Below you will find the knowledge that every Trader must have. There is no way around this, so we have set this training in a way that makes getting the knowledge as smoothly as possible. Just sit tight and learn.
First of all:
What is the best asset class to start my trading adventure?
It’s Forex, for sure. Due to the leverage and execution speeds. Leverage on Forex can be as high as 1:3000 (which we consider a bit too high, 1:500 is more than enough) and on Forex markets you don't have to even know what the difference between “long” and “short” positions is, you just buy and sell. Let us explain - on some Markets (like shares or indices), you have no problem buying (called “going long”) but sometimes you cannot sell (to short, or go short). It’s because the regulated markets have limited number of buyers and sellers, and sometimes there is simply no one to buy from you. Always someone will sell to you, but not always someone will buy. OTC markets don’t have that disadvantage – but they don’t have any Order’s Book. So for Traders that have less than 5 years of practical experience Forex is the best choice, as in Forex the Broker must always buy from you. That’s his obligation towards you. The same goes for the execution time. On stock market you sometimes have to wait for 1 minute for your transaction to open, then you learn the “slippage” real pain (slippage is the difference between the price in the moment you pressed the BUY or SELL button and the price the position was really opened at). On Forex, people argue for $0,0001 slippage sometimes… On stock market, you can get $150 slippage and there is no one to cry to.
I was expecting to get everything served on the plate. Do you really expect me to learn?
Yes, we do. We know that there are a lot of teachers who promise to teach you everything without the smallest effort from your side. That’s (forgive us) a bullshit. If you just learn to copy someone, you will be stacked forever in the time when you made that copy, you will never be able to adopt to any new circumstances. Which means you will never follow Volatility. Our best Traders have acquired the knowledge from us once for good, and are leading some of the biggest Investment Companies out there, without any updates from us. We are still friends, but the skills we gave them still let them find themselves in any situation and in any market conditions. We teach how to “read the numbers” in a way unavailable to others. So, yes, we really do expect you to learn. Be ready for a brainstorm.
What are the styles of trading you mentioned before?
There are a lot of ways to trade, many of which are usually taken for something else. For example, many people think that quantitative trading is actually an algo trading. No, one has nothing to do with the other. Algorithmic trading is meant to be a programmer more than a trader - you have to write the code, where quantitative trading is simply precise mathematics. The confusion comes from the very fact, that mathematicians tell the programmers what the code needs to achieve. The floor of quants is strictly connected to the programme's floor. It’s about the speed, called HFT (High Frequency Trading –the computer opens one transaction every millisecond - not available to retail traders due to the cost scheme – commissions that don’t apply to the so called Interbank, the brokerage agreement for Institutions). Once mathematicians find a pattern (visible in quantitative analysis, that is the ones we teach and provide), the coders must write a code that follows that particular way of thinking, but does it very fast, faster than any human can. This is where algorithmic trading is taken for quantitative trading. And believe us or not, Institutional Traders are not really willing to clarify that, as they wish to keep their secrets. Programmers do programming, quants do analysis, no one expects a quant to be a programmer and the other way around.
But, going back to trading styles - in previous articles we mentioned the “red army style” and the “partisan style.” Let us explain: for someone with $10M account trading is a bit more difficult than for a small account holder, as that amount of money will always put some pressure over the Market. That money can be traded either by HFT (which for the Institutionals is the only way of a day-trading approach or in long time frames -with that amount of money, you move like a big whale, slowly and visibly). Or dark pools come into action - once you place your order, you wait for about 10 minutes to have it all filled. You get a series of partial fillings that look on the charts like a staircase, or a few broken breakouts (if you know what the breakout is, you must have seen it). That’s the “red army” style in action - usually devastating for amateur traders that still hope for the next Holy Grail Pattern to work. In the meantime, the Market has a lot of time to react, that’s why you have to plan your moves in such a way that other market participants will be unable to do anything about it (the partial openings). Your moves are big and slow, and once you choose a direction, you can’t change it without big losses. That’s why it’s called the “red army style”, because you have to behave like a big army. Partisan style, on the other hand, is something that Retail Traders do. It’s the opposite of the red army style. You can move quickly, change your mind whenever you wish and execute your orders within a split of a second. These styles take their names after the military strategies which are the sources of those approaches. Partisans turn their small size into the advantage over the big armies, they attack fast, and disappear even faster, before the big army can react. Therefore, Warren Buffet trades in the red army style, Retail Traders trade in the partisan style, and both profit from it.
