Friday, 25 September 2015

HOW CAN I PREDICT MARKETS?

Simple answer is there are are no definates

This is my opinion, so take it how you will, many people will try to sell you courses and video's totalling $1000's of dollars but really it comes down to a few key factors I do use graphs and fundamentals as well and keep these in mind but events over the last few years have shown there are some much higher factors at play than simply reading a graph

Are the markets sitting on a high or low?

Look at the graphs. Generally if the markets are low they will go up, maybe not that day but soon you don't need a $10000 course to tell you that. Not at this point anyway. These things have value don't get me wrong but for someone just starting up I don't think you need to do this. But thats your decision.

The most important questions you can ask yourself are:

Are they high or low on a short term basis?
Are they high or low on long term basis?

and then make your decisions accordingly


Is there something in the world that is causing a lot of fear? 

ie Greek Crisis, China Slowdown and the gold and oil sell offs late have proved that while fundamentals may look good you can't control everything that happens around you

There are certain things which are out of our control. The Gold crash of late july 2015 was fuelled by someone selling off 5 tonnes of gold which flooded the market causing the price to drop. You can't predict these things and neither can I.
The only advice i can give is to sit it out if you are not on borrowed money or hopefully you've left yourself with enough margin to cover short falls if you are.

Also another thing you can't control is institutional sell offs or buy ins. Some of the bigger firms which trade billions of dollars a day can single handedly spark a mass sell off or gain from one big transaction.

Triggered selling

This has been another thorn in my side over the last few years with computerized trading becoming really popular amongst virtually everyone who trades. many people who have "sell orders" attached to their holdings to automatically sell once their prices fall through to a certain point can get sold out on a sharp market drop, this can result in a cascading effect and push the market down even further as highlighted in the GFC of 2007/8.  Much of the trading now is automatically done with 'triggers' and unfortunatley it means that you have to trade with a much safter margin if you are on borrowed money than you did before the GFC hit.

Basically the rules of "saftey first" apply here, if you go in too hard you will eventually get stung. you might have a few success but you will get caught out in the long run




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