how can you beat the any financial market?
“online trading become such an easy and quick way to make money ,in fact you are only one click away from being a millionaire” ,this phrase is the slogan of every trading platform in the internet ,the word’s might be different but the essence is the same :”financial freedom is a side effect of lazy investing”.
but if you did do what they tell you will be facing the very ugly truth of the market ,as a very hard place to make money ,in fact 90% of traders lose there money trading. so some of you will leave it here and continue there lifes. but if you are stubborn like me you will try to find a proper and more logical way to make profitable trades and this what im going to share with you today.
my winning trader protocol :
A)-never be fooled by the broker:
The business model of most brokers consist of taking the money that you want to invest but not into the market but into the bank ,so if you lose your money you don’t lose to the market but to the broker.
That’s why your broker choice is a very important :what should you be looking for in a broker?
1-1:certifications:
1-2:business model:
1-3:community:
1-4:support:
Conclusion :never underestimate your choice of a broker.
B)-a quick introduction to market analysis :
I’m not going to be very elaborate on specifics because you can find many books and videos that explane the steps that I use to analyse any market .
The steps are in order of importance in forecasting the markets.
1-follow the smart money.
The market can generally be divided in two categories:
retail traders: this group is where we belong ,and this is the group that the 90%-10% statistic apply to.
The market makers: group include every financial instrument known in the world ,the banks ,the international companies ,the politicians ,the professional traders …. Just to name a few .the market makers don’t just win because the economical environnement is positive ,but even if the economy was in a peril they will make money anyway because they create that positive economical environnement .
You can watch this lecture for more incite :
And that’s why we should as retail traders follow the market makers ,because they do not only have incite on the market ,but they also help shaping the potential growth or decline of the market for consistant profits .
There is a lot of ways to know the market makers opinions , the COT indicator is very helpful in this subject.
2-see if the univers agrees with the market maker.
This may be really hard from a technical point of view to implement but there is indicators that show you if the price is going up or down relatively to space weather and movement of the planets around the sun.
Because economists have discover that space weather effect in a big way the planet and there for the psychology of the people and the banks use this detail to take advantage of the positive or negative attitude of the masses toward consumption and spending.
We can take sunspots as an example of this space weather phenomena .sunspots are spots that appear and disappear on the surface of the sun, and they have found that the number of this sunspots effects people in a big way .in fact the 2008 economical crisis was happened during a record braking number of sunspots on the surface of the sun which caused markets to panic and commit some big mistakes.
3-fundimantal analysis:
This type of analysis is based on analyzing news about markets and have incite on there outcome.
There is two type of news in that effect the market :
Microeconomical news: its data related to companies that you wish to invest in .a very repeating example is the merging of two companies that generally increase the values of the stock of the company.
Macroeconomical news: these are data related to the economical environment of a country .it can be very helpful in the foreign exchange market (forex ) to decide which currency pair you are going to invest in.
all the steps above are very basic and just need a good amount of commune sense to apply. but what they answer is “what are you going to invest in right now ?” but they don’t give you an idea on the amount you have to invest ,the right time to invest and the right time to withdraw ,that’s when the technical analysis and the money management come to save the day.
4-technical analysis:
“In finance, technical analysis is an analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume.”- wikipedia
4-1: the geometry of the prices:
Several studies on the market discovered that prices follow certain geometrical patterns .a very simple example that makes perfect sense is the “support and resistance levels” this levels are related to the supply and demand principal that is the most basic principal in free economical systems.
4-2: statistical analysis of the price:
Statistical analysis is based on technical indicators that display graphs of functions that depend on the price and volume along with other variables. we can find a lot of indicators available in trading platforms that can e categorized as price based indicators and volume based indicators.
D)-the making of your own strategy :
If you follow this steps and understand the logic and the randomness of the market you will be able to make your own strategy.
and I insist on you trying to make your own strategy because you will find thousands of strategies in the internet but most of them don’t follow a logical statistical or economical factors of price dynamics .this is the first benefit of making your own strategy, the second is that when you have an algorithm that you follow to study the market you start having a very pragmatic point of view ,very far from any psychological and feeling based decisions that can cause you significant looses.
PS: you should backtest your strategy in any market you want to invest in before starting investing to see if the percentage of the profits is more than the looses .
E)-risk management:
Risk management is very very very …important part of optimizing your performance as a trader .because you have to know that nothing is certain in trading and in life in general. so in order to be successful in trading you should be able to manage your money so as to never be afraid from small looses because you are confident enough in your strategy that in the long run that small loss want endanger your account .
F)-psychology of trading:
The psychology of trading is a very important part. successful traders have certain traits that help them have the right attitude toward trading and a good understanding of money.
1st trait- small ego: having a big ego can be a problem, because it becomes between you and you best intellectual performance as trader while analysing the market in a subjective way.
2nd trait- have a good reason to trade for.
3rd trait-don’t be greedy.
4th trait-learn all the time.