The Truth About Market Forecasters

What 35 Years Trading Has Taught Me About Forecasters

 

CNBC and Bloomberg Can Make You Poor A guest analyst on CNBC makes a bullish comment and the Dow rallies 150 points (July 2009). All afternoon we hear about the "Guest Analyst Rally". Why is this dangerous? The rally and the bullish statement were unconnected. They put 2 and 2 together and made 5. How do we know? The fact is that the low of the move was a target from 6 days earlier (out by 1 point) combined with a key support (hit exactly). The low was made hours before the analyst spoke. The extent of the rally was also known in advance (predicted by my system based on market dynamics), again well before the analyst appeared on CNBC. So how can they be connected, when all the key levels were predicted in advance? Now getting it right for the wrong reasons is a bonus but what about when they really mess it up? "No support" was the strong advice for trading Sterling. (This time it was Bloomberg) Sell, Sell, Sell !! BUT the market bounced. What happened if you listened to the TV and stayed short? You could have broken even on the trade 9 years later, but only if you had stayed short through a 7,300 point rally. You were exposed to totally incorrect information given out by the financial news channels as if it was a fact. This is not trading, it is hoping. Fundamental Analysis Fundamental analysis can be used for forecasting many things. Forecasting accurate levels for market turning points is not one of them though. The fundamental analysts may sometimes get the direction correct but the predictions for the target levels are often nothing more than wild guesses. Don't lose your money listening to all those "experts" on the T.V. and don't forget that if anyone appears on T.V. or writes in a newspaper giving financial advice, they do NOT have to be qualified. Technical Analysis Technical analysts are like Jemima. When they are good they are very very good but when they are bad they are horrid. Many you see on T.V. are unqualified, inexperienced and base their knowledge on reading a few books or as one of my old colleagues used to say "One book and not a very good book at that". Unless you know their track record and the risk criteria they use for their trading, then forget it. You could be risking your hard earned cash on an idea they only thought of on the way to the studio because they didn't have much to say. The True Nature of Markets Let's make this really short. Markets are NOT random. It's worth saying that again because it is vital that we all understand it. Markets are NOT random. Accurate predictions for market turning points can be made and they can be made not just for day trading. They can be made for years into the future but only if you know how to do it and know how to unravel the DNA like quality that price data has. After many years of research I discovered how to do this and I can show you how to do it too. Strong Trends and Super Trends Markets that trend do so generally in three ways. They either trend gently, strongly or  exponentially (Super Trends). If you get the type of trend wrong you are in danger of losing money faster than you can say "I've lost the lot". You need to know how to recognise the difference and recognise it early as there is a lot of money to be made in them. The "Dot Com" boom was an exponential trend. So was Wheat, Gold and Oil. All good trends come to an end though, which brings us to Crashes. Crashes, Panics and Big Moves Again these are not random events. The 1987 stockmarket crash happened for a reason and it wasn't for any of the reasons that I have seen put forward by the so called experts. I was working in the City of London at the time, for a major bank, and was right in the middle of all the action. Afterwards I wanted to find out the real reason it happened and I found it.  Guess what, the 1929 crash looks very similar and so does the 2000 "Dot Com" disaster. I am not just talking about "the market has gone a long way very fast so it must come down", I am talking about having information good enough to trade on with a quantifiable risk. Big moves do not come out of thin air, they can often be be calculated and predicted in advance. This type of information can even be used every week for high quality/low risk day trades. You just need to know what to look for and how to calculate the turning point prices.   Non Trending/Trading Range Markets Non Trending Markets = Cash Machines Trading ranges can be one the best markets to trade (about 80% of market time is trading ranges) but there is a problem that makes them difficult to trade unless you have the right information. The highs and lows of the ranges shift like the boundaries of an offshore quicksand. What looks like a buying opportunity on a breakout can actually be the new high. You might buy at the worst possible moment if you don't know the new price levels. Don't get caught out. Know the real levels in advance. The Truth is that the Only Person Who Can Manage Your Money the Way You Want it Managed .....is YOU !