Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

markl67

Trading S/R Areas

Recommended Posts

After having thrown away every indicator from charts many months ago and deciding to strictly trade ranges I have a question for more experienced traders. Would you share how you trade around s/r levels? My main problem seems to be setting stops. For example, resistance is at lets say 1100 on the ES. I set an order to buy just above 1100 on what appears to be an up-trending move and get filled, only to get the usual head fake and watch price decline below 1100 and continue to decline, then get stopped out only to watch price reverse in my direction. :angry: And, of course, if I hadn't put on the order at all then price would blast thru without me on board, etc.

 

I know there's no cookie cutter answer or solution, but any suggestions are welcome - thanks.

Share this post


Link to post
Share on other sites
After having thrown away every indicator from charts many months ago and deciding to strictly trade ranges I have a question for more experienced traders. Would you share how you trade around s/r levels? My main problem seems to be setting stops. For example, resistance is at lets say 1100 on the ES. I set an order to buy just above 1100 on what appears to be an up-trending move and get filled, only to get the usual head fake and watch price decline below 1100 and continue to decline, then get stopped out only to watch price reverse in my direction. :angry: And, of course, if I hadn't put on the order at all then price would blast thru without me on board, etc.

 

I know there's no cookie cutter answer or solution, but any suggestions are welcome - thanks.

 

Couple questions/thoughts.

 

What S/R levels are you using to trade with on what time frame chart. S/R can be determined using weekly, daily, minute, and tick charts and then the question is what time frame chart are you using to trade one of those levels.

 

An annotated chart of a trade you took would help also to see what you are doing, how the S/R was determined, where the trade was entered. Just post a couple charts from the last day you traded. The more information you give the easier it is for other to give useful help.

 

There is some great threads on TL about S/R trading but I'd direct to different places based on how exactly you are trying to trade it.

Share this post


Link to post
Share on other sites

For me, stops have to make sense - that is, they have to be placed somewhere that is not likely to be hit easily on little gyrations. If you are using arbitrary stop levels (based on a fixed loss), then that's asking for trouble esp on the ES.

 

Your comment is a little odd too - you say you are buying resistance? I would normally buy support and sell resistance, so not sure what you mean there.

 

Stops are there to get you out when the market has proven you to be wrong, not just a random number you may have picked out of the air. So if you are buying support, your stop needs to be below that level and above when selling resistance.

Share this post


Link to post
Share on other sites

Thanks - hopefully attachment works. (5 minute chart from yesterday)

 

Note at 1100 how price breaks thru but then quickly retreats. I was buying the breakout of resistance with target at next level of 1101.5. I'm determining the levels by scrolling backwards to view what price did previously at these levels and picking out what appear to be key levels.

5aa71013e2b76_ES6_15_10.jpeg.c801c35773b1ffd7315bafc07939b5fa.jpeg

Share this post


Link to post
Share on other sites
Thanks - hopefully attachment works. (5 minute chart from yesterday)

 

Note at 1100 how price breaks thru but then quickly retreats. I was buying the breakout of resistance with target at next level of 1101.5. I'm determining the levels by scrolling backwards to view what price did previously at these levels and picking out what appear to be key levels.

 

Well, price did exactly what you thought - it retraced on resistance. It may not have been a big retrace, but price did find a reason to test the level and then retreat.

 

So really you are talking about buying a break of a level, which is fine and very tradable. Exactly how you do it will take testing on your own to see what you are comfortable with. It's easy hindsight trading, but that looks like a pretty nice pullback to your 98.50 level.

 

It's also a function of the market you are trading - the ES is excellent at finding some loose stops and then resuming the move. While you test the ES, also test some other different markets such as Oil, Gold, Bonds, and the Euro. Take a look and see if your levels are better respected there.

Share this post


Link to post
Share on other sites

what you did was buy the break out. You did not buy support.

buying support=>: the instrument is breaking to the upside, you determine the trend is up.

Watch for retracements of the rally to support eg; the last swing high and place a buy order here.

