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I was going to post this before the open, but I lost my internet connection. The ES is much the same, though it is currently 3pts above its midpoint.

 

This could have been posted in several places, but here is as good a place as any.

 

Db

 

 

attachment.php?attachmentid=30148&stc=1&d=1343315518

nq0726.jpg.711aaf9dfa9c955fa89b5780870923ca.jpg

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A lunchtime update:

 

Price moves up past minor R thru the midpoint of the trading range and fails just a few minutes later. Those of you who have been studying the Forum know that this is weakness. Price rallies again, but makes a lower high. Additional weakness. And there's your short at 88. Just demand/supply and support/resistance.

 

Simple.

 

Db

 

attachment.php?attachmentid=30150&stc=1&d=1343320975

 

attachment.php?attachmentid=30151&stc=1&d=1343320975

nq0726a.jpg.28c830df957b9cab0c59ab2d9d1c5f87.jpg

nq0726b.jpg.0fc2a203d19bc23c69b241acdfe888ac.jpg

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About that formation... Do you consider this a hinge, although ther is not a clear reduction in volume? Do you just ignore that volume spike towards the end of the triangle?

5aa7112175414_PotHinge.thumb.png.112791e38fcd5a32518d7c156a97a376.png

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  tupapa said:
About that formation... Do you consider this a hinge, although ther is not a clear reduction in volume? Do you just ignore that volume spike towards the end of the triangle?

 

When the short is taken, whatever hinge there might be has not yet formed. And I didn't plot volume, so it wasn't a consideration.

 

Db

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Could you indicate where exactly you place your sell stop order (asuming you are using a 1m chart) like you did in the trading in 90 min thread? Could you also indicate the stop loss

 

I see more than 1 point to enter in this chart and they wouldnt all succed so it would be good to see your exact entry point.

 

Feel free to use my 1min chart for greater clarity.

 

Many thanks.

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  tupapa said:
Could you indicate where exactly you place your sell stop order (asuming you are using a 1m chart) like you did in the trading in 90 min thread? Could you also indicate the stop loss

 

I see more than 1 point to enter in this chart and they wouldnt all succed so it would be good to see your exact entry point.

 

Feel free to use my 1min chart for greater clarity.

 

Many thanks.

 

I have a better idea. Given the seven or eight charts I did for the 90M thread, why not show me what you'd do? Remember to read the chart from left to right.

 

Db

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I thought you might suggest this and I am glad you have. In the following chart I have indicated each entry and trade management of yesterdays rejection of that midpoint, at 2588.

 

I use a sell stop order 1 tick below the previous 1m bar and a stop 1 tick above support or the last Lower high (I am not sure if my stop placement strategy is correct).

 

I assume I am trading 1 contract which is exited as we break the supply line, so lets see the entries:

 

1- Price moves through support but there is no follow through and each bar starts making lower highs, I place my sell top 1 tick below the support line (2588). There is a retracement, I draw the supply line and exit the short as we break this line, with a small proffit.

 

2- Price tests support and fails making a Lower High, there is a retracement and once again I exit with a small proffit.

 

3- Price moves through resistance and once again I enter as that wide range bar breaks the 2588 S/R line. I had to replay this in real time to see how the bar formed

and it first breaks the support line and then moves higher taking my stop loss.

 

4- I re enter as we break support once again, draw a supply line and exit shortly at BE.

 

5- The final Entry, once again below the support level at 2588, price has made a series of lower highs since it reached 2594 showing clear weakness. Price finally falls and I wait for a retracement to draw the supply line, here I have my doubts, what do you consider a retracement?

 

Does it have to be compromised by a minimum of 2 or 3 bars or can one bar be a retracement?

 

In this case, which is the correct supply line, the first thin line or the thicker one?

 

I look forward to your comments.

5aa71121d31dc_26-05Trades.thumb.png.69f9e2c571cc0a4a8e8e0673fbc2ba30.png

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This is very good. You're picking up on the concepts well. It is not exactly as I would have done it, but not only does it work, you've provided the support for each step you took, which beats the hell out of "feelings".

 

First, I would have placed a buystop above that first RET to the S/R line (when trading around a midpoint, avoid calling it a "support" or "resistance" line; that can bias you toward a direction; what matters is not the line but the behavior of price). This buystop would not have been triggered. But even if it had, I'd have been prepared for the SAR (this is a particular problem when trading "inside bars"; on a tick chart, the indecision at these points becomes much clearer).

 

Second, I'd rotate my first SL (supply line) to the left, tracking the high points of the bars (on a tick chart, these would be swing points). This would get me out faster, though the profit would be the same. After all there could have been a violent reaction rally to the S/R line, which would result in BE. Ditto on the next SL.

