When discussing trading, typically the conversation revolves around forecasting the future direction of the market, current news events that may change perception, or the latest indicator that’s ready to throw off a sell signal, usually after a steep drop has already occurred. In addition, much time is spent debating the fundamentals. Factors such as earnings, GDP growth, and the jobs numbers are looked at closely and then deciphered in an effort to figure out the market’s next move. In the case of commodity futures, inventory numbers, and crop reports, along with weather forecasts, are used to extrapolate future projections.
By now — at least that’s my assumption– most of you have figured out that this way of looking at the markets pays analysts on Wall St. very well, but rarely materializes into actual trading profits. This may sound very cynical, but the reality is that all this analysis is done by design to lull investors into traps. How so? You might be asking. Institutions need liquidity in order to buy or sell large quantities of stock or futures contracts. That is, when big banks… Continue Reading