You will most likely not pick the exact bottom, it might fall a little first, but if the trend holds the rally will continue. Also not everything retraces and you will moss some orders getting set and hence some large moves....such is life.

 

The rest of the equation is then for how long you will run it.

 

Buying breaks and buying support can be very different.

Share this post


Link to post
Share on other sites

Markl67,

 

I used to trade in a similar fashion. I also used to love to fade when the market got close to obvious resistance. It worked great, until it didn't. What I have learned is that it is better to not do what the herd is doing and to try to trade original ideas and setups. Who wasn't trying to buy the breakout at 1100 on the ES? Well, I wasn't for one, but that's not my point. I rather trade for high percentage targets based on reliable trade setups. But then again, that's just me and that's what makes a market.

 

Sometimes I get setups based on my trade method that seem very awkward. They either bump up against obvious s/r levels or I have to break through one to get to my calculated target. At first this was very difficult for me and it was easy to feel like that cliched to death, proverbial deer caught in the headlights of an oncoming car. Analysis paralysis will kill your trading. Still though, one must respect s/r levels, to some extent.

 

I came up with hard and fast rules that have since worked very well for me. For one, if my entry is close to an s/r, I'll make a minor adjustment to get around it. I'm talking 1 to 3 ticks only. The reason is that headfakes happen all the time, and even an adjustement can get you triggered into a trade and still wind up losing, and with a slightly bigger loss, due to the adjustment. In the end, I came to realize that s/r levels are broken all the time. If not, there would only be sideways markets, right? So the easiest answer for me was this: Trade my plan. If I have a setup that forces a break of an s/r, I'm going to trust my system and take the trade. I know that my system puts the odds in my favor on every trade and it gives me a winning edge in the market. If 'this' trade loses, so what. 35% of all my trades lose anyway. I have to get through those to get to my 65% winners. If I am scared of a trade because of an s/r level, I will get hit by that oncoming car.

 

Who knows if any trade will win or lose? No one. We have no control over that. All we can do is put the odds in our favor on every trade, trade our system as intended, and control our risk. That's it. Luckily, that's enough to prosper at this difficult business. So I guess that's a long winded way of saying, try something different. :)

Share this post


Link to post
Share on other sites

Mark, as from expirience from the trading just es for a 7+ years i could say you my truth. Don't even look at the indicators, keep in mind s/r BUT trade context. In 80% of the time, and it is THEIR edge, sup/res will be violated. Let's say price is rising and is flirting with a 1100 level currently trading at 1099. I could ensure you that this level would be violated and maybe not from the very first chance but from the second one. You could ask why? Because at the 1101-1102 there are large quantities of retail stops, and your too :) and this level must be violated by professionals to unload long inventory, which was accumulated from the ~1160 ot 1180 level to shorts covering. That's true and every professional knows that. Intraday sup/res is very often just a lot of stops and are used for the inventory unloading. Basically it's very often just a last phase of the intraday trend. My strategy would be selling on the resistance violation at ~1103 and stop would be at 1105-06 because it's more probably than not that the resistance would be retested or there was just a fake break out to unload longs.

Share this post


Link to post
Share on other sites

I think Boomerangas makes an excellent point. I would also add that if the price comes up, after failing on three attempts, the 4th attempt might give you better odds that the level will finally be broken and the uptrend will resume. Of course, nothing is 100% certain but I like those odds most of the time.

Share this post


Link to post
Share on other sites
After having thrown away every indicator from charts many months ago and deciding to strictly trade ranges I have a question for more experienced traders. Would you share how you trade around s/r levels? My main problem seems to be setting stops. For example, resistance is at lets say 1100 on the ES. I set an order to buy just above 1100 on what appears to be an up-trending move and get filled, only to get the usual head fake and watch price decline below 1100 and continue to decline, then get stopped out only to watch price reverse in my direction. :angry: And, of course, if I hadn't put on the order at all then price would blast thru without me on board, etc.

 

I know there's no cookie cutter answer or solution, but any suggestions are welcome - thanks.

 

hello, I will add my thoughts but you should know first I have been trading the es for a long time and have lost a great deal of money with different strats in the beginning.

