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An Indicator That Speaks Volumes

glabal chart researchVolume is a major indicator when analysing markets.

In the Global Chart Research we often mention the important relationship between price and volume. Volume can help determine market direction.

Yet the significance of volume is largely ignored or misunderstood by most traders.

Volume is the fuel that drives our markets.

How can we understand the meaning of volume when markets will go up on high volume one day, then do the same thing the next day on low volume? To confuse things more, price can head sideways or down on the same volume too.

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Will Rising US Interest Rates Drive Stocks Down?

US Interest RatesThe US Central Bank increased interest rates again this week - the eighth time since 2015 and cemented expectations for another rate hike this year. The Fed Funds rate is now at its highest level since October 2008 when Lehman Brothers collapsed.

The Fed cited an economy that remains strong and an inflation rate that hovers near the 2% target. More increases may be warranted through 2019.

Many investors believe this could be the trigger for a reversal of the massive stock market gains that have been created by record low interest rates and expansionary measures by global central banks.

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The Path of Least Resistance

trading pathLet’s continue our discussion on supply and demand. You can read our previous posts here and here.

1) If selling has decreased substantially on a down move it’s a sign that sellers are exhausted. Supply has waned. The market will have a tendency to want to go up.

2) If buying has decreased substantially on up moves, demand has waned. The market will tend to want to go down.

So, it will take an increase of buying on up days to make the market go up, and an increase in selling on down days to make the market go down.

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Current Research Project

research projectWith almost complete automation in my trading, and when not fishing, I spend considerable time researching the myriad of ideas that constantly pop into my head.

The latest is trend following with options as a part of the Trade Long Term Premium Portfolio.

Leverage aside, in theory options would allow lower capitalised traders to access higher priced stocks. The lowest stock price currently in the Premium Portfolio is trading at $242. The highest is just shy of $2000.

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Supply and Demand

supply and demandUnderstanding supply and demand can help us become more successful traders.

Supply and demand tends to be the professional trader's main focus.

This means researching the relationship between price action, volume and price spreads.

Novice traders however focus on technical analysis indicators; moving averages, stochastics, time cycles, astrological factors etc.

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Random Markets & Other Misconceptions

random marketsMost people see movements in the stock market as being random. Or at the very least heavily influenced by news. 

Yet how many times do we see a stock or market move in the opposite direction to what we thought it was going to do?

Sudden moves can often surface out of nowhere, and appear to have little to do with logic. 

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Beliefs and Objectives.

Beliefs TradingBefore you start trading it's good time to review your beliefs about trading, the markets, what you feel is possible, what you believe to be probable and what you think is false.

Once you've thought these through, review your objectives. What exactly are you wanting to achieve? What are you good at? What skills or traits do you lack? What about your own personal risk tolerances?

The beliefs held by many of the world's great traders can be found in various texts, such as the Market Wizards series by Jack Schwager.

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Stop. Revive. Survive.

Stop. RevivePreviously we've discussed how being passionate about what you do is an important ingredient towards success and longevity. 

And in our last newsletter we emphasised how exercise should be an essential part of everyone's weekly trading strategy to maintain physical and psychological well being. 

However, beware the paradox that can come into play as we embrace these types of strategies. 

That is, physical and mental well being may be keeping us in the game when what we really need to be doing is taking a break. 

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Move to Improve Your Trading Results

Move to Improve Your Trading ResultsLove trading?

For many of us it's a passion, whether we're trading full time or as a secondary income. 

With an endless learning curve, trading can be all-consuming with every spare moment spent in front of the computer. And this is where trading starts becoming an unhealthy pursuit. 

There are the obvious health concerns with spending too much time in front of our screens. One of the biggest is the sedentary lifestyle that comes with sitting for hours on end.

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The Biggest Business in the World

The Biggest Business in the WorldNo, it's not Apple Inc (AAPL), Amazon.com (AMZN) or Alphabet (GOOGL).

Every day billions of dollars change hands across stock, futures and currency markets around the world. As traders and investors, participating in these markets means taking part in the biggest business on the planet.

Major businesses have measurable goals and vision for now and into the future.

Yet you may be surprised to hear what the goals and visions are for the biggest of them all, Global Markets.

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