to make their own coin.
Many altcoins are used within their respective blockchains to accomplish something, such as ether, which is used in Ethereum to pay transaction fees. Some developers have created forks of Bitcoin and re-emerged as an attempt to compete with Bitcoin as a payment method, such as Bitcoin Cash.
Others fork and advertise themselves as a way to raise funds for specific projects. For example, the token Bananacoin forked from Ethereum and emerged in 2017 as a way to raise funds for a banana plantation in Laos that claimed to grow organic bananas.
Altcoins attempt to improve upon the perceived limitations of whichever cryptocurrency and blockchain they are forked from or competing with. The first altcoin was Litecoin, forked from the Bitcoin blockchain in 2011. Litecoin uses a different proof-of-work (PoW) consensus mechanism than Bitcoin, called Scrypt (pronounced es-crypt), which is less energy-intensive and quicker than Bitcoin's SHA-256 PoW consensus mechanism.
Ether is another altcoin. However, it did not fork from Bitcoin. It was designed by Vitalik Buterin, Dr. Gavin Wood, and a few others to support Ethereum, the world’s largest blockchain-based scalable virtual machine. Ether (ETH) is used to pay network participants for the transaction validation work their machines do.
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Basic Guidelines for Using Volume
When analyzing volume, there are usually guidelines used to determine the strength or weakness of a move. As traders, we are more inclined to join strong moves and take no part in moves that show weakness—or we may even watch for an entry in the opposite direction of a weak move.
These guidelines do not hold true in all situations, but they offer general guidance for trading decisions.
1. Trend Confirmation
A rising market should see rising volume. Buyers require increasing numbers and increasing enthusiasm to keep pushing prices higher. Increasing price and decreasing volume might suggest a lack of interest, and this is a warning of a potential reversal. This can be hard to wrap your mind around, but the simple fact is that a price drop (or rise) on little volume is not a strong signal. A price drop (or rise) on large volume is a stronger signal that something in the stock has fundamentally changed.
2. Exhaustion Moves and Volume
In a rising or falling market, we can see exhaustion moves. These are generally sharp moves in price combined with a sharp increase in volume, which signals the potential end of a trend. Participants who waited and are afraid of missing more of the move pile in at market tops, exhausting the number of buyers.
At a market bottom, falling prices eventually force out large numbers of traders, resulting in volatility and increased volume. We will see a decrease in volume after the spike in these situations, but how volume continues to play out over the next days, weeks, and months can be analyzed by using the other volume guidelines.
3. Bullish Signs
Volume can be useful in identifying bullish signs. For example, imagine volume increases on a price decline and then the price moves higher, followed by a move back lower. If, on the move back lower, the price doesn’t fall below the previous low, and if the volume is diminished on the second decline, then this is usually interpreted as a bullish sign.
4. Volume and Price Reversals
After a long price move higher or lower, if the price begins to range with little price movement and heavy volume, then this might indicate that a reversal is underway, and prices will change direction.3
5. Volume and Breakouts vs. False Breakouts
On the initial breakout from a range or other chart pattern, a rise in volume indicates strength in the move. Little change in volume or declining volume on a breakout indicates a lack of interest and a higher probability for a false breakout.
6. Volume History
Volume should be looked at relative to recent history. Comparing volume today to volume 50 years ago might provide irrelevant data. The more recent the data sets, the more relevant they are likely to be.
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A bull market is the condition of a financial market in which prices are rising or are expected to rise. The term "bull market" is most often used to refer to the stock market but can be applied to anything that is traded, such as bonds, real estate, currencies, and commodities.
Because prices of securities rise and fall essentially continuously during trading, the term "bull market" is typically reserved for extended periods in which a large portion of security prices are rising. Bull markets tend to last for months or even years.
> A bull market is a period of time in financial markets when the price of an asset or security rises continuously.
> The commonly accepted definition of a bull market is when stock prices rise by 20% after two declines of 20% each.
> Traders employ a variety of strategies, such as increased buy and hold and retracement, to profit off bull markets.
Understanding Bull Markets
Bull markets are characterized by optimism, investor confidence, and expectations that strong results should continue for an extended period of time. It is difficult to predict consistently when the trends in the market might change. Part of the difficulty is that psychological effects and speculation may sometimes play a large role in the markets.