 

I look for s/r to be rejected, I never trade with the trend in the es (I think this is a formula for disaster) and after toying around with different stops for years I do not use fixed stops any longer. Many will say I am crazy for this. I exit at a point when I have been proven wrong this may be 3 ticks back or 4 points it depends on the trade and the amount of risk I am willing to take.

 

I would not recommend not using stops if you are not ready but enter a trade and have an idea as to where you are no longer right, the es has some very strong levels that are tagged and rejected every day and provide awesome opportunities, but a 1,2,3 point stop for all trades is not the correct way of going about this

 

When figuring S/R remember whatever arbitrary time period you choose to plot price and S/R is just a representation of the ongoing auction, I would not get too hung up on time period or the levels the time period produces

 

I do use a disaster stop for power outages and what not

Share this post


Link to post
Share on other sites

Thanks for that bathrobe. I can see what you mean with the ES. I have approached the ES in the past, with a similar method/way of trading. Personally, I don't really like the ES. I rather trade the other eminis. So many times I have hit my projected target, only to wait in a long cue to get filled. Then the price backs off 3 or 4 ticks, and now what? I hate that dilemma. It is such a thick market. I don't like the 1/4 point ticks either because of what I just said. That's not to say it can't be accounted for or traded profitably. It obviously can be. I just don't want to deal with that extra layer of complexity. I could trade other markets and get filled easier and with less slippage. That's just my view and I'm sure there are many who will disagree. :cool:

Edited by AmCan1
typo

Share this post


Link to post
Share on other sites
Thanks for that bathrobe. I can see what you mean with the ES. I have approached the ES in the past, with a similar method/way of trading. Personally, I don't really like the ES. I rather trade the other eminis. So many times I have hit my projected target, only to wait in a long cue to get filled. Then the price backs off 3 or 4 ticks, and now what? I hate that dilemma. It is such a thick market. I don't like the 1/4 point ticks either because of what I just said. That's not to say it can't be accounted for or traded profitably. It obviously can be. I just don't want to deal with that extra layer of complexity. I could trade other markets and get filled easier and with less slippage. That's just my view and I'm sure there are many who will disagree. :cool:

 

Yep, I have seen the same thing on the ES which surprises me given the extreme volume. Like today, I had an order to buy at 1102.5 (prior low) and I couldn't get filled on 1 contract after several failed "touches" so I moved up 1 tick and got filled. But on the Russell with far less volume I seem to get filled almost instantly most of the time...

Share this post


Link to post
Share on other sites

Yeah, I think the Russell is much easier to trade. Especially due to the 1/10th of a point ticks vs the 1/4 point ticks. Bathrobe has a good idea and I'm sure that helps elliminate some slippage. My bigger problem is exiting a trade, though, not entering. I hit my target, I want to get out at that target. I worked hard for it, right? If I get a 1/4 point of slippage due to the way the ES normally trades, that represents too large of a bite out of my total profit objective. Over time, it really adds up. Especially when a 1 tick slip turns into a 2, 3 or 4 ticks of slip. My thoughts are, "I don't need to put up with that." Let the big boys battle it out. On paper, my system works great on ES charts. In real life, the issues we've been discussing, dramatically impact the results. For me, it's just not worth it.

Share this post


Link to post
Share on other sites
After having thrown away every indicator from charts many months ago and deciding to strictly trade ranges I have a question for more experienced traders. Would you share how you trade around s/r levels? My main problem seems to be setting stops. For example, resistance is at lets say 1100 on the ES. I set an order to buy just above 1100 on what appears to be an up-trending move and get filled, only to get the usual head fake and watch price decline below 1100 and continue to decline, then get stopped out only to watch price reverse in my direction. :angry: And, of course, if I hadn't put on the order at all then price would blast thru without me on board, etc.

 

I know there's no cookie cutter answer or solution, but any suggestions are welcome - thanks.

