Do you think you have to be smart to make money trading the financial markets? Think again. While there are strong studies on the correlation between IQ and income levels that show the higher the IQ, the stronger the income, I would argue the supply and demand strategy that I write about so often flips that equation. Meaning, from my experience, the less you use your smart brain and instead keep things at the kindergarten level with some discipline, the more likely you will have success.
Let’s take the same approach with this article and keep things really simple.
The chart above is a recent trade we took in one of my live trading sessions with members of the academy. It was in Crude Oil futures, one of the many markets we monitor and trade. The trading opportunity offered us a $3.00 gain for $0.30 of risk. Price rallied up to our predetermined supply zone (retail prices) where we sold short, and then it fell to our predetermined demand zone (wholesale prices) where we bought back for a profit.
As you can see on the left, many students reported reward to risk gains that were very ideal. So, what did we need to master to identify and take advantage of this opportunity? Let’s dive into that question…
Question: How much do we need to learn about the fundamentals of Crude Oil and that market?
-
Answer: Nothing at all.
Question: How much do we need to focus on the fundamentals and news around Crude Oil?
-
Answer: Not at all.
Question: Do we need to know or focus on whose supply and demand it is at our levels?
-
Answer: No, we don’t at all, it doesn’t matter.
Question: Do we need to be an expert in math or economics?
-
Answer: No, not at all.
Question: Does it matter if we really don’t understand what Crude Oil is and think Oil is something that grows on a tree and we eat it?
-
Answer: Doesn’t matter at all.
Question: Do we need to know how to quantify and identify real supply (retail) and demand (wholesale) on a price chart?
-
Answer: Yes, this is how you profit buying and selling anything in life, so you have to master this.
The big illusion is that you have to be a walking calculator or Ivy League economist to be a great trader or investor. The reality is, you don’t. How we make money trading the financial markets is exactly how you make money buying and selling anything.
Really think about how you buy and sometimes sell things in other parts of life. We always try and buy at wholesale prices and sell at retail prices just like any business or store does.
Really think about it for a minute. You probably know what a sale price on laundry detergent is, but do you know the chemical make up of it? Do you care? Do you know the factory it’s made at and who manages that factory? No, you’re focused on price. Whether it’s the detergent, a car, your home or your trading and investing markets, your thought process and strategy should not change. There is only one way to make money buying and selling anything in life. Don’t let the illusion of a complicated financial system fool you.
If you have any questions or comments, please let me know I am always happy to help if I can.
Read the original article here - Are You Too Smart to Make Money?
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Editors’ Picks
AUD/USD pressures as Fed officials hold firm on rate policy
The Australian Dollar is on the defensive against the US Dollar, as Friday’s Asian session commences. On Thursday, the antipodean clocked losses of 0.21% against its counterpart, driven by Fed officials emphasizing they’re in no rush to ease policy. The AUD/USD trades around 0.6419.
EUR/USD extends its downside below 1.0650 on hawkish Fed remarks
The EUR/USD extends its downside around 1.0640 after retreating from weekly peaks of 1.0690 on Friday during the early Asian session. The hawkish comments from Federal Reserve officials provide some support to the US Dollar.
Gold price edges higher on risk-off mood hawkish Fed signals
Gold prices advanced late in the North American session on Thursday, underpinned by heightened geopolitical risks involving Iran and Israel. Federal Reserve officials delivered hawkish messages, triggering a jump in US Treasury yields, which boosted the Greenback.
Bitcoin Price Outlook: All eyes on BTC as CNN calls halving the ‘World Cup for Bitcoin’
Bitcoin price remains the focus of traders and investors ahead of the halving, which is an important event expected to kick off the next bull market. Amid conflicting forecasts from analysts, an international media site has lauded the halving and what it means for the industry.
Is the Biden administration trying to destroy the Dollar?
Confidence in Western financial markets has already been shaken enough by the 20% devaluation of the dollar over the last few years. But now the European Commission wants to hand Ukraine $300 billion seized from Russia.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
Discover how to make money in forex is easy if you know how the bankers trade!
5 Forex News Events You Need To Know
In the fast moving world of currency markets, it is extremely important for new traders to know the list of important forex news...
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and...
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.