Fundamental
vs. technical trading
First let me share what these two
types of analysis are.
Fundamentals, or as I like to call
them fuzzymentals, try to predict ETF future prices by supply, demand,
interest rates, government policy, weather, underlying economic factors,
etc. In part it does work if you are an economist and very, very good at
it, but it will never generate the types of profits that technical
analysis can.
Technical analysis takes advantage of
the fact that
ETFs move in trends 30% of the time. It helps identify
those trends and take advantage of moving prices.
Ultimately we don’t care what (if
any) the fundamental reasons are for price movement, but that it is
moving and we are capturing profit from it. Identifying trends is one of
the most important things to learn. My system teaches you how to do
this.
My system uses only technical trading
because I know, not just believe, that the price already reflects all
the known fundamentals. For example when a hurricane is approaching the
U.S. Gulf coast oil prices start to go up. Because of the new
fundamental knowledge of the storm the price already started moving up
at the time the knowledge became available, not when the storm actually
hit.
Most importantly even if somehow you
magically knew all the fundamental information there was you would not
know the market’s reaction to that information. If you knew all the
reasons why the market was going to crash in September and October 2008
you still would not know how far it was going to crash. With technical
analysis my system caught a very large part of that drop in many ETFs.
If your portfolio is stagnant or
dropping it is time to rethink your whole approach to the markets or at
least diversify a portion to self trading.
One of the questions I get a lot is
how much money does the 5-10 minute per night trading system make? The
answer depends on how much money you trade. The easier way is to look at
percentages.
Total non compounded monthly result
are: 6.43%.
All this while risking only 1% on
every first trade and having very low draw downs.These results are with
using margin, but that does not increase risk because we still risk only
1% regardless of using margin or not.
Day trading my system can make you
over 12% per month with the same low risk. You could make more once you
become experienced study the larger list of ETFs.
If you use an IRA account I will give
you a list on inverse ETFs which allow you to sell the market, but
because you can’t use margin in a IRA or 401k account you will need to
cut the above returns in half. Plus cut the draw downs (losses) in half.
Where else can you safely average 6%
per month or 3% per month in a IRA account trading only 10 minutes per
night? Anyone who complains about this does not understand real trading
and investing or has gotten sucked into the hype on the internet. I’ll
expo all that hype in a later article.
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