 

Jonbig04 trades breakouts of s/r levels and he uses tiny stops. Go to his journal and look at his trades. Basically if you are trading a breakout and it doesn't move in your favor immediately then you are wrong and need to get out even if you are in the green. A breakout of a s/r level should make a strong move with almost no heat and no pause at all. You have to be able to tell when it's breaking out v.s. when it's testing s/r. If it looks like it's breaking out and then you find out it's just testing then you need to bail.

 

Now if you are entering on a breakout and find that you are constantly getting stopped out then what does that tell you? It tells me that a lot of times when support becomes resistance (which is what a breakout is) it will test it at least one more time.

 

So what do you do? I would let it break out initially and then look for an entry when it retraces to test the old support/new resistance area.

 

I will use your example...

 

1100 ES you are buying at resistance. I would wait on the resistance to break... ok it does now it is trading at 1110. I would anticipate the market coming back and testing 1100 again and probably going a little below it. Ok, now the market is at 1099.00...1098.50...1098.00... now put in your limit order to buy at 1100.00. You want it to be far enough away so that it's not filled by noise but instead a direction change but close enough to give you a nice small stop. Sometimes you can move the limit order with the market (I guess it's the same idea as a trailing stop) because the s/r levels will bend a bit sometimes.

 

Again, with this method you still have to be able to tell if old support became new resistance or was it a test w/ a little bit of a bend (i.e. taking out stops or a 2b) because there's a different approach between the two (at least for me).

 

You mentioned... "And, of course, if I hadn't put on the order at all then price would blast thru without me on board, etc.". If this tilts you then I would lean towards the way JonBig04 plays breakouts because if you do what I suggested you will find yourself waiting for the retracement and it never comes or price gets to 1110.25 and reverses without you on board.

Share this post


Link to post
Share on other sites

Personally myself have gained some edge on es these days and became profitable after i forgot following herd and to trade the trend. Here is my 2c what one should do to be profitable on es:

 

1. Throw away all the time-based charts, instead use fixed-ratio range, renko, volume or tick charts. They eliminate 70% of the noise.

2. Throw away sup/res from traditional charts. Instead use MP levels, it works really really great especially when Europeans are trading. They are good enough at the local usa time too but you can get false breakouts more often.

3. Don't day trade till 17:15 it will kill you. Instead, day trade, but leave position overnight if there is some reason to do it.

4. I'm heavily using worst-recognized techniques as the martingale but it just works fine for me, so you must have at least 10000 bucks in your account to leave position overnight and to add to the losing position. You can research historical data, and you'll see that there is 95% of time when next day's bar overlaps previous day bar by at least 3-5 full points. Here is a statistical edge if you are not correct with you entry. 1 basic rule - never martingale downtrend market there is always some chances to get a day like May 6, 2001/09/11 and so on. 2 basic rule - never martingale market till 17:02 if you are not correct with the entry and shorts are covering. Just try to add when everyone got margin call. You could see, how locals will correct this market in next 13 minutes till the close.

5. Try to learn not sup/res but where do big players want to see this market in next few days and trade just this direction, inventory really matters and where someone need to unload this inventory. These principles are very well desribed in wyckoff studies.

It seems thats all :) really will be happy if it helps in your trading.

Share this post


Link to post
Share on other sites

Thanks boomeranga for your insights. I appreciate it. Your style of trading is a lot different than mine but it makes a lot of sense and I find your approach very interesting. Can you please explain what martingaling is? I believe I know and I guess it's just a google click away but if you have the time for a brief explanation that would be great. I'm feeling the urge to revisit the Wyckoff materials too.

Share this post


Link to post
Share on other sites
Personally myself have gained some edge on es these days and became profitable after i forgot following herd and to trade the trend. Here is my 2c what one should do to be profitable on es:

 

1. Throw away all the time-based charts, instead use fixed-ratio range, renko, volume or tick charts. They eliminate 70% of the noise.

2. Throw away sup/res from traditional charts. Instead use MP levels, it works really really great especially when Europeans are trading. They are good enough at the local usa time too but you can get false breakouts more often.

3. Don't day trade till 17:15 it will kill you. Instead, day trade, but leave position overnight if there is some reason to do it.

