How to Become a Better Trader: Dare to Defy the Crowd

How to Become a Better Trader: Don’t Follow the Crowd

Updated April 20, 2024

If your goal is to become a better trader, print the above statement and put it aside and over the months and years, look at it. As you progress, the meaning will change, and one day, you will suddenly realise you don’t need to look at it because you understand what it means from within, and it will have a unique meaning for each person. To become a better trader, one needs to know oneself and not try to act like another. If you try to emulate another person, the real you will wither and disappear, and you will need the other person forever. Your eyes will only see what they are directed to see. In other words, a glorified blind man.

This is why the masses are destined by design to repeat history forever. They look but don’t see, hear but don’t understand, and think but can’t formulate a single original thought; one would be almost tempted to call them the “living dead”. Many subscribers stated that many individuals they know (and some are family members) have difficulty digesting any new information that is more than one to two pages long. Well, that’s the new world order for you.

The Crowd: Destined to Repeat History

A paralysed man can be a sad sight, but a paralysed mind is always a monumental tragedy. Man (we automatically are referring to women, too) has the power to be on par with the Gods. Instead, most can barely make it to the level of a wild animal. Most animals have a purpose; can one say that of most individuals? Hence, to become a better trader, one must never follow the crowd.

Despite the strong rally, the gauge on the anxiety index has not moved at all, which is both stunning and fantastic. Stunning because this is one of the sharpest rallies of all time, and it should have pushed the needle out of the madness zone. Wonderful because it tells us that this Bull market has a long way to go before it dies. Dow 30K is going to be taken out with ease, probably in less than 12 months. Market Update May 2, 2020

This week one would have expected much lower bearish sentiment readings, but instead, it stands at 53, and the anxiety gauge is still locked deep into the madness zone. This tells us that the crowd is still sitting on the sidelines and that the Fed is actively pushing the markets higher. Market Update May 14, 2020

Another day, another illusion

Look at the data; the current situation is incredibly unusual and has never occurred before. This bear market was the shortest living bear market in history, yet despite this massive rally, the masses are scared. What’s going on? They have a reason to be afraid, as the landscape is uncertain. Millions of jobs will be lost forever, many sectors will die or shrivel up, and new industries will emerge and gain traction. It is a time of extreme uncertainty and chaos. So, what gives?

A new world order; The Fed is attempting to recreate reality again. Everyone will say Nah, they won’t succeed, but they will, for the masses are destined to lose. For the few to win, many have to fall. Forget about the great awakening or a global shift in consciousness; the masses don’t want to wake up. You can take a horse to water but can’t make him drink.

To become a better trader, you need to understand that the markets are driven by psychology, and the best way to understand what is going on is to pay attention to the masses. Studying the crowd is known as Mass Psychology, and it can help even the most naïve of traders become Better Traders.

Fight The Fed& end up dead.

After assassinating the previous bull, the Fed has just engineered a new baby bull. The old bull was not supposed to die, so the only way to take it out was to put it down before its time. The new bull is a hybrid designed to kill bears, and so far, it’s doing a fantastic job. However, it has a second function: It is also designed to kill bulls. We will discuss this in the future.

This new bull is at the baby stage, so imagine what force it will have once it becomes an adult. Be ready for things you could never have supposed to come to reality. Coronavirus was a shock-type event that awakened those on the cusp of awakening and threw the rest into disarray.

The current set of Vaccines is Rubbish.

The first batch of vaccines will fail spectacularly, for something called “evolution” will kick in. The coronavirus will morph and evolve like its first cousin, the flu, and will grow faster than anyone has ever imagined. Most will panic, curse their governments, fight the trend, pray or do a combo of all the above. The astute player will observe from the sidelines and understand that if your immune system is not compromised, you are 99% in the clear. Hence, the solution is to keep yourself in shape. If you are overweight, start working on the weight factor; if you are stressed, start working on reducing your stress.

Food for thought: we have about 328 million people in the US and 4.43 billion in Asia. Yet, more people have died in the US than In Asia. So what gives? That’s the multi-billion dollar question. The answer is simple. However, contemplate it, and we will discuss it in future updates.

Stress leads to more inflammation.

Higher levels of inflammation lead to a weakened immune system.

Our study showed that high levels of IL-6, CRP and hypertension were independent risk factors for assessing the severity of COVID-19. The risk model established on IL-6, CRP and hypertension had the highest predictability in this study. Besides, IL-6 played a pivotal role in the severity of COVID-19 and had a potential value for monitoring the process of severe cases. https://bit.ly/2zhGrPD

People always focus on the created problem, not the real problem or the real issue. Coronavirus is a manufactured crisis created for those who don’t want to see or hear and will do the job it was designed to do. It will lead to the demise and downfall of those who embrace the fear factor, and unfortunately, that is a massive percentage of the populace.

However, if you stand above this noise and realise that fear only works because you allow it, you can kill this monster with a simple feather. It’s too late to cry over spilt milk. Looking at the situation from a logical perspective (minus the emotional factor), it’s a monumental disaster from a financial angle. As the equation must balance, it will provide those with the foresight to see the actual pattern with a tremendous opportunity to lock