Brandon Wendell, CMT
Brandon Wendell
One of the core pieces of Online Trading Academy’s Core Strategy is to help traders succeed by trading in the same manner and direction as the large trading institutions. Many people have questioned the ability of being able to know where these buying or selling points lie; that is until they learn the strategy and see it working for themselves.
Many people even doubt that these large trading institutions exist. We commonly think that the large banks solely engage in businesses like managing client accounts and thrive on commissions. The truth is that trading activity constitutes either a large portion or even the majority of their profits. Need proof? Well, these large institutions are publicly traded companies so one only needs to view their annual reports to see where their profits really come from.
Bank of America, for instance, made 13 billion dollars from their investment and brokerage services but over six billion from their trading activities.
Morgan Stanley’s largest income producer was in fact their trading at over $9 billion. This easily dwarfed their moneys received from investment banking or commissions.
JP Morgan Chase is known as a banking center and a brokerage, but they also made over $284 million from their trading activities.
If you have ever been involved in trading the US equity markets, you should be aware of market making activity. If you do not know what this is, you definitely need to educate yourself before risking any more money in the markets themselves. Market makers create liquidity in the equity markets by buying and selling securities for themselves and their clients. But they are also able to manipulate prices in the markets. This leads to losses from the uneducated traders who still commit money to the markets.
One of these big market makers is Goldman Sachs. We know them as an investment banking company, but as you can see from their financial information, they made over $9.5 billion last year in market making activity. This is trading!
If you think that I am just trying to promulgate an “us against them argument”, let’s check out the facts. There are scores of data points that show that the big institutions are more interested in profits for themselves than helping you secure your financial future. In fact, trading activity for these institutions has become much more profitable.
Neither Freedom Management Partners nor any of its personnel are registered broker-dealers or investment advisers. I will mention that I consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. Because I consider the securities or positions appropriate to the discussion or for illustration purposes does not mean that I am telling you to trade the strategies or securities. Keep in mind that we are not providing you with recommendations or personalized advice about your trading activities. The information we are providing is not tailored to any individual. Any mention of a particular security is not a recommendation to buy, sell, or hold that or any other security or a suggestion that it is suitable for any specific person. Keep in mind that all trading involves a risk of loss, and this will always be the situation, regardless of whether we are discussing strategies that are intended to limit risk. Also, Freedom Management Partners’ personnel are not subject to trading restrictions. I and others at Freedom Management Partners could have a position in a security or initiate a position in a security at any time.
Editors’ Picks
EUR/USD rebounds after falling toward 1.1700
EUR/USD gains traction and trades above 1.1730 in the American session, looking to end the week virtually unchanged. The bullish opening in Wall Street makes it difficult for the US Dollar to preserve its recovery momentum and helps the pair rebound heading into the weekend.
GBP/USD steadies below 1.3400 as traders assess BoE policy outlook
Following Thursday's volatile session, GBP/USD moves sideways below 1.3400 on Friday. Investors reassess the Bank of England's policy oıtlook after the MPC decided to cut the interest rate by 25 bps by a slim margin. Meanwhile, the improving risk mood helps the pair hold its ground.
USD/JPY rallies to near 157.00 as Yen plunges after BoJ’s policy outcome
The USD/JPY is up 0.85% to near 156.90 during the European trading session. The pair surges as the Japanese Yen underperforms across the board, following the Bank of Japan monetary policy announcement. In the policy meeting, the BoJ raised interest rates by 25 bps to 0.75%, as expected, the highest level seen in three decades.
Editors’ Picks
EUR/USD rebounds after falling toward 1.1700
EUR/USD gains traction and trades above 1.1730 in the American session, looking to end the week virtually unchanged. The bullish opening in Wall Street makes it difficult for the US Dollar to preserve its recovery momentum and helps the pair rebound heading into the weekend.
USD/JPY rallies to near 157.00 as Yen plunges after BoJ’s policy outcome
The USD/JPY is up 0.85% to near 156.90 during the European trading session. The pair surges as the Japanese Yen underperforms across the board, following the Bank of Japan monetary policy announcement. In the policy meeting, the BoJ raised interest rates by 25 bps to 0.75%, as expected, the highest level seen in three decades.
Gold stays below $4,350, looks to post small weekly gains
Gold struggles to gather recovery momentum and stays below $4,350 in the second half of the day on Friday, as the benchmark 10-year US Treasury bond yield edges higher. Nevertheless, the precious metal remains on track to end the week with modest gains as markets gear up for the holiday season.
Crypto Today: Bitcoin, Ethereum, XRP rebound amid bearish market conditions
Bitcoin (BTC) is edging higher, trading above $88,000 at the time of writing on Monday. Altcoins, including Ethereum (ETH) and Ripple (XRP), are following in BTC’s footsteps, experiencing relief rebounds following a volatile week.
How much can one month of soft inflation change the Fed’s mind?
One month of softer inflation data is rarely enough to shift Federal Reserve policy on its own, but in a market highly sensitive to every data point, even a single reading can reshape expectations. November’s inflation report offered a welcome sign of cooling price pressures.
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5 Forex News Events You Need To Know
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Top 10 Chart Patterns Every Trader Should Know
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What Are the 10 Fatal Mistakes Traders Make
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The challenge: Timing the market and trader psychology
Successful trading often comes down to timing – entering and exiting trades at the right moments. Yet timing the market is notoriously difficult, largely because human psychology can derail even the best plans. Two powerful emotions in particular – fear and greed – tend to drive trading decisions off course.