I think it’s everyone’s dream to know exactly how to trade and anticipate correctly financial markets. Maybe even perfectly, like buying at the minimum price and selling at the maximum price.
Well… let met stop you there immediately… I am sorry, but this doesn’t exist! Nobody can successfully always buy at minimum prices and sell at maximum prices.
In general, whoever tells you something too good to be true, it probably is!!
But don’t worry, it’s not all bad out there.
There are some techniques that actually work, and that if used correctly can give you good satisfactions.
In my own experience (I started trading crypto back in 2018, “those were good old times”), after spending some years of my life mainly on my personal growth, I approached the world of trading.
It goes without saying that it completely got me into it, as I was fascinated by how the financial markets could be used as ways to achieve financial freedom, which is one of the main pillars of wellness.
I unexpectedly discovered a passion for the financial markets, and in particular the cryptocurrency market. I spent years trying to figure out “how it all works”, and how to be profitable in a market where 90% of the traders lose their money (according to major brokerage companies’ declarations).
I am here today to explain you what I found out, and most importantly, what really works.
1) Technical Analysis
Technical Analysis is a trading technique that uses tools to predicts the market moves through market anticipation.
It uses different methods, such as patterns, trendlines, indicators, etc., as mechanisms to understand which areas of the price action (PA) can potentially give specific reactions. These potential reactions is what traders and investors try to exploit to make profitable trades.
This means that for example if a specific area can potentially impact the price positively, I speculate by betting that the PA will go up from that specific area.
On the contrary, if a specific area can potentially impact the price negatively, I speculate by betting that the PA will do down from the identified specific area.
This is a technical analysis graph I made for you to understand some basic aspects of technical analysis.
2) Cyclic Analysis
Cyclic Analysis is, like technical analysis, another trading technique that uses tools to predict the market moves through market anticipation.
Unlike technical analysis, cyclic analysis also uses the variable ‘time’ to analyse the market, rather than only the PA.
This trading method is based on the fact that everything, including the financial markets, are part of a cycle that starts, grows, declines, and ends.
In particular, bigger cycles contain smaller cycles, ranging from the ‘smallest’ t-6 cycle (which represents approximately 3 hours) to the biggest one represented by the K Cycle which lasts around 50 – 70 years.
These concepts are difficult to explain in just a couple of sentences, but to make the long story short, time is used as half confirmation of a potential future movement, and PA represents the second half of the confirmation itself.
Sometimes half confirmation is used (only the time-confirmation, or the PA-confirmation) if the market conditions allow it.
Here for you guys an example of cyclic analysis.
3) SMT – Smart Money Trading
Smt is different from Cyclic and Technical analysis in its nature, as it uses tools to predict the market moves through price reaction, rather than price anticipation.
What I mean by that is that SMT uses trading techniques that looks for market confirmations at first, and then uses such confirmations to base the trades on.
Also, SMT looks for points of liquidity, which generally are areas of the PA with an imbalance, or extremes of a range.
I understand it can sound complicated, and in fact it is complicated to understand unless you study it well enough.
In SMT time is used only as a different timeframe (like in technical analysis) and does not represent any kind of confirmation to anticipate market moves.
I made an SMT analysis for you, if you are curious to know what I am talking about.
Information you can’t find in Books
What is not explained in books is how things really work.
Technical analysis is the oldest known and recognized trading strategy, reason why the majority of people base their market predictions on this technique.
SMT analysis uses the trigger points of technical analysis as opportunities to get liquidity from the market. This is what is used by the market makers of the financial markets.
The fact that the majority of traders (called the retailers, aka small fishes) uses this technique basically allows banks and institutional money (called whales) to move the PA in specific points where the retailers would close their trades in loss (called stop loss) allowing the whales to find liquidity in those points. Such liquidity is then used by whales to move the market in their desired direction.
SMT basically teaches what the whales are looking for, so that you move in line with them, which means you make money with them.
So the question that should come to our mind should be ‘then when is Technical Analysis useful’?
I find Technical Analysis to be more useful in long-term analysis rather than short-term and medium-term analysis.
I also noticed that technical analysis patterns and behaviours are valid until when the whales decide to make their moves, so it can be used in that sense. Technical analysis therefore leads to higher risk operations, but aggressive traders (high risk operations) might still find it useful to use.
I prefer to have a less-risky trading strategy, reason why I normally use SMT for bigger capital operations and technical analysis for smaller capital operations.
The best existing trading technique combination out there (as far as I know)In my experience I learned to prefer the combination of SMT and Cyclic Analysis to optimise my hedge at maximum levels.
I use the PA’s reaction-nature analysis of SMT, together with the anticipating-nature of cyclic analysis, to find moments where both trading style’s trigger points match with each other. Only on that moment I execute my trade orders.
This highly increases the success rate of the trades.
I would suggest you these books if you want to study technical analysis and cyclic analysis. If you really want to understand all the concepts that are behind these trading techniques, don’t be shy to try it out yourself (but be ready as it will take a long time and effort before you can become profitable in any financial market).
1A) Technical Analysis:
1B) Study Guide for Technical Analysis Book
2A) Cyclic Analysis
When I will find a reliable source to learn SMT from, I will post it here in the article.
My current knowledge of SMT is a combination of different researches that I did independently through the web, and not a course or book I bought and learned from, that’s why I can’t suggest anything for you right now.
Instead, I found a website that briefly explains what I mean by SMT analysis, and that provides tools to use in the Forex market (attention: I have not used nor tried their tools, I only reference their explanation of SMT analysis!!).
If you liked my article and want to understand more about any trading strategy, or want to share some ideas, or understand how to make money in the financial markets, just leave a comment below and I will be more than happy to guide you into it.
I hope this article helped you understand one aspects of financial wellness: financial freedom.