its no secret. 90% of traders lose 90% of their capital within the first 90 days. On every regulated broker you will sign up to they will have this warning or something similar plastered somewhere on their website. Its not for show.
When it comes to learning how to trade the attention and emphasis is typically placed in the retail traders sphere. The individuals, their tools and their method of thinking. This is emphasis placed on the wrong area.
Why would you focus on an area where 90% of the individuals operating in that space go bankrupt in 90 days ? Obviously that areas is not effective. Think about it. Would you place a bet on a sports team to win if the lose 90% of their matches ?
In the game of trading there're two sides. The institutions and the retail traders. If anyone could have a broad look at the game of trading you could say (Jokingly) that it is a game built and designed for institutions to take money from each other and financially ruin the lives of retail traders.
What do you do then ? instead of being a retail trader an individual would be much better off thinking like and about institutions. As their thoughts and opinions (Of institutions) create the truth of the markets. The market doesn't massively move (Under normal circumstances) by the thoughts and actions of retail traders (Although it is possible) the people who move the markets are institutions.
This viewpoint redefines our understanding of trading and understanding of the fundamentals.
The fundamentals could be defined as the key facts or observations institutional investors look for when deciding to buy or sell (Participate in a market) and set price targets for the market.
In a sense the institutions are behemoths chucking around a massive amount of capital and this massive amount of capital which they move around and disperse and give/take to each other creates the fluctuations we see in price.
Support and resistance are the byproducts of orders that institutions have made at a specific price levels.
Trading is really a game of institutions vs institutions and institutions vs retail traders. The only different in these two games is that the retail trader gets crushed along the way.
If you look through the market with the lens of, what decisions are the institutions going to make and why you would have developed a much better trading rationale and will be much more efficient and effective as a trader yourself.
This leads to a weird conundrum when it comes to studying this field, Most of us learn initially from retail traders. Which is not a bad thing. However the fact of the situation is still the same. 90% of traders lose 90% of their capital within the first 90 days.
If their education was effective this statistic would have changed. The reason why this statistic remains the same is due to a problem in trading rationale.
Individuals focus on retail traders, They focus on retail trading tools and they focus on retail trading ideas rather than analyzing the market from the stance of "What are the institutions going to do ?"
By focusing on retail trading instead of the institutions and their actions at specific levels and the reasoning behind their actions is like trying to understand a human society strictly by studying ant society. Yes it may look interesting but unfortunately your looking in the wrong place and thinking about the wrong things.
Any trading activity which is in some way shape or form (knowingly or unknowingly) not centered around "What the institutions are going to do" is an activity destined to be ineffective.
Its not the actions of retail traders which make the market. Its the actions of institutions that make the market. If there were no institutions the financial markets as we know them would not exist.
The key takeaway I hope everyone gets from this is that If you think "What are the institutions going to do and why" you'll have become a better trader. And if you refine this ability you'll improve your profitability.
Where most individuals fail in trading is by not focusing on what the institutions are going to do and why. They focus so much on the mechanics of the market such as support and resistance and moving averages not realizing that they'e by products of the decisions and actions of institutions nothing else. They're symbols and indicators of the activity of institutions.
This is what allows most retail traders analysis to be come extremely technical and complicated. They've disconnected from the fundamentals of who creates the market. They've stopped focusing on the creators of the market and started to focus on the creations itself.
This is the equivalent of trying to figure out whether or not Ford will go bankrupt by looking at their latest model of car. It may work if you are looking and thinking in the right way but it is not an effective operating basis.
The movement of the market in all forms, shapes, speeds and sizes is created by the decisions and actions of institutions and nothing else. You can draw as many lines, blocks and give those lines and blocks as many fancy names as you want. It doesn't change that basic fact.
In theory, all those fancy lines and blocks wouldn't be needed if you knew exactly what the institutions (As a group) were going to do in the short term and which side would win in the institutional tug of war called buyers vs sellers.
What are buyers and sellers ? They're institutions. When buyers win, it simply means that the institutions who were buying managed to out buy the institutions who were selling to push the price of the asset up.
In a sense it is belief that creates price movements in the market. If more buyers believe more strongly than the sellers that the price is going to go up then the price goes up. If more sellers believe more strongly that the price is going to go down then the price will go down.
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