There is no specific and universal metric used to identify a bull market. Nonetheless, perhaps the most common definition of a bull market is a situation in which stock prices rise by 20%, usually after a drop of 20% and before a second 20% decline. Since bull markets are difficult to predict, analysts can typically only recognize this phenomenon after it has happened. A notable bull market in recent history was the period between 2003 and 2007. During this time, the S&P 500 increased by a significant margin after a previous decline; as the 2008 financial crisis took effect, major declines occurred again after the bull market run.
34 2022-06-17 07:49:09 (edited by SolidECN 2022-06-17 07:49:25)
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Solid ECN - Negative Balance Protection
Volatility often occurs in the market. Solid ECN has always been committed to the highest standards.
With the Solid-Shied feature, the traders don’t have to worry about having a negative balance with Solid ECN. This means that even under highly volatile situations when margin calls and stop-outs do not function accurately, no client with Solid ECN is responsible for paying back a negative balance.
Solid-Shield automatically adjusts the balance to zero in case it becomes negative after a stop-out. The process of reset is automatic.
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Forex, short for foreign exchange, refers to the trading of one currency for another. It is also known as FX.
> Forex markets are the largest in terms of daily trading volume in the world and therefore offer the most liquidity. This makes it easy to enter and exit a position in any of the major currencies within a fraction of a second for a small spread in most market conditions.
> The forex market is traded 24 hours a day, five and a half days a week—starting each day in Australia and ending in New York. The broad time horizon and coverage offer traders several opportunities to make profits or cover losses. The major forex market centers are Frankfurt, Hong Kong, London, New York, Paris, Singapore, Sydney, Tokyo, and Zurich.
> The extensive use of leverage in forex trading means that you can start with little capital and multiply your profits.
> Automation of forex markets lends itself well to rapid execution of trading strategies.
> Forex trading generally follows the same rules as regular trading and requires much less initial capital; therefore, it is easier to start trading forex compared to stocks.
> The forex market is more decentralized than traditional stock or bond markets. There is no centralized exchange that dominates currency trade operations, and the potential for manipulation—through insider information about a company or stock—is lower.
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The price at which the market is prepared to sell a product. Prices are quoted two-way as Bid/Ask. The Ask price is also known as the Offer.
In FX trading, the Ask represents the price at which a trader can buy the base currency, shown to the left in a currency pair. For example, in the quote USD CHF 1.4527/32, the base currency is USD, and the Ask price is 1.4532, meaning you can buy one US dollar for 1.4532 Swiss francs.
In CFD trading, the Ask also represents the price at which a trader can buy the product. For example, in the quote for UK OIL 111.13/111.16, the product quoted is UK OIL and the Ask price is £111.16 for one unit of the underlying market.
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The most basic forms of forex trades are a long trade and a short trade. In a long trade, the trader is betting that the currency price will increase in the future and they can profit from it. A short trade consists of a bet that the currency pair’s price will decrease in the future. Traders can also use trading strategies based on technical analysis, such as breakout and moving average, to fine-tune their approach to trading.
Depending on the duration and numbers for trading, trading strategies can be categorized into four further types:
A scalp trade consists of positions held for seconds or minutes at most, and the profit amounts are restricted in terms of the number of pips. Such trades are supposed to be cumulative, meaning that small profits made in each individual trade add up to a tidy amount at the end of a day or time period. They rely on the predictability of price swings and cannot handle much volatility. Therefore, traders tend to restrict such trades to the most liquid pairs and at the busiest times of trading during the day.
Day trades are short-term trades in which positions are held and liquidated in the same day. The duration of a day trade can be hours or minutes. Day traders require technical analysis skills and knowledge of important technical indicators to maximize their profit gains. Just like scalp trades, day trades rely on incremental gains throughout the day for trading.
In a swing trade, the trader holds the position for a period longer than a day; i.e., they may hold the position for days or weeks. Swing trades can be useful during major announcements by governments or times of economic tumult. Since they have a longer time line, swing trades do not require constant monitoring of the markets throughout the day. In addition to technical analysis, swing traders should be able to gauge economic and political developments and their impact on currency movement.
In a position trade, the trader holds the currency for a long period of time, lasting for as long as months or even years. This type of trade requires more fundamental analysis skills because it provides a reasoned basis for the trade.
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Where is Forex Traded?
Forex is traded primarily via three venues: spot markets, forwards markets, and futures markets. The spot market is the largest of all three markets because it is the “underlying” asset on which forwards and futures markets are based.
Why Do People Trade Currencies?
Companies and traders use forex for two main reasons: speculation and hedging. The former is used by traders to make money off the rise and fall of currency prices, while the latter is used to lock in prices for manufacturing and sales in overseas markets.