What should I learn –technical or fundamental analysis?
To answer that, let us pose another question: why did Warren Buffet suffer those tragic losses recently?
If you wish to be a Trader, you must always draw your own conclusions but stay away from the vivid imagination. In this article, we expect you to do exactly that. This information is only known to and understood by a few people in the US. Now, we will give it to you. Get the most of it then:
There is a law in the USA that provides that traders cannot be informed by the Government or the FED about the future moves of the US Economy, everyone must find out about major movements at the same time. If the FED is, let's say, dropping the interest rates, no one should know about it in advance. Especially the people who participate in trading and have their own interest in that prior knowledge. Sounds fair and honest, right? And it’s not only about the interest rates. Every information that can help to predict the future prices on the American Exchanges, but is not known to the public, falls under this law. Its name is SEC Rule 10b5-1 – please read the definition HERE.
Now, let’s examine a hypothetical situation that will let you understand an important difference between the Institutional and the Retail Trading: there is a big crank in the economy, like in the Covid19 case, and you are the owner of, let’s say, a big Air Line in the US. You are using all of your means to get help from the government, the so called bailout, and you know that there is a very big chance to get one. On the top of that, you get a hint from a "friendly force" that the bailout is on the way. What do you do with your shares? You buy more, of course, because you know you will profit from it (buying your own stock is called buy-back, and it was considered a “dirty practice” years ago. Big companies were going bankrupt when they got caught on buying their own shares. Now buy-back is a common thing, no one is ashamed of it anymore).
When the bailout finally happens. You can sell some of your own shares to get a reward. You knew in advance that it was going to happen, the investment was solid. But let’s analyse another situation. A similar case. A big company that is “too big to fail”. The bailout is expected, so you buy shares. But finally, the bailout is not happening… what happens then? You get the picture?
These information is officially secret right up to the announcement time. But the FED has found a way around this by “reaching for expert advice”. Before such a big move as the bailout, the FED usually calls some experts for an advice. So being among those experts is a very good place for an investor, right? The FED possesses a list of experts that have enough knowledge and experience to be able to truly tell what such and such movement will cause. That’s understandable, as everyone reaches for advice from time to time. And it’s a well-known fact that Mr. Buffet has been one of the FED's experts for many years. Now, the circle of people who are among those advisors has changed recently. The current US government administration is doing many rapid moves, that are shaking the old system to the ground. One of these changes is reaching for expertise from different experts, as President Trump considered that the old crew is not doing any good for the United States. So, different experts have been called for advice regarding bailing out the US Airlines… can you connect the dots now? This is the knowledge that the Institutional Traders have by the way. This is something you will never find out from the charts. Only years of experience in the business can get you there. But, getting back to the subject, Mr Buffet bought airline shares worth millions of dollars and after a few weeks he sold them at a huge loss. Because no bailout came. The only way he could profit from that investment was a bailout, there was no other chance looking at the C19 crisis outcomes. He was always making such weird investments that proved to be profitable at the end, and that's why he was considered a genius. But not anymore. Up until now, he had always been sure of his decisions. He had never made a single mistake. Now he almost ruined his business. He has admitted that he simply doesn’t know what to do (and the whole Institutional Trader's World whispers that it's because no one asks him for advice anymore). He showed a totally different face to his shareholders, and with the above hint you know why was that. This is the reality of big trading. If you want to profit from the Markets, you must be aware of that. It's a rough business. Yes, it is. But you either get use to the reality or you lose. As a Retail Trader, you must be aware of the true forces that influence the markets, but you also have to understand where your place is in the whole system. Please, think about it for a while. A good while. We don’t want to scare you off, but we want to be honest with you. Markets are like the internet- they entwine the whole world. You must learn to look at every piece of news as a potential source of income, and also a warning against a loss. Looking at the charts is one thing, but understanding the Market's nature is something completely different. Please, have a look at this interview:
What is drawing of a Candle?
