Oct 10, 2014, (EDT) / 11 Oct, 2014, (IST)
One of our fellow traders has expressed some worries about markets, asking us about various economic crises such as Ebola, IMF, Ukraine, ISIS, Chinese growth, Euro Zone bickering and recession fears etc.,and wants to know our opinion about how long can this pullback/beginning of correction last, especially considering the analysis by Bloomberg/ NBC ?
Here is my detailed reply, for all of us who are interested in making money in stock markets-
1) Media do not move markets. Media is nothing but a bunch of morons (usually junior level) sitting at their desks, trying to find scary news that will drive traffic to their websites. TV channels are full of manipulative analysts who try to fool the crowd by their false predictions etc. If you read/ watch Bloomberg, NBC and believe it, you will soon be left with a lot of general knowledge but no money.
2) Do as markets do.
Learn the basics of technical charting, because charts are pictures of market movements and these “pictures” are worth more than one thousand dollars.
3) If you want to trade, trade with markets.
When markets are falling- sell. When markets are rallying- buy. Up and Down movements are two sides of markets, just like day and nights are of our 24 hour cycle. Do you breathe only 12 hours of your day? Then why waste 50% of market moves waiting for only up moves or only down moves?
4) I am just one of millions of morons out there, called small traders. If you read what I write, and think that I know everything about markets, and trade according to that then you’ll soon be left penniless 🙂
Do NOT read, listen, watch whatever anyone else out there is saying about markets.
Learn about markets yourself, and then utilize that knowledge .
Sit down, learn about markets as much as you can. And this comes easily by watching and observing day –to- day market-movements. Not by jumping in the ring as soon as the opening bell rings and then thrash around like a fish out of water.
The secret of markets is—- that there is no secret in markets!
All our trading mistakes, faults lie within us.
Markets go up, or go down. That’s all they do. Very simple.
This is what we do to complicate it (I’m giving my own example) – Central bank- blah-blah-blah blah– the Fed- blah-blah-blah blah- Draghi – blah-blah-blah blah—Syria- blah-blah-blah blah—ECB- blah-blah-blah blah-.
The truth is- I have to write only one line every day, and if you follow that, you will succeed in markets.
DO AS MARKETS DO.
But then, if I write that, all of you’ll say, “ Hah! We already know that moron, tell us something intelligent!”
So I start writing- Central bank- blah-blah-blah blah– the Fed- blah-blah-blah blah- Draghi – blah-blah-blah blah—Syria- blah-blah-blah blah—ECB- blah-blah-blah blah-.
Now to your question, when will markets stop correcting?
What difference does it make? If you are a long term investor then these short term corrections won’t make any difference to your money. Read these post about Dow Jones:
If you are a short term trader then do as markets do and start short selling.
Please, do NOT depend on anyone or search for any magic pill, bullet, map of market treasures. Those treasures come to you in every session, but you ignore it and go looking for some magic mantra to earn it.
All you have to do it, trade positive till markets are positive, book your profits when markets start to turn low, or trade negative when markets are trading negative and book you profits when markets start to reverse trend. How to know trade entry and exit levels? Learn the basics or technical trading. It is as simple as that.
Rest is all bullshit. Including what I write on this site. ( well, not exactly but I’m just trying to be modest 🙂 🙂 )
And please, do NOT overtrade.
Trade only one lot a day, till you can train your emotions and make profits in seven consecutive sessions. Then, you can allow yourself to trade in two lots a day. If any day you make losses, go back to trading one lot a day. This will save you a lot of money and bring discipline to your trading.
Use to weekend to learn technical charting techniques. Study charts, note down your trade entry, exit, stop loss levels. Then trade on Monday- only one lot.
Don’t read anything else.
Good luck. God save your money.