Are Forex Markets Volatile?
Forex markets are among the most liquid markets in the world. Hence, they tend to be less volatile than other markets, such as real estate. The volatility of a particular currency is a function of multiple factors, such as the politics and economics of its country. Therefore, events like economic instability in the form of a payment default or imbalance in trading relationships with another currency can result in significant volatility.
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Which Currencies Can I Trade In?
Currencies with high liquidity have a ready market and therefore exhibit smooth and predictable price action in response to external events. The U.S. dollar is the most traded currency in the world. It features in six of the seven currency pairs with the most liquidity in the markets. Currencies with low liquidity, however, cannot be traded in large lot sizes without significant market movement being associated with the price. Such currencies generally belong to developing countries. When they are paired with the currency of a developed country, an exotic pair is formed. For example, a pairing of the U.S. dollar with India’s rupee (USD/INR) is considered an exotic pair.
How Do I Get Started With Forex Trading?
The first step to forex trading is to educate yourself about the market’s operations and terminology. Next, you need to develop a trading strategy based on your finances and risk tolerance. Finally, you should open a brokerage account. Today, it is easier than ever to open and fund a forex account online and begin trading currencies.
The Bottom Line
For traders—especially those with limited funds—day trading or swing trading in small amounts is easier in the forex market than in other markets. For those with longer-term horizons and larger funds, long-term fundamentals-based trading or a carry trade can be profitable. A focus on understanding the macroeconomic fundamentals that drive currency values, as well as experience with technical analysis, may help new forex traders to become more profitable.
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What Is a Spot Trade?
A spot trade, also known as a spot transaction, refers to the purchase or sale of a foreign currency, financial instrument, or commodity for instant delivery on a specified spot date. Most spot contracts include the physical delivery of the currency, commodity, or instrument; the difference in the price of a future or forward contract versus a spot contract takes into account the time value of the payment, based on interest rates and the time to maturity. In a foreign exchange spot trade, the exchange rate on which the transaction is based is referred to as the spot exchange rate.
> Spot trades involve securities traded for immediate delivery in the market on a specified date.
> Spot trades include the buying or selling of foreign currency, a financial instrument, or commodity
> Many assets quote a “spot price” and a “futures or forward price.”
> Most spot market transactions have a T+2 settlement date.
> Spot market transactions can take place on an exchange or over-the-counter.
Understanding a Spot Trade
Foreign exchange spot contracts are the most common type and are usually specified for delivery in two business days, while most other financial instruments settle the next business day. The spot foreign exchange (forex) market trades electronically around the world. It is the world's largest market, with over $5 trillion traded daily; its size dwarfs both the interest rate and commodity markets.
The current price of a financial instrument is called the spot price. It is the price at which an instrument can be sold or bought immediately. Buyers and sellers create the spot price by posting their buy and sell orders. In liquid markets, the spot price may change by the second, as outstanding orders get filled and new ones enter the marketplace.
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Charts Used in Forex Trading
Three types of charts are used in forex trading. They are:
Line Charts
Line charts are used to identify big-picture trends for a currency. They are the most basic and common type of chart used by forex traders. They display the closing trading price for the currency for the time periods specified by the user. The trend lines identified in a line chart can be used to devise trading strategies. For example, you can use the information contained in a trend line to identify breakouts or a change in trend for rising or declining prices.
While it can be useful, a line chart is generally used as a starting point for further trading analysis.
Bar Charts
Much like other instances in which they are used, bar charts are used to represent specific time periods for trading. They provide more price information than line charts. Each bar chart represents one day of trading and contains the opening price, highest price, lowest price, and closing price (OHLC) for a trade. A dash on the left is the day’s opening price, and a similar dash on the right represents the closing price. Colors are sometimes used to indicate price movement, with green or white used for periods of rising prices and red or black for a period during which prices declined.
Bar charts for currency trading help traders identify whether it is a buyer’s market or a seller’s market.
Candlestick Charts
Candlestick charts were first used by Japanese rice traders in the 18th century. They are visually more appealing and easier to read than the chart types described above. The upper portion of a candle is used for the opening price and highest price point used by a currency, and the lower portion of a candle is used to indicate the closing price and lowest price point. A down candle represents a period of declining prices and is shaded red or black, while an up candle is a period of increasing prices and is shaded green or white.
The formations and shapes in candlestick charts are used to identify market direction and movement. Some of the more common formations for candlestick charts are hanging man and shooting star.