4. I'm heavily using worst-recognized techniques as the martingale but it just works fine for me, so you must have at least 10000 bucks in your account to leave position overnight and to add to the losing position. You can research historical data, and you'll see that there is 95% of time when next day's bar overlaps previous day bar by at least 3-5 full points. Here is a statistical edge if you are not correct with you entry. 1 basic rule - never martingale downtrend market there is always some chances to get a day like May 6, 2001/09/11 and so on. 2 basic rule - never martingale market till 17:02 if you are not correct with the entry and shorts are covering. Just try to add when everyone got margin call. You could see, how locals will correct this market in next 13 minutes till the close.

5. Try to learn not sup/res but where do big players want to see this market in next few days and trade just this direction, inventory really matters and where someone need to unload this inventory. These principles are very well desribed in wyckoff studies.

It seems thats all :) really will be happy if it helps in your trading.

 

Yes, a little more explanation would be appreciated - I can't picture exactly what you're describing, but I do like the 95% overlap statistic...thanks.

Share this post


Link to post
Share on other sites
Yep, I have seen the same thing on the ES which surprises me given the extreme volume. Like today, I had an order to buy at 1102.5 (prior low) and I couldn't get filled on 1 contract after several failed "touches" so I moved up 1 tick and got filled. But on the Russell with far less volume I seem to get filled almost instantly most of the time...

 

You must backtest your method on all futures markets to determine which specific market your method produces the best results. With that data...you can determine which trading instrument to trade. Thus, it's possible your method is more suitable for another trading instrument in comparison to the Emini ES. In addition, the goal is to be profitable. Therefore, it's not uncommon that your backtest results will reveal that you should be trading another trading instrument that's not your preferred market for trading (e.g. your method may perform better on Oil CL futures in comparison to S&P 500 Emini ES futures).

 

My point is that too many newbie traders follow the herd via getting married to a particular trading instrument without backtesting to determine if their method will perform better on another trading instrument in comparison to the Emini ES.

 

Never get married to a particular trading instrument because if you're trading something you shouldn't be trading...the divorce will be ugly (e.g. account blow up, not reaching profit goals). In fact, the few profitable traders I've met and watch trade in person...they all are trading something that's not at the top of their list of favorites...they are trading something because it generates the most profits along with allowing them to reach their profit goals.

Share this post


Link to post
Share on other sites

I think Wrbtrader makes an excellent point. Backtesting plays an essential role to success but you also have to understand its limitations. It is great for learning your method, going through the internal changes you inevitably go through as you assimilate experiencing the wins, losses, and how the two relate to the overall growth of the equity curve. It reinforces discipline, helps refine your trade rules, and gives you a broader vision of your market, etc. You also should have some way to read all the backtested trade data and that can be real tricky. There's great stuff in there so getting proficient at excel is important too, I think. There's some good tools out there that are worth the investment many times over.

 

But how do you know you can execute accurately what you are backtesting? It's one thing to post trades in the comfort of a static, non-moving chart. It's quite another thing to do it in real life. This is where I believe, the value of sim trading comes in. Prove you can execute your plan and do it a whole bunch of times until you can do it on 'auto-pilot.' It won't be perfect and should not be confused with real trading. But it will help you practice the physical moves you need to make to execute your trades and it will also sharpen your fast decision making skills. Prove you can be profitable in a sim account and continue to track your trades, adding them to your backtest results.

 

If you can maintain the same winning edge, and execute your plan without making mistakes, you have gone a long way in laying the foundation for your trade business. You're probably going to be in the best position to succeed if you have learned your lessons well from the above excercise. Through all this, you might just discover that you're better off in a different market than your initial thought. That's what has worked for me anyway and going through the above steps turned my trading around in a big way.

Share this post


Link to post
Share on other sites

When it comes to backtesting - there is backtesting and there is backtesting

It seems to me that a lot of people try and back test using a computer and then try and manually trade

 

If you can accurately and properly backtest an automated system, and you know the data is accurate (this is tough enough), the system very accurately reflects reality (slipppage etc) and you can go back far enough with this data, then ideally just have an automated system going..... not impossible

Otherwise

the backtesting really is a walk forward testing with market replay data whereby you are trying to train your mind, and work out what does work (without the binary inputs and details of a computerised system) via setups, context, triggers, trade management etc being slightly different each time.

