There has been a lot of talk about new highs having been achieved by the equity markets. The Nifty broke to new highs as I write this article. If you have ever read a book on trading or technical analysis, you will know that buying stocks or the index on the breakouts is an extremely popular strategy. Most retail traders are told to look for breakout opportunities as a chance to buy and profit from new highs in the stock.
If this strategy worked so well then anyone who has read those books should be a crorepati! The problem is that the majority of retail traders or even academics do not make consistent profits in trading. So we need to examine our strategies and figure out who is making the money in the markets and mimic their strategies. So who makes the consistent profits in the markets? The institutional traders do!
At Online Trading Academy, we teach you how to trade like the professional institutional traders. When we trade, we need to find the areas where the amateurs are making mistakes and take the opposite side of the trade from them. That is what the professionals do on a daily basis.
It always amazes me when I look at peoples’ actions in the markets. In our everyday lives, we look to buy things cheaply or on sale. Think about a car buying experience. You wouldn’t walk onto a car lot and take the first price offered to you. Or even worse, you wouldn’t wait for the price of the car to go up before you bought it would you? Of course not, you haggle with the sales person to get a lower price and a value for your money.
But when it comes to buying stocks, amateurs often look to buy once prices have risen or when they breakout to new highs! Often they buy a peak and lose as prices fail to reach those new highs they had anticipated.
Notice how there is a large candle or a gap each time that prices move to a new high? This is caused from the amateurs jumping into stocks according to their breakout strategy. This sudden influx of buying pressure dies off quickly without institutional support. The amateurs are left holding the bag as price corrects and stops them out or moves sideways for a long time.
Trading the professional way really involves common sense. We should buy stock on sale and sell it when it becomes expensive, not the other way around. To learn more about how to trade like a professional, attend one of Online Trading Academy’s Courses and see how the professionals consistently profit in the markets.
Neither Freedom Management Partners nor any of its personnel are registered broker-dealers or investment advisers. I will mention that I consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. Because I consider the securities or positions appropriate to the discussion or for illustration purposes does not mean that I am telling you to trade the strategies or securities. Keep in mind that we are not providing you with recommendations or personalized advice about your trading activities. The information we are providing is not tailored to any individual. Any mention of a particular security is not a recommendation to buy, sell, or hold that or any other security or a suggestion that it is suitable for any specific person. Keep in mind that all trading involves a risk of loss, and this will always be the situation, regardless of whether we are discussing strategies that are intended to limit risk. Also, Freedom Management Partners’ personnel are not subject to trading restrictions. I and others at Freedom Management Partners could have a position in a security or initiate a position in a security at any time.
Editors’ Picks
AUD/USD: The hunt for the 0.7000 hurdle
AUD/USD quickly left behind Wednesday’s strong pullback and rose markedly past the 0.6900 barrier on Thursday, boosted by news of fresh stimulus in China as well as renewed weakness in the US Dollar.
EUR/USD refocuses its attention to 1.1200 and above
Rising appetite for the risk-associated assets, the offered stance in the Greenback and Chinese stimulus all contributed to the resurgence of the upside momentum in EUR/USD, which managed to retest the 1.1190 zone on Thursday.
Gold holding at higher ground at around $2,670
Gold breaks to new high of $2,673 on Thursday. Falling interest rates globally, intensifying geopolitical conflicts and heightened Fed easing bets are the main factors.
Bitcoin displays bullish signals amid supportive macroeconomic developments and growing institutional demand
Bitcoin (BTC) trades slightly up, around $64,000 on Thursday, following a rejection from the upper consolidation level of $64,700 the previous day. BTC’s price has been consolidating between $62,000 and $64,700 for the past week.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
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