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Two effective Trading Strategies using Williams % R
Williams % R for Trading Strategies is a very simple but effective is a technical analysis oscillator described by Lary Williams in the year 1973. It measures the capacity of bulls and bears to close prices each day near the edge of the recent range. Williams % R confirms the trend and gives us a warning of the upcoming reversal.
Williams % R gives us 3 types of trading signals. They are as follows-
1. It defines the overbought and oversold zone
2. It defines failure swings
3. It identifies bullish and bearish divergence
Case 1:
When the price closes below the 100 DMA and the Williams % R is below the 50 line, a short signal is generated. We will remain in the trade until the Williams % R gives closing above 50 line and the price closes above 100 DMA.
In the first scenario, as we can see in the chart, that when the price closes below the 100 DMA and the Williams % R was also below the 50 line, we could have taken a short trade. However, when the Williams % R crossed back above the 50 line, we could book our trade, thus making a fair amount of profit in the process.
Case 2:
When the price closes above the 100-period moving average, from below, and the Williams % R is above the 50 line, a buy signal is generated. We will be there in the trade unless the Williams % R gives closing below 50 line or the price closes below the 100 DMA.
In the second scenario, we saw that as the price closed above the 100 DMA and as long the Williams % R is above the 50 line, we could remain in the trade. However, when the Williams % R closed below the 50 line, we could have exited the trade. This trade could give us very good profit.
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Trading with Elliott Wave (Part 1/2)
Technical analysis’ Elliott Wave theory is used to explain price changes in the stock market. Ralph Nelson Elliott created the hypothesis after observing and identifying recurrent, fractal wave patterns. Consumer behavior and stock price movements both exhibit waves. The theory holds as these are recurring patterns, the movements of the stock prices can be easily predicted. Investors can get an insight into ongoing trend dynamics when observing these waves which also helps in deeply analyzing the price movements.
What is Elliott Wave?
The Elliott wave principle is a form of technical analysis that helps traders in analyzing the financial market cycle. With the help of this Elliott wave theory, traders can forecast market trends by identifying extremes in prices and investor psychology. Elliott Wave Theory suggests that movements of the market follow a sequence of crowd psychology cycles. The Elliott Wave Patterns are formed according to the ongoing market sentiment, which alternates between bullish and bearish cycles.
How does Elliot Wave work?
The Elliott wave theory is a type of technical analysis that aids traders in understanding the cycles of the financial markets. By spotting extremes in price and investor psychology, traders can predict market patterns using the Elliott wave theory. According to Elliott Wave Theory, market movements are said to be influenced by a series of cycles in crowd psychology. The current market attitude, which alternates between bullish and bearish cycles, determines how the Elliott Wave Pattern is generated.
The concept of wave analysis as a whole does not equal to a typical blueprint formation where you just follow the instructions, unlike most other price formations. Wave analysis provides insights into trend dynamics and aids in a deeper understanding of price movements.
Decoding Elliott Wave Impulsive Pattern
Five sub waves make up an impulse wave, which moves overall in the same direction as the trend of the largest degree. The most prevalent and straightforward to identify motive wave in a market is this pattern. It is made up of five sub-waves, five motive waves, three of which are likewise motive waves, and two corrective waves. This is classified as a 5-3-5-3-5 structure, as was previously illustrated.
Its creation is governed by three unbreakable rules:
> Wave two cannot retrace the preceding wave more than 100%.
> Of waves one, three, and five, the third wave can never be the shortest.
> Wave four cannot ever advance past the third wave.
The structure is not an acceptable structure if one of these rules is broken.
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Trading with Elliott Wave (Part 2/2)
Decoding Elliott Wave Corrective Pattern
Corrective waves, also known as diagonal waves, are composed of three sub-waves or a combination of three sub-waves that result in a net movement that is perpendicular to the trend of the next-largest degree.
Its objective, like with all motive waves, is to move the market in the trend’s direction.
There are five sub-waves in the corrective wave. The diagonal is different because it might seem like a wedge that is either extending or contracting.
Depending on the sort of diagonal being observed, the sub-waves of the diagonal may not have a count of five. Every sub-wave of the diagonal, like the motive wave, never exactly repeats the previous sub-wave, and wave number three of the diagonal may not be the shortest wave.
Elliott Wave with Fibonacci
Corrective wave application emphasizes the potential for cross-studying Fibonacci retracements. Fibonacci levels were not directly used by Elliott, although traders have done so to make the conventional theory more complex.