 

Third, you were smart to open up the bar and see where price went and when . Same problem here with the "inside bar". That it happens is not as important as not freaking when it happens. If you can stay calm, you can focus on the next entry, three bars later, which, in this case, is above the S/R line, one bar earlier than yours. What you've done is fine; it's just a bit later than it needs to be. Note also that the money you lost by being stopped out at 3 has been paid for by the profits you took at 1 and 2.

 

Fourth, this sort of in-and-out can drive you crazy if it goes on for too long, but there is an eventual payoff at 5. However, make sure that the decision to allow price to come back to your cover stop is not the result of being tired of screwing around with the in-and-out. This trader fatigue can be costly.

 

As to defining a RET, I've read quite a few and none of them are adequate. The RET is the result of conscious intent, or effort that's more than just casual. If the bars involved are, for the most part, sideways, then it's more a breather than a RET. The RET you've chosen for your first exit shows more effort (note where it comes; look to the left).

 

As for the SL, it's purpose is to track those points where supply dominates demand. If there's no RET, then you have to use the highs of the bars (again, if you were to use a smaller interval, these would be swing points). Therefore, your thin line is correct. And once price renews its decline and makes a lower low, the next SL can be drawn as well.

 

And though you don't show it, I assume you re-entered the short at that RET. It's a pain in the neck, but it minimizes the risk to the point of inconsequentiality, which makes managing the trade far more pleasurable. At no point are you hoping for the best.

 

If it's available to you, I suggest you plot exactly the same timeframe using a 15sec bar interval. It may help you to go beyond the "bar" thing and see what's in the bar even when using a longer interval. After all, even when using a 1m interval, you can still blend the bars in your head to see what the 5m people, or even the 15m people, are looking at.

 

Db

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Thanks for taking the time and interest to read the chart, I just had a look at the 15 sec and I can straight away see the benefits of using this bar interval for trade management.

 

I am attaching the 15 sec chart with the supply lines corrected as you suggested for whoever might be interested. So presumably, by drawing the SL on the 15 sec chart, we track price closer and exit the trade sooner....

 

Yesterday this strategy worked fine, but isn't there a danger that we might exit the trade to soon and miss most of the move? Do you always draw the SL after a retracement on the 15 sec. chart or does this depend or do we need to be less mechanical about this?

 

Thanks again.

5aa71121d9f88_26-0715sec.thumb.png.887b1194baf2d03e02101b2d56be3f49.png

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  tupapa said:
Yesterday this strategy worked fine, but isn't there a danger that we might exit the trade to soon and miss most of the move? Do you always draw the SL after a retracement on the 15 sec. chart or does this depend or do we need to be less mechanical about this?

 

If the trader gets all egotistical and emotional about stopping himself out or being stopped out and wastes his time moaning about how wrong he was and what a useless sack he is and so forth then yes, he will miss most of the move. Unless, of course, there is an immediate reversal after he's out and he congratulates himself on being so prompt and astute and disciplined and so forth and never takes the SAR and misses out on that as well.

 

Too many beginners think that once they're stopped out, that's it. They're too emotional and unfocused to stay in the zone and consider re-entry, much less do it. You yourself have seen how effortless it is to exit when the move appears to be over, then re-enter when it turns out not to have been over after all. In fact, it's not unusual to pick up a point or two in the process. It's just a matter of focusing on the demand/supply balance. In this way, risk is virtually non-existent (FWIW, I used to tell people to use these RETs as opportunities to add another contract, but there's far less risk in exiting the trade and re-entering the trade than in hoping that it is nothing more than a RET and ending up getting screwed; better to trade all the contracts at the outset).

 

As to drawing the SLs and DLs, I don't actually draw them while I'm trading, other than in my head. There's just no time. But if one has spent sufficient time studying old charts and replay trading, he ought to be able to "see" these lines without actually plotting them. When posting the charts, of course, they become necessary. Otherwise, nobody knows what's going on.

 

As for being less mechanical, one needs to avoid being mechanical at all. Learning the guidelines and following them is not mechanical. But it's very different from being all feely. It's trading what you see, not what you think.

 

Db

Edited by DbPhoenix

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  DbPhoenix said:
This is very good. You're picking up on the concepts well. It is not exactly as I would have done it, but not only does it work, you've provided the support for each step you took, which beats the hell out of "feelings".

 

First, I would have placed a buystop above that first RET to the S/R line (when trading around a midpoint, avoid calling it a "support" or "resistance" line; that can bias you toward a direction; what matters is not the line but the behavior of price). This buystop would not have been triggered. But even if it had, I'd have been prepared for the SAR (this is a particular problem when trading "inside bars"; on a tick chart, the indecision at these points becomes much clearer).....