It applies to regulated markets only, where you have no leverage, but you can get (an expensive) “margin loan”. When you trade shares of a small company, your investment has an influence on the share price. Your order changes the price and you can see a candle on the chart that is drawn due to your own investment. This is drawing of a candle. As a Retail Trader, you can draw candles of small caps (assets with small capitalisation), that are sensitive to the smallest changes on the order’s book. You will never draw a candle for EURUSD of TESLA - capitalization is just too big, you will disappear in the crowd.
But it gets even more interesting, as forex is an OTC market, Retail Traders take only passive part in trading. We have no influence on the price whatsoever. Big banks have, and only them. The price of a currency depends (in day-trading) only upon the number of transactions around the world that are paid with this particular currency. If there are a lot of trades in USD and only a few in EUR, the EURUSD pair goes down. Also, there is an influence of single-time events, like Mr Trump announcements or the FED’s interest rate cuts. These are in general called “the news times”- we always advise not to trade in these hours, as the price is more unpredictable and spreads age getting dangerous.
What do Quants do?
Quants are like mushrooms- kept in the darkness of an underground building and kept shut. It’s because Quants are the only people who see the true face of the market at any given time. No one can lie to them, as they only trust the numbers. You will never see an Investment Bank press release with Quants speaking, as they might accidentally tell the truth. :)
They also know that in order to understand the market, they have to think like a market. They have to “become” a market, start perceiving the reality as the market does. Programmers are not needed on the floors of big banks all the time, Quants are. Programmers only write the algorithms that Quants tell them to do. So a programmer in a big bank can usually take the afternoon off, but Quants can’t, they are needed almost on the 24/7 basis.
As your own quant, you have to do everything yourself. But we will show you how to make a professional spreadsheet that works as a scanner in minutes, literally. You will not have to code anything.
What tools do Quants use?
To put it simply, Quants use tools usually made in the form of tables or spreadsheets that are showing life action on the markets from one specific angle of their choice. Value Traders want to see where the wealth goes, day traders want to see the opportunities for their style. Simply speaking, which asset is currently the best choice for, let’s say, breakout patterns. The tools we are talking about are either called screeners or scanners. You can find both of them available to Traders, but what you can find is the universal type of them. Let us explain.
First of all there is a difference between a screener and a scanner.
Screener is a graphical tool that provides you with the data with certain delay, as it needs to calculate a lot to get the requested result. Screener calculations usually base on long timeframes, like 15 minutes or more. Screeners are cheap, you can get a decent screener for like $30 / month.
Scanner is much faster, only numerical and provides data with no delays. It can be used even on a 1-minute timeframe. Scanners are much more sophisticated, and much more expensive. Decent scanner costs around $120 / month.
And many Traders use them. The only problem with them is that you can only use the data the particular scanner / screener provides. The makers of them are trying to make them as universal as possible, but it actually doesn’t work. A Trader using that tool is bombarded by tons of useless data, that instead of showing him the current situation are only confusing him. You can have a look on the search engine for those tools and find out for yourself.
The main point is to understand that every Trader looks for an opportunity that will give him “an edge” over the markets. That edge is a situation when the reality of modern markets is in “one way” road and it’s very easy to predict the direction. Let’s assume that you see the current correlation between GBP and JPY. A professional scanner will show you the rest of correlations of those particular currencies, an amateur scanner will show you everything else as well, so you will simply miss the opportunity. That’s why it’s so important to build your own scanner, as this is the only way to know what to look for and how to set it up. It might not sound revolutionary, but this is what Quants are responsible for.
What is a professional Portfolio and why do all the famous Traders make their own public?
A professional portfolio is simply a set of assets that you can trade at the same time. By preparing your strategy, you calculate your risk per trade and you come up with a number of assets to trade (we teach that in the Paid Programme). Let’s say, you have $500 for a start, you look into the assets available to you (we go through that in detail in the Paid Programme) and find the ones that meet your criteria - volatility, cost and return. In other words, you find those assets that you can afford and that can give bets returns. Then you analyse them from the point of view of similarity. That is to say you exclude those, that are moving together by choosing the cheaper ones. Having more money, you can pick other criteria, and by growing your account, you will have to adjust your portfolio. But you have to do it yourself. As me mentioned before, you are your own boss, no one will guide you because no one knows you as well as you do.