Which Fibonacci retracement levels might be applied at different stages in the trend are highlighted by the previously stated principles. The 23.6 percent -50 percent levels would be of special interest to a trader searching for a fourth wave given rule three, who would also be looking for it to be reasonably shallow.
Additionally, we can look for the correct A, B, and C move to represent a retracement of 50% to 61.8% of the overall 1-5 impulse move.
Bottom-line
For many people all across the world, Elliott Wave theory continues to provide markets a sense of structure. The capacity to constantly adjust the theory whenever a rule is breached can make it difficult to employ the theory as a trading tool.
But it also significantly improves trend recognition’s level of clarity. Elliott’s original principles can be made as complex as a trader wants, but it is unquestionably an approach that many traders choose to prioritise in their market tactics.
We hope you found this blog informative and use it to its maximum potential in the practical world. Also, show some love by sharing this blog with your family and friends and helping us in our mission of spreading financial literacy.
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How to trade with High-Wave Candlestick Pattern?
Indecision candlesticks that resemble long-legged Dojis are known as High-wave candlestick patterns. Their lower shadows are lengthy, and their top wicks are long. They also have a larger physical body. They’re common near support and resistance levels, as well as during periods of consolidation. Bullish or bearish high wave candles are possible.
What is High-Wave Candlestick Pattern?
A high wave candlestick pattern is an indecisive pattern that indicates neither bullish nor bearish market conditions. It generally happens at the levels of support and resistance. This is where bears and bulls compete to drive the price in a specific direction. Long lower shadows and long higher wicks are used to show the design of candlesticks. They, too, have little bodies. Long wicks indicate a lot of price movement throughout the period. However, the price eventually settled near the opening level.
In most situations, buyers attempt to raise prices but are met with fierce opposition. Similarly, sellers attempt to cut prices but find fierce opposition. Both fail to drive price in a specific direction, resulting in the candlestick closing near to where it began.
Formation
The high wave candlestick is a unique type of spinning top basic candlestick with one or two lengthy shadows. The prices at the open and closing are not the same. They differ slightly from one another. The colour of the body has no bearing here. The pattern looks like a long-legged Doji.
The High wave pattern indicates that market changes are rapid, just as most candles have long shadows. This could put the current trend in jeopardy. The significance of the candle, like in so many other examples, is highly dependent on the market setting.
How to interpret this pattern?
A high wave candlestick pattern can appear anywhere on the price chart of a stock or currency pair. This High-wave candlestick pattern could be regarded as part of a continuation pattern if it appeared in the middle of a move, either an upward trend or downwards trend. For example, if a stock is heading up and the high wave candlestick pattern appears, a consolidation could occur. After a few swings, the price of a range’s highs and lows may break out of the range and continue to rise.
If the high wave candlesticks appear in a stock that is going lower, a range may emerge, resulting in a sideways activity. When the consolidation period ends, the price may break out and continue to fall in line with the long-term decline.
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49 2022-07-10 06:06:33 (edited by SolidECN 2022-07-10 06:06:46)
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Trading Example for Mat Hold Pattern
You’re seeking to join an existing trend when you trade the Mat Hold pattern. As a result, you’re waiting for the market to retrace in order to jump on board without incurring too many risks. As previously stated, the Mat Hold chart pattern can emerge in bullish and bearish trends. Because it’s a continuation chart pattern, you’ll want to pair it with Fibonacci retracement levels to understand support and resistance levels better.
Limitations of Mat-Hold Candlestick Pattern
The mat hold pattern is difficult to come by. However, it happens occasionally, and the price does not always move in the expected direction when the pattern is followed.
For the mat hold pattern, there is no profit target. The pattern does not show how far the price could go if it moves as planned. Another method, such as trend analysis or technical indicators, or possibly another candlestick pattern, will be required to determine an exit. The mat hold pattern is best used in conjunction with other types of analysis because it can be unreliable if traded alone.
Bottom-line
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About us
Solid ECN Securities is a team of experts with more than a decade of experience in trading, IT, and brokerage development. Gradually over the years, we collected priceless information about the market demands. We have learned how to safeguard and secure the trading environment on contracts.
It was in 2017, that we were determined to establish an independent hub to protect our accounts and trades. It was at that time we came up with the idea of Solid ECN Securities. We started with a self-developed platform, but due to the trading demands, the platform could meet our minimums only. Therefore, we stepped up and made it to the next level.
We formed the company and hired more experts to expand the Solid ECN brand worldwide. The pillar of the company is to provide secure trading without discrimination.