Sam Seiden
Online Trading Academy, Chief Education, Products, and Services Officer
The world of market speculating is
made up of everyone from the active day trader to the longer term
investor, speculating in all kinds of markets and asset classes, people
all around the globe pushing buy and sell buttons each day in hopes of
achieving income and wealth. Never in history has there been so many
books written and so much information on the internet on how to
speculate in markets for traders and investors. Each weekend in many
cities around the world, there are educational seminars given on how to
“get rich” from trading. With so much education on how to properly
speculate in markets out there, why is it that most short term traders
lose money and most long term investors never achieve long term
financial goals? How can this be? The answer is twofold and is the focus
of this piece.
First, it’s because of most of the books and seminars. Most books and
seminars are loaded with conventional Technical and Fundamental
analysis which tends to teach you how to buy when everyone else buys and
sell when everyone else sells (herd mentality) which is high risk, low
reward, and low probability. Conventional Technical analysis is based
on pattern recognition that has people buying after price has rallied
and also offers buy and sell signals based on indicators and oscillators
that always lag price which means high risk buying and selling.
Conventional Fundamental analysis offers buy signals only after good
news is present and company numbers are strong. Where do you think the
price of a stock is by the time this good news is offered to you? If you
guessed high, you’re correct almost always. Remember, the only way to
be consistently profitable when buying and selling in markets is to have
a strategy that has people buying after you buy, at higher prices than
you paid and selling after you sell, at lower prices than you sold at.
Conventional Technical and Fundamental analysis does not help us in this
regard. The basic principles of these two ways of thinking ensure you
will buy and sell with the herd, when it’s too late which means high
risk and NO EDGE. If proper market speculating was as easy as reading a
book, wouldn’t everyone be millionaires?
The second reason most people lose money in the global trading
markets which is really part of reason number one is that they throw all
simple logic out the window. When you go to buy a car and you’re at the
dealership and see the car you have your heart set on, you see the
price and its $20,000. Do you go to the dealer and say; “I like this
$20,000 car so much, I want to pay you $30,000 for it.” Of course you
don’t do that, you likely offer $17,000 or something like that. In
trading, most people wait for confirmation of higher prices and then buy
which is the opposite of how they buy things outside of trading, this
makes no sense. I once had a gentleman go through our training program
and I will never forget the day I met him and spoke to him about the
program. He approached me and said he wanted to learn how to trade and
join our program. I said, “before we commit to this, let’s have a
conversation or two and make sure this is right for you.” You see, I
always want to make sure whoever is coming into the training program has
the best chance in succeeding. I don’t want to waste their time or
ours. My first question was, “What do you do for a living now?” He
happened to own and run a pizza chain that he had just sold. As soon as
he said that, I knew he had the best chance at doing this because he
already knew how to make money buying and selling. In fact, there was
nothing about buying and selling in a market that I could teach him that
he didn’t already know; I will explain this in a minute. Our first
lesson went like this… I asked him to tell me about his business and he
did. He explained that the whole business comes down to the price of
cheese. I asked him three simple questions: 1) What is the average price
of cheese? “Around $2.00 a pound,” he said. 2) If the cheese you buy is
selling at $4.00 a pound, how much will you buy? He said, “As much as I
need.” 3) If the cheese is selling at $1.00 a pound, how much will you buy? “As much as I
can
and store it,” he said. I then told him that he was already a great
trader and that there was nothing I could teach him about trading that
he didn’t already know. What I could teach him however is EXACLTY what
this proper buying and selling looks like on a price chart. He was
already buying and selling in a market properly, he just didn’t know
what that looked like on a price chart. This was an easy task for me
because he already had the foundation of how you make money buying and
selling anything down and had made plenty of money from it. The most
important part of today’s article for you to understand is this:
The more you can bring the mind set and rules that you use each
day to purchase everyday items at the grocery store, appliance store,
and so on into your market speculating, the better you will do. Do you
ever use coupons to save some money? If you do, you already know how to
buy at a low price. Take that same exact mind set and action into your
trading world. The mass illusion is that proper trading and investing is
somehow different than how we properly buy and sell things in everyday
life. Truth is, there is no difference.
Many so-called professionals like to complicate the process with
smoke, mirrors, curtains, and sleight of hand. They do this to trick you
so that you will transfer some of your account, into theirs, without
you realizing it. The key for you is to keep everything “real.” Use your
simple logic filter to ensure you will not lose some or all of your
account to illusion. For your review, let’s walk through a trade we took
at Online Trading Academy.
In the upper left corner of this screen shot, we see a market that is
falling fast and reaching what our strategy determined to be an
objective demand zone (wholesale prices). Most people would not want to
buy in that circled area because there is a downtrend and every book
says to never by in a downtrend. There was also some bad news causing
price to crash which would make people very nervous when buying at that
level. So, most people would not only not buy, some actually sold in
that circled area. That is a chart of the Euro. What if I changed the
market and made it the market for Samsung Smart (very smart) TV’s like
you see on the right. If you saw price decline like that would you be
more inclined to buy? Would you be afraid to buy on that decline or
would you be very excited? Of course we would be thrilled to buy that TV
at a discount. Why then does just about everyone on the planet have
opposite feelings or emotions with these two examples. The answer is
simple, one is a financial market and the other is an example of
anything else we buy and sell in life. Furthermore, you have been
brainwashed to think that how you make money buying and selling in a
financial market as a trader or investor is somehow different from how
you make money buying and selling anything in life.
The chart in the middle, on the bottom is the result of that trade.
Price turned higher, giving us a low risk profit on that trading
opportunity. The reality is that the Euro was on sale for a short period
of time and there was only a small amount for sale at that price
meaning once they were all bought, price would rise. The chart gives us
all this information if you understand our patented market timing supply
and demand strategy.
2 Mistakes the Novice Trader/Investor Made
1) The seller sold to us AFTER a decline in price.
2) They sold to us at a price level where the chart told us, demand exceeded supply.
These are the two most common investing mistakes the masses commit
around the world which is why most active traders lose money and most
long term investors never come close to achieving their financial goals.
There is nothing wrong with following the rules of a trading book, just
make sure you are the author and that your strategy has you buying at
wholesale prices and selling at retail prices. To do this, start with
using all the powerful buying and selling knowledge you already possess
and use on a daily basis outside of the trading world. Bring this key
but simple strategy into trading and you will soon be spotting “blue
light specials” all over the place. Never forget, how you make money
buying and selling anything in life is EXACTLY how you make money buying
and selling in the financial markets.
Hope this was helpful. Have a great day.
Sam Seiden –
sseiden@tradingacademy.com