Db

 

Db: regarding this partial quote from post #267, I am having a hard time visualizing exactly where this buystop would be placed based on your description. Particularly if it would not have been hit.

 

Are you are referring to above the 14:37 bar on tupapa's chart?

 

Also thanks to you both for the examples and the discussion.

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  20814md said:
Db: regarding this partial quote from post #267, I am having a hard time visualizing exactly where this buystop would be placed based on your description. Particularly if it would not have been hit.

 

Are you are referring to above the 14:37 bar on tupapa's chart?

 

Assuming you mean the 1m chart, no. I was thinking of the bar at 14:44 since it had tested the S/R line several times and looked as if it might hold. However, the bar you mention, and the bar two bars over, are also justifiable entries. Ordinarily, I'd avoid this kind of entry since it's so late in what is a parabolic move. However, buyers are enthusiastic, and you never really know. So I wouldn't beat somebody up for taking either one. HOWEVER, the trader MUST be willing and ready to get the hell out if the trade doesn't go his way or fails rapidly. This is no time for dithering around. And there's no time for multiple confirmations. He must understand what he's looking at and act accordingly.

 

Which brings me back in a roundabout way to tupapa's question about "is this a RET?" And being mechanical. The trader, even the discretionary trader, or particularly the discretionary trader, must know what he's looking at and what he's looking for. Otherwise, he's very likely to get his hope and/or fear triggers tripped, and that's no place to be. On the one hand, the trader must realistically allow price to come back at least a little, even with cascades. But he must define what he means by "a little". Using bars, is it okay for price to come back one bar? How about two? How about three? (Some advocate letting price come back 50% of the move, and if that suits your risk profile, fine.) If price hasn't rolled over by then, perhaps it's time to exit and breathe a little (and enter, but don't transmit, the order to re-enter). If price rolls over, great. Draw a new SL and go on from there. If it doesn't roll over, then you're out and you can re-evaluate the situation.

 

And throughout, pay special attention to hope and fear triggers. When are they ignited? Where? Why? Whatever you're doing to ignite them, don't do that anymore. Back away. You can't think properly when your heart is pounding and you're hyperventilating.

 

  20814md said:
Also thanks to you both for the examples and the discussion.

 

You're welcome. But you and the other lurkers (and, yes, I know who you are) are expected to jump in eventually, preferably sooner rather than later.

 

Db

 

Edit: My perspective on RETs.

 

attachment.php?attachmentid=30176&stc=1&d=1343410618

rets.thumb.jpg.62eefe781977f8c07244c3fbb459fffc.jpg

Edited by DbPhoenix

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Thank you so much for this trading plan. I been reading it for about 4 hours and taking notes as begin to form my strategy. This is a good read so far and helps me start from the basics of developing a strategy/method for me to trade efficiently in my sim account. Atleast I can save my capital by starting off right. I reply with some question or comments soon.

 

Thank you.

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  DbPhoenix said:
Make every effort to avoid imposing your biases onto what you observe.

 

Can you explain a bit what you mean by "imposing your biases" on what I see while observing price movements?

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  goodoboy said:
Can you explain a bit what you mean by "imposing your biases" on what I see while observing price movements?

 

It's too high/low. It can't go any higher/lower.

 

It's ready to roll over/rally.

 

Volume is too high/low.

 

Anything having to do with candles or candle patterns.

 

It's lunchtime. It will be dull.

 

It's Friday. It will be dull.

 

News is good/bad. Price will rise/fall.

 

Etc

 

Db

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My 90 Minute NQ trading for today, thanks DB for all the advice, everyday things make a bit more sense...

 

If I am in a possition, and price retraces maing a lower high I lower my stop loss 1 tick above the LH (Points 3.1 and 4.1)

 

The biggest factor in todays session was strong resistance at 2656, the top of the trading range we have been in for the last month and a half.

30-07.thumb.png.e1a361e89e0a59cdbc6a53547c028c0a.png

5aa711233046f_DailyChart.thumb.png.9f76b2690e45d0f1a0c40acc7d679df3.png

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  tupapa said:
My 90 Minute NQ trading for today, thanks DB for all the advice, everyday things make a bit more sense...

 

If I am in a possition, and price retraces maing a lower high I lower my stop loss 1 tick above the LH (Points 3.1 and 4.1)

 

The biggest factor in todays session was strong resistance at 2656, the top of the trading range we have been in for the last month and a half.

 

Congratulations. Why so late on the short at 2?

 

Db

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  DbPhoenix said:
Congratulations. Why so late on the short at 2?

