Trading – How to trade and win in the market (without being overworked and burnt-out)?

Trading room – Tue 11 Dec 2018

Every trader wants to buy a stock that is going to go higher and obviously, for those who sell or short, the same trader wants to enter into a trade that is going to go lower.

Now, we all know that stock price movement is at its base merely a function of the supply and demand for the stock.

For a stock that is going to move higher, it’s just simple more buyers who want to own a particular stock versus the number of sellers who are willing to sell their shares to those buyers. But here is the key consideration.

Elite traders want a stock that is always going to move in a significant way. Of course, they’ll always be small, thinly traded stocks that will pop up for a day or two but there won’t be any liquidity in these stocks for a trader to make a sizable profit sum.

Hence, as elite traders, we would only buy into a stock that will go higher for a sizable sum and length of time. These are the kind of moves that can make a difference in your overall performance and maximize the use of your capital.

Another factor to consider is the quality of the company that one enters into a trade.  Common traders tend to get sucked into flimsy stocks that are moved up on manipulation as price action is probably the only common denominator in their decision.

And hence, because of greed, common traders then to buy late(when the price moved high enough to attract them) and refuse to sell (as the higher the price go, the higher their hope of them making a bigger gain from the stock).

In reality, such manipulated stocks tend to trap a common trader as they are prone to sudden and quick moves. It is not that you cannot trade such stocks but rather you have to be very alert to track the movement in such stocks and common traders typically lack the skill and tools to do this and hence, tend to get trapped at the top of the cycle.

Trading such stocks thus should be left to elite traders who are comfortable to manage their positions in such stocks given their skills, experience and tools at hand. After all, elite traders are trained to do battle against other tough traders in the market and against the market itself.

On the other hand, elite traders like to hitch a ride on stocks that are being pushed up by buying from the institutional money.

The reality is, it’s the big fund managers who are really going to move a stock for any sustained period of time. These managers are investing millions of dollars every day and this kind of activity is what makes a stock go higher for a sustained period of time.

Hence, it is not only speculative and manipulative stocks that offer great opportunities in the market for elite traders but also quality stocks that are rising on the back of institutional buying.

As it is, the problems facing a common trader has increasingly multiplied many timesover today. 

The competition and complexity of trading has risen in the new age where the business world is changing with newer companies and businesses in new-age industries replacing the traditional bricks-and-mortar businesses.

And the investment markets are also seeing newer financial technologies (fintech) such as automated investing and trading software, robo-advisers and social media wealth management platforms.

Globalization and social media have caused markets inter-play and real time news to affect stock prices almost instantly.

Movement in a stock price may have nothing to do with the company itself but rather on events happening on a global scale such as geopolitical or economic or in another asset class such as a commodity or interest rate.

These among other factors are causing volatility to rise in the prices of equity instruments and markets locally and worldwide. Choppy price movements instead of the traditional straight-line rise or fall are beginning to be the norm, confusing even traditional research and analysis.

In the end, without the resources and skill to track new-age trends and developing factors, the common trader is left to suffer at the hands of the elite traders, who move ahead in and out of the stock first at the right time.

The global and coming future trend for trading and investment houses are to employ mega-salaried data scientists, or”quants,” who program ultra-sophisticated algorithms and even self-correcting artificial intelligence (AI) statistical models to predict market trends and pinpoint particular trades.

And this is not your common trading platform charting system.

We are talking cutting edge, state-of-the-art,multi-million-dollar programs that utilise the latest in technological programming to analyse and make sense of millions and billions of bytes of data in seconds to consistently help their traders and investors be ahead of the market.

In the past few years, the trend has been that even fundamental analysis has taken a back seat to algorithm– generated mathematical formulas modelled to eliminate risk about a stock’s short and long-term direction.

Professional fund management firms and newer players into the industry now have systems that not only pick the stocks, but also auto trade completely without human interaction at high-frequency.

These developments further leave the resource and skill gap between the elite traders and the common traders growing wider, making it harder to for the common trader to make money in the market against the professional and elite fund traders in the market today.

If you want to spot the best stocks that are going higher, you need to cover the entire breadth and depth of the market using algorithms that will fast forward the time, effort and speed that it will take you against other elite traders in the market and the institutions.

There are many ways to spot a stock that is going to move higher. Tell-tale signs such as sudden rise in volume, the breaking of a key critical levels in the stock price, an expansion of volatility, counter-trend moves at anticipated levels predicted way in advance, time expansion, and etc.are only just some of the methods used by the crème-de-la-crème elite traders in the market.

The only problem is as the complexities of trading and volatilities in the market rise along with new players and technologies, how are you going to spot these stocks in the market earlier than others and consistently with confidence without being overworked and burnt out?

Can you still rely on manual works while the elite traders and institutions increasingly rely on automation and technology?

Imagine if you can identify, track and enter/exit the stocks with ease and at the most optimum levels. Imagine if all these triggers are available for you to act on as soon as they appear in the market. Imagine if you can spot some of the best trends in the market as they happen simultaneously in complete correlation.

Imagine if you can choose the best diversified portfolio by picking from a complete market universe rich in depth and breadth. Imagine your knowledge, skills and confidence at this stage and you probably have reached the level of a master trader in the market.

At mPower Algorithm and mPower Trading, quantitative, big data analytics and algorithms form the core of our belief as elite traders in the market.