it. The environment will not overlook your trade position.
As you read through this do not assume that you must know all of
this inside and out in order to trade. You don't
What you need is a
working appreciation or understanding of what affects what. That's all.
Don't try to make yourself an economist. It's not necessary, but, as I
point out: the more you know, the more you know.
You'll grasp these
relationships over time anyway.
Either you know what you're doing or you don't.
Learn how not to lose in the market and
are actually beginning to learn how to trade!
Face it... the more you
know, the better your decisions.
You will need guidance
the critical things you need to know before
you start trading.
If you don't know what those critical things are,
you may be blindsided by those things
you don't know you
don't know. That's why you need a coach. Believe that if you
believe nothing else.
Use this page in conjunction with the
Sector Rotation page to complete
the "Big Picture".
a stock market or option trading coach sends you in to
play, he/she needs to verify that you indeed understand
the big picture of the game you are playing. The function
of the stock market is to act as a discounting mechanism
providing valuation and a trading platform for corporate
stocks, bonds and derivatives (options & futures). You
can view the market as a proxy as to the health of the
economy looking forward about three to six months.
Think about that for a moment,
the market discounts news as well as expected
earnings looking forward in time. As such, the driving
force of those valuations and reevaluations is
news- week-by-week, day by day, minute by minute. It is
the same news that instills
fear and greed in investors. News, good or bad, is
quickly evaluated adding or subtracting from current stock
price valuations, i.e., does the event add potential
profit or detract from profit?. In addition to company
specific news there are core economic
elements that affect the market such as a rise or fall
in interest rates, fuel prices, inflation, taxes,
government regulation and economic indicator
announcements, corporate earnings, competition, currency
valuations, to name some of the more important ones.
Therefore, you need to be aware of these events. The
action in the stock price will tell you what the markets
think of the news. You need to trade the reaction
rather than the news itself..."buy the rumor, sell the
news" is an old
expression. All of these swirling push-pull
phenomena become your trading environment. So do you buy
(go long) or sell (short) a stock? Do you start with the
chart or with the market environment, i.e., do you start
from the bottom up or from the
top down? If you've followed this so far, you'll have
no problems. If you're still baffled, call me...this is
what I do, I teach you the critical stuff.
quoted on TV refers to the
relationship between the futures contract on a market index and
the actual value of the index. If the futures are above fair
value then traders are betting the market index will go higher,
the opposite is true if futures are below fair value."
Fair value is only relevant in the real world as to how the
market will open and not how it will behave all day.
A sample News Headline
are the indicators released by government to monitor
Some are more important
than others with the Employment report
arguably being the most important.
is your market
environment. Do you know where we are