 

Db

 

That trade really made me doubt and once I got in it was clearly to late..

 

Main reason why I didn't take is how wide and next to eachother all those bars are... I thought it showed big indecision but its difficult to explain how I perceived it in real time, I guess I just didn't have the confidence to take the trade.

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  tupapa said:
That trade really made me doubt and once I got in it was clearly to late..

 

Main reason why I didn't take is how wide and next to eachother all those bars are... I thought it showed big indecision but its difficult to explain how I perceived it in real time, I guess I just didn't have the confidence to take the trade.

 

It happens. What's more important is that you didn't sit there and mope but kept it together to re-enter at 3.

 

Db

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One other thing. If the "length" of the bars throws you off, keep a 30sec or 15sec alongside so you can see what's going on "inside" the bar, regardless of whether you use it for entry or not.

 

Db

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  DbPhoenix said:
It's too high/low. It can't go any higher/lower.

 

It's ready to roll over/rally.

 

Volume is too high/low.

 

Anything having to do with candles or candle patterns.

 

It's lunchtime. It will be dull.

 

It's Friday. It will be dull.

 

News is good/bad. Price will rise/fall.

 

Etc

 

Db

 

Thanks for the comments.

 

In the strategy, should I include when to adjust stop once the trade is my favor? I think in my strategy, the trade management part, I need to identify in what cases I want to break even and adjust stop in order for the entire method to be well defined.

 

If I understand your writing correctly, the strategy must be well planned and executed as such so that I am not second guessing myself in order to see true results. Do you mean trade the strategy exactly how its written?

 

Thank you

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  goodoboy said:
Thanks for the comments.

 

In the strategy, should I include when to adjust stop once the trade is my favor? I think in my strategy, the management part, I need to identify in what cases I want to break even and adjust stop in order for the entire method to be well defined.

 

The two chief reasons for wanting to break even are (a) you don't know what you're looking at and don't know what to do about it so whatever course price takes is pure chance so you'd rather just get out before the chaos loses money for you and/or (b) fear.

 

The underlying purpose of all this is to understand what price is doing and why. Only then can you work on how to profit from these movements. Attempting to short-circuit this process by jumping ahead to the profit stage will actually take longer because you'll never develop the understanding you require. Thus you will be starting over again and again and again.

 

Therefore, leave the stop alone and just sit and watch. If price reaches a point where you think you ought to get out, then write down what that point was and why you thought that. Define that exit point if you want to include that criterion in your plan. But don't exit simply because you don't understand what's going on or you're uncomfortable.

 

  goodoboy said:
If I understand your writing correctly, the strategy must be well planned and executed as such so that I am not second guessing myself in order to see true results. Do you mean trade the strategy exactly how its written?

 

Yes. Exactly. Make the modifications later, not during.

 

Db

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  DbPhoenix said:
The two chief reasons for wanting to break even are (a) you don't know what you're looking at and don't know what to do about it so whatever course price takes is pure chance so you'd rather just get out before the chaos loses money for you and/or (b) fear.

 

The underlying purpose of all this is to understand what price is doing and why. Only then can you work on how to profit from these movements. Attempting to short-circuit this process by jumping ahead to the profit stage will actually take longer because you'll never develop the understanding you require. Thus you will be starting over again and again and again.

 

Therefore, leave the stop alone and just sit and watch. If price reaches a point where you think you ought to get out, then write down what that point was and why you thought that. Define that exit point if you want to include that criterion in your plan. But don't exit simply because you don't understand what's going on or you're uncomfortable.

 

 

 

Yes. Exactly. Make the modifications later, not during.

 

Db

 

Thank you. The comments makes sense. Everything must be analyzed (and included in the journal) and calculated such as the entry, exit, why the entry, why the exit, why this stoploss, why I break-even, why I moved the stop up/down! And all this analysis has to do with price action and reaction.