Both to me are very different and each have their own issues.

 

(probably a slight deviation from the original thread, and a bit of a rant - so apologies - its been a long week):)

Share this post


Link to post
Share on other sites
You must backtest your method on all futures markets to determine which specific market your method produces the best results. With that data...you can determine which trading instrument to trade. Thus, it's possible your method is more suitable for another trading instrument in comparison to the Emini ES. In addition, the goal is to be profitable. Therefore, it's not uncommon that your backtest results will reveal that you should be trading another trading instrument that's not your preferred market for trading (e.g. your method may perform better on Oil CL futures in comparison to S&P 500 Emini ES futures).

 

My point is that too many newbie traders follow the herd via getting married to a particular trading instrument without backtesting to determine if their method will perform better on another trading instrument in comparison to the Emini ES.

 

Never get married to a particular trading instrument because if you're trading something you shouldn't be trading...the divorce will be ugly (e.g. account blow up, not reaching profit goals). In fact, the few profitable traders I've met and watch trade in person...they all are trading something that's not at the top of their list of favorites...they are trading something because it generates the most profits along with allowing them to reach their profit goals.

 

Yep - thanks, I've recently found that out, for example backtesting has shown the ES reacts well fading the prior day highs and lows whereas the Russell - not so much, however, the Russell reacts better with the prior day close.

Share this post


Link to post
Share on other sites

SIUYA makes a good point. I personally don't believe that automated backtesting is terribly useful in the context of what we are discussing though. You can not get a feel for your market and the dynamic relationship between the wins and losses and the equity curve, trade after trade unless you can live through those trades, one by one. To me, that is essential. I believe you have to set your charts up at some random date in the past, and begin clicking forward, looking for your trade setups at the right edge of the chart. As they setup and trigger in, record it in your spread sheet and manually build up a record of trades. To me, you gain SO MUCH from this excercise that there is just no way to duplicate the benefits in any other way. It's exactly how I turned my trading around. Is it a lot of work? Ahhh... Yeah! Harder to recoup lost trade capital though. And what you learn is priceless information.

Share this post


Link to post
Share on other sites
SIUYA makes a good point. I personally don't believe that automated backtesting is terribly useful in the context of what we are discussing though. You can not get a feel for your market and the dynamic relationship between the wins and losses and the equity curve, trade after trade unless you can live through those trades, one by one. To me, that is essential. I believe you have to set your charts up at some random date in the past, and begin clicking forward, looking for your trade setups at the right edge of the chart. As they setup and trigger in, record it in your spread sheet and manually build up a record of trades. To me, you gain SO MUCH from this excercise that there is just no way to duplicate the benefits in any other way. It's exactly how I turned my trading around. Is it a lot of work? Ahhh... Yeah! Harder to recoup lost trade capital though. And what you learn is priceless information.

 

Yeah, I've been backtesting going back to Jan 4th various different strategies for weeks now - 8 to 10 hours a day. I feel like my eyes are gonna roll out of my head. I'm really hoping one of these days to actually find that edge...

