Want to learn how to trade like the pros? Learn all about how to improve your tactical analysis by using TradingView. Watch this step-by-step tutorial above to get started or continue reading for a breakdown of the various tips and pointers discussed in the video.
Tactical Analysis
TA, Tactical Analysis, by definition is the use of indicators for the purpose of interpreting past price action so that we can make inferences on future price action. From where we can calculate potential risk and reward for the purpose of making highly profitable trades which lead to success over time.
It is an art form, not a science. Like all things in life, it is something you get better at over time.
Whether you are looking for short-term profits or long-term here are a few tips to help you improve your TA when preparing to invest.
- Identify Trends – by being able to identify the ups and lows you will have an advantage. Getting your TradingView set up properly will make this even simpler by identifying repeat overtime, triangles, halvings, currency, and stocks.
- Identification of Institutional Investors Liquidity Zones – How can a large amount of trades affect the price movement in a market and the ability to absorb them. More so with institutional investors how quickly can a security be bought or sold on the secondary market without having to pay a hefty fee?
- Awareness of Market Participants & Motives – Who are the people participating in the market and what are they looking to do? By understanding the people that are participating in the market will help you make a better analysis of changes.
- Group Think – What is everyone thinking at the time? What is on the news, Reddit, Twitter, Bloomberg, etc.?
- Human Psychology – Be fearful when others are greedy and greedy when others are fearful.
- This is where the terms bullish and bearish come into play. The bulls like to push the market upwards and play on the fear of missing out. While the bears want to push the market down also play off of fear and uncertainties.
Trading View
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For the step-by-step walk-through please refer to the video. In the video, however, there are a handful of trading terms used while setting up TradingView. Here is a breakdown of what each of them means:
- EMA – Exponential Moving Average measures the trend direction over a period of time.
- In the video, you see the inputs for First, Second, Third, & Fourth set to 9, 21, 55, & 200.
- The first, 9, is extremely fast-moving and refers to oftentimes as a directional filter.
- 21 is probably the most accurate and this would a medium-term moving average.
- 55 and 200 are long-term moving averages that help identify long-term trends in the market.
- In the video, you see the inputs for First, Second, Third, & Fourth set to 9, 21, 55, & 200.
- RSI – Relative Strength Index is an indicator measures the variance of recent price changes evaluating overbought or oversold conditions in the price of assets or stocks.
- Stochastics – refers to the closing price of a security to a range of prices over a certain period of time. Often time stochastic math shows when a stock has moved into an overbought or oversold position. It is also used to show support and resistance levels.
- Bollinger Bands – shows the percentage difference between upper and lower bands. Making an easy way to visualize market volatility.
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