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    • Date: 10th January 2025. Why is the British Pound Declining?   The Great British Pound is the worst performing currency of 2025 so far after witnessing sharp declines for 3 consecutive days. The decline is largely being triggered by the bond selloff, lack of business confidence due to the UK Autumn budget and political uncertainty. Will the trend continue?     The GBP Index Declines 2% In 2025! Why Is The Pound Dropping? The Great British Pound is the worst performing currency of the week and of the year so far. Below you can see a table showing the Pound’s performance in January 2025 so far. GBPUSD -2.25% EURGBP +1.69% GBPJPY -1.44% GBPCHF -1.42% GBPAUD -1.91% GBPCAD -2.00% A key reason for the GBP’s decline is the latest labor budget, which is driving a selloff in UK bonds. Bonds across the global market are declining, including in the US and Germany. However, the global decline is mainly due to monetary policy. The decline in UK bond yields is due to concerns regarding the UK budget, higher costs for business and investor confidence. As a result, investors are selling UK bonds, but also reducing their exposure to the Pound. Bond Selloff and Rising Yields: Higher bond yields can sometimes strengthen a currency by attracting increased investor demand. However, this effect is unlikely when rising yields result from a bond selloff driven by declining investor confidence. The UK 30-Year Bond Yields are at their highest level since 1998 and the 10-Year Bond Yields are up to the highest level since the banking crisis of 2008. Investors’ concerns are that the higher costs for business will be passed onto consumers, triggering higher stickier inflation. As a result, the Bank of England will struggle to reduce the cost of borrowing in 2025 and foreign investors will become more cautious of operations in the UK. The short-term impact is that the UK Chancellor may struggle to meet her fiscal rules. Her budget margin of £9.9bn to avoid overshooting borrowing has likely shrunk to about £1 billion due to market shifts, even before the OBR updates its forecasts. This uncertainty may force the Treasury to cut future spending plans, but the full picture won’t emerge until the OBR's March forecast. According to reports, the UK Chancellor cannot risk higher increases in taxes and will be forced to cut public spending. The GBPUSD Falls To A 60-Week Low! The GBP is struggling against all currencies, but the sharpest decline can be seen against the USD. The GBP’s decline is partially due to the incoming president, Donald Trump, who is expected to introduce Dollar-supporting measures, but also potentially impose tariffs on the UK.   The new White House administration is likely to impose new tariffs on imports from China, Canada, and Mexico. This is likely to potentially disrupt supply chains and prompt the Federal Reserve to adopt tighter monetary policy, thereby strengthening the national currency. Some experts believe the UK will face tariffs or be pressured to adopt more pro-American economic policies. This is also something the EU will likely experience. In addition to this, reports suggest that the UK Prime Minister, Keir Starmer, and Trump supporters are not on good terms, nor agree on much including on Geo-politics. Therefore, the decline is also related to concerns the UK may be put into a difficult position by the new US administration. According to analysts, Dollar strength is likely to continue throughout the year due to the new administration’s measures, but also due to a hawkish Federal Reserve. In the latest FOMC meeting minutes, the committee stated it expects interest rates to decline at a slower pace. The Federal Reserve is likely to only cut 0.50% in 2025 and may not cut until May or June. Liz Truss 2022 Or James Callaghan 1976? Is this the first Pound crisis? The GBP has experienced many "sterling crises” in the past. For example, Black Wednesday from 1992 and after Brexit in 2016. However, there have been similar crises in the past which are very similar to the current situation. For example, the Liz Truss Budget from 2022 which saw the GBP decline more than 23%. During the Sterling Crisis of 1976 the GBPUSD fell from 2.0231 to 1.5669. Both sterling crises were due to the budget, inflation and rising bond yields. Today’s issues for the GBP and UK are very similar, however, the performance of the GBP will depend on if the new SI contributions triggers lower economic activity, inflation and if the Federal Reserve indeed avoids cutting interest rates in the near future. If inflation rises it will dampen consumer demand and the Bank of England will be forced to pause any rate adjustments. As a result, the economy may contract or stall further pressuring the GBP. However, this cannot yet be certain. KPMG experts anticipate accelerated economic growth this year, supported by monetary policy and increased government spending. They project GDP to rise to 1.7%, more than doubling last year’s 0.8%. This growth, according to their estimates, will be driven by a recovery in consumer spending, expected to increase by 1.8% compared to 1.0% last year. In addition to this, if the Federal Reserve unexpectedly opts for more frequent rate cuts, the GBP and EUR are likely to benefit. When monitoring the price movement and patterns which can be seen in the exchange rate, the decline looks similar to the price movement seen in 2022, during the Truss reign. The price has now fallen below the support level from April 2024. The next support levels can be seen at 1.20391 and 1.17992. Technical analysis for the GBP can also be viewed in HFM’s latest Live Trading Session.   Key Takeaways: The Great British Pound is the worst performing currency of the year so far, having declined by more than 2.00%. A key reason for the GBP’s decline is the latest labor budget, which is driving a selloff in UK bonds. UK 30-year bond yields are at their highest since 1998, while 10-year yields have reached levels last seen during the 2008 banking crisis. Investors reduce exposure to the GBP as the US edges closer to a new president and pro-Dollar supportive measures. The UK labour government will not reconsider higher taxes but may be forced to reduce public spending. 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 HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Andria Pichidi HFMarkets 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 Leveraged 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.
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