This is why famous Traders make their portfolios public - because they know that no one else can use them. It’s perfect for them, for their particular style of trading, but for no one else.
By choosing a decent portfolio, you are already ahead of the majority of Traders, as most of them don’t understand the purpose of a portfolio. It’s as personal as your surname, and no public market watch will replace it. We will teach you how to pick the best assets based upon your circumstances, and how to use it the best way. Your portfolio can consist of 20 or 200 assets. It's all down to your own ability to read the scanner well. We are helping you to pick the best assets from many brokers and put them all together in one scanner that we make together. In that way, you will have everything you need on one screen and you will see things that others don't - within your portfolio. We hope that by now you understand the power of what we provide. Let's admit - your brain will have to get used to trade in pro way, but this is the right way to be successful.
It is not true that every Trader trades the same assets. No, every Trader has his own set of assets that he knows like old friends, and feels good trading them. For example, old-school Traders don’t like trading Crypto, as every Crypto is very hard to get familiar with. Cryptos don’t want to have friends, they say. And they simply don’t trade them, as by doing that they will break their own style. And this is a pro approach. Amateurs laugh hearing that. We don’t, we actually recommend those Traders to the best jobs.
Reserve "for tommorow"
What is the secret of currencies?
It’s that they are all connected. That’s why your portfolio must include some other assets, like indices or commodities. But those currency connections don’t last long, usually everyday there is a reset of their dependences.
All currencies of the world have their own multi-currency replacement that banks are using for years. It’s not true that Bitcoin is so revolutionary. There is something else that existed long before the Cryptos (since 1969). And that is SDR (Special Drawing Rights) currency. You can read about it here: LINK
SDRs are used to exchange the currencies between the Courtiers, and that makes all the currencies connected. The SDR has its own value in every currency, and it’s announced once per day by International Monetary Fund. We, as Retail Traders, can’t trade SDRs, so brokers never mention them, but it’s the SDRs that dictate the relation between currencies common movements that you are looking for.
The secret of SDRs is, that they are always announced after European lunch time when American banks have just joined the markets. It’s sometimes a bit before the US Market’s opening, sometimes a bit after (Institutional Traders start trading at 6 a.m.). But it’s always after the big banks make their daily trades. So, the SDR announcement can be treated as the currencies reset time. It is assumed that when the US is joining the Markets, the situation always changes due to the US pressure. Which is not true, it’s because of the SDR announcements. Look closer on the days, when there was a bank holiday in Europe, but not in the US. On those days, that daily reset did not occur.
But what is the practical conclusion?
That no currency is actually independent. Therefore, the portfolio and the scanner must be sensitive to the common movements, so the Trader can see them straight away. On one day the Euro goes hand by hand with the Dollar, on the other day it goes separately. You can always detect common relationships within one day, always up until the SDR announcement. Please, remember that, because that is also a very valuable information.
Depending on the time when you trade and part of the world you are in, you should adopt a way of “saying good morning” to the Markets by finding out what is the current currencies connection and setting up a little break for the SDR announcement.
The International Monetary Fund makes its announcements here: LINK
In this Free Programme, we wanted to show you the way of thinking you must adopt if you wish to become a profitable Trader. You don’t need a Degree in Economics, but you must understand the situation on the financial markets to be an independent Trader. If you only learn to copy someone, you will never discover your potential. But if you get to know what really happens on the Markets, you will stand a chance on it. Please understand that by joining the Market you are joining the table of the most sophisticated game on this planet. Your opponents are the most intelligent people out there. You must prepare in the right way, you must learn the industry. There is no shortcut on the markets. 80% of losing Traders look for shortcuts and this is why they suffer losses. If you want to win, someone must lose. And the winner is always the person who has done his homework better. The equation is simple, like in the old army saying “the more sweat on the training field, the less blood on the battle field.” And since you are your own commander, it's all up to you.