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • Date : 28th October 2020.Alphabet Q3 earnings: Focus on advertising revenue.Once again the FAANGs excluding Netflix plan to report their earnings the same day within 30 minutes of each other. FAANGs illustrate 20% of the S&P500’s total value. Even though most of them face increasing antitrust scrutiny, all posted an impressive rally this year as their shares have surged and sustained close to record highs as the pandemic reckoned with online services such as shopping, streaming, clouds.Hence in addition to our earnings articles, today we will focus also on Alphabet’s third quarter earnings for 2020 which will be reported along with the rest of the giants. Just a quick reminder, Alphabet Inc. is a holding company and Google’s parent company. The company’s businesses include Google Inc. (which is the largest one) and its Internet products, such as Access, Calico, CapitalG, GV, Nest, Verily, Waymo and X. The company’s segments include Google and Other Bets.Alphabet’s report will be key after its first year-over-year revenue decline in company history in Q2 as a result of the lack of advertisement demand from the majority of businesses amid the economic slowdown globally. However the forecasts for Q3 have the company well positioned with the consensus recommendation “strong buy”, corresponding to the majority of the consensus recommendation from Reuters Eikon, as 30 out of 36 analyst firms recommend “buy” and “strong buy”, while only 6 recommend ‘hold’. Hence, no analyst firm is making a “sell” or “underperform” recommendation for the company.GROWTH FOR ALPHABET INCAccording to Zacks Investment Research and Reuters Refinitiv, the information service is expected to have $11.33 in earnings per share during the third quarter of 2020, which represents a yearly rise of 12% since the reported EPS for the fiscal quarter ending September 2019. Focus should also turn onto the revenues number which is projected to hit a 6% yoy spike, to around $42.8 billion, from the $40.49 billion reported last year. Net sales meanwhile are seen at $35.26 billion.Revenue by business segment:   Google Search & Other (ad revenue, dominated by Google Search) – consensus of $24.96 billion* YouTube ads – consensus of $4.38 billion* Google Network (ad sales on third-party websites/apps) – consensus of $5.07 billion (down 4%) Google Cloud – consensus of $3.32 billion* Google Other (Play Store, hardware, YouTube subscriptions) – consensus of $5.11 billion* Other Bets (Google Fiber, Verily, Waymo, etc.) – consensus of $153 million (down 1%) Despite the huge diversification of its portfolio, Alphabet Inc earns nearly 71% of its revenue from advertising. Hence even though, the travel sector is still weak the majority of the analysts remain bullish on the advertisement services of Alphabet into Q3 given the slightly ‘temporary as it seems’ recovery that we have seen as the pandemic eased over the summer and business began reopening. Morgan Stanley stated also that they came into earnings season positive about the online ad market recovery but grew more optimistic following Snap’s blowout ad revenue beat and better-than-expected ad results from Verizon subsidiary AOL, Sirius-owned Pandora, and Interpublic Group.The positive consensus for Q3 could also be driven by the shift of Alphabet to Google Play and YouTube to help its partners support their businesses. The majority of the analysts believe that we could see strength in YouTube ad pricing and the return of brand spending in its channel checks.Alphabet CEO Sundar Pichai however highlighted in his latest statements GOOGL’s focus on non-advertising segments. Like tech giant and its cloudspace rival Microsoft Corporation (NASDAQ: MSFT), GOOGL has the capacity and resources to strategically pivot, from a large “legacy” company to an aggressive emergent; in this case, from search to various ‘other segments’ offering potential growth.Meanwhile, the risks that Alphabet faces ahead of the report is the solid competition from Amazon in advertising business and cloud services but also the cold headwinds on the earnings front in addition to emerging regulatory challenges. Coming off a not-so-stellar Q1 reporting season, GOOGL fell short in Q2, reporting its first ever year-over-year quarterly decline.Earlier this week, the Justice Department, along with 11 Republican state attorneys general, filed an antitrust lawsuit against Google, alleging an unlawful monopoly on search services and advertising. US Deputy Attorney General Jeffrey Rosen called GOOGL, “the gateway to the internet” and said the company “has maintained its monopoly power through exclusionary practices that are harmful to competition.”At this stage, we have to point out that a consensus recommendation, similarly to economic data forecasts, has a significant effect on the near-term stock price, as it represents a company’s wealth picture. Hence on every earning report, stock price is highly influenced by the comparison between the outcome and the expectations. The market tends to react positively if the outcome comes in better or at least in line with the forecast, while the price moves lower if the reported earnings miss expectations.Technically, the current Google price action has posted a sharp rally since the March panic with the stock rebounding from the $1,000 area to record highs at $1,732.41. Currently the asset is traded at the $1,524 area which is just a 23.6% loss from all-years highs. The overall bias remains strongly positive even though medium term momentum indicators signal a potential pullback lower.Always trade with strict risk management. Your capital is the single most important aspect of your trading business.Please note that times displayed based on local time zone and are from time of writing this report.Click HERE to access the full HotForex Economic calendar.Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!Click HERE to READ more Market news. Andria Pichidi Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Date : 27th October 2020.USD improves, GBP Mixed, CB decisions & TRY.The Dollar firmed up into the London open and beyond, paring declines seen earlier in pre-Europe trading in Asia. The move drove gold and oil prices lower, too, indicating there has been some depth in dollar buying, although the magnitude of movement hasn’t been great.US equity index futures have managed modest gains after the S&P 500 closed with a 1.9% loss yesterday, though investor sentiment in global markets remains decidedly restive. Most Asian stock markets declined, and Australia’s ASX 200 equity index closed with a 1.7% loss in its worst single day performance in a month. Soaring positive Covid tests and the associated trend toward increasingly restrictive countermeasures, along with the risk of next week’s US election results being contested, and the delay in US stimulus relief, are keeping markets on edge. Overall strong Q3 economic data are being overlooked as markets look to what is appearing to be a grim winter ahead in the northern hemisphere, with risks of a double dip recession being factored in, especially in Europe. Amid this, the Dollar has been holding up, despite a narrowing in nominal US yields relative to peers in recent days, including Bunds and JGBs, revealing that the US currency is functioning as a safe haven currency again.The USDIndex index lifted back above 93.00, though remains down on yesterday’s and Friday’s highs at 93.11-13. EURUSD tipped back to levels around 1.1800 after posting a high at 1.1836. USDJPY remained settled in the upper 104.00s in what could be termed a consolidation of the steep decline seen last Wednesday but has tested below S1 below to 104.60. The pair remains about 0.7% down from week-ago levels. Sterling continued to trade without direction, overall, holding over 1.3000 around 1.3020. EU and UK trade talks continue in London through to tomorrow before relocating to Brussels. They are reportedly working to a mid-November deadline.Taking a step back, the currencies that are showing the biggest gains on the year-to-date are the ones that most would expect to have risen against the backdrop of the global pandemic crisis, being currencies of current account surplus economies, specifically ones that don’t have a high commodity export component. Thereby the Euro, Swiss Franc and Yen are the biggest gainers, while the dollar bloc and the likes of the South African Rand and Russian Ruble, among others, are showing the biggest year-to-date declines, save the politically savaged Turkish Lira. Turkey seems to be in dispute with all its neighbours and some further afield. The Central Bank holding rates last week has not helped its predicament – USDTRY printed a new all time high earlier at 8.1580.USDCAD lifted out of a correction low at 1.3169, with oil prices, although up yesterday’s lows, coming under moderate pressure during the early London session. WTI benchmark crude prices are down 6.5% from week-ago levels, and prospects for a sustained rebound look to be limited given the supply glut and weakening demand as Covid-containing measures intensify across Europe and some parts of North America. This backdrop should keep USDCAD underpinned. The pair has been trending lower since March, though we have been noting trend derailing risks. A run to levels around 1.3500 and above seems possible, as the BOC decision tomorrow and the US Election next week remain the key immediate fundamentals .Always trade with strict risk management. Your capital is the single most important aspect of your trading business.Please note that times displayed based on local time zone and are from time of writing this report.Click HERE to access the full HotForex Economic calendar.Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!Click HERE to READ more Market news. Stuart Cowell Head Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • “Self-evident truths” ( btw the ‘trading’ industry runs on a lot of these “self-evident truths” too) https://www.zerohedge.com/geopolitical/escobar-make-america-jeffersonian-again and a study in current “defactualization” https://consortiumnews.com/2020/10/19/patrick-lawrence-the-damage-russiagate-has-done/
    • Overtrading either trading too big or too often – is the most common reason why forex traders fail. Overtrading might be caused by unrealistically high profit goals, market addiction, or insufficient capitalization.
    • Yes, i do trust my broker. LMFX offers are very good and attractive. They have high leverage for newbie so do try with opening Demo account with LMFX. 
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.