I am not a stock trader or any kind of trader for that matter, but I like studying the markets to get a feel for how things are going in the investment world. I believe that knowledge is power, so I’m pretty open to any kind of financial education I’m able to receive on the subject of investing.
Studying The Stock Market In A Different Way
Although I don’t participate in it, one thing that continues to fascinate me is the world of trading. I used to be a casual trader in another life, and one with a horrible track record. When I was very new to the stock market, I started off by trading. And I was very poor at it. I had no “game plan”. I had no idea what I was doing and I bought and sold stocks based on “how I felt” about a stock. I obviously had no strategy whatsoever. And no, I definitely did not get any better at it!
Since then, I abandoned the active trading strategy and went on to become a passive index investor. Now with the indexes at their lowest points in twelve years, long term investing doesn’t seem to have been the greatest investing strategy we’ve taken either, but I’m still keeping the faith that there’ll be a market recovery in the horizon.
What Does “Trading The Market” Mean?
What’s interesting about successful traders though, is that they make their money differently from those of us who invest for the long term. I checked out this video to see the kind of things they’re interested in keeping up with:
You can click on the image below or this link to watch the video.
Traders keep a close watch on general market trends and try to capitalize on their volatility. As you can see, they use charts to figure out their next move and some of them are lucky enough to be making some money out of it (in the video, the trading experts at INO.com, an online company providing investment resources, made money on 4 trades and lost money on 1 trade, netting them a profit of $13,901 over 2 months). Though this kind of profit sounds very attractive, it takes a lot of practice, skill and education to earn this kind of money consistently through trading, in my opinion. Nevertheless, if you’re interested in learning more about the markets (as I am), you can sign up to use this free market trend analysis tool and watch these free investing/trading videos from INO.com.
How To Track General Market Trends
The video above discusses the general trends we’re seeing in various major markets during the time frame spanning late 2008 and early 2009:
- The equity markets are in a major downtrend.
- Crude oil is in a negative trend.
- Gold is in an erratic upward trend.
- The US Dollar is in an erratic upward trend.
Should these trends mean anything to us, the average investor? To some degree, yes, but only as a way to get some direction and a general feel for the health of various markets. For the long term asset allocator, it shows us how certain types of investments are uncorrelated and may be worth investigating in the context of a diversified investment plan (see the opposite movements between gold and the US dollar vs equities).
Free Investment and Trading Tools
If you’re a trader, you’re looking at these events with different colored glasses. But regardless of what your investing orientation is, I think that an investment education is worth receiving, especially when it’s for no cost. For those curious about the markets, you can check out this trend analysis tool and these investment videos which are available for free.
Additional discussions and videos on the markets, trading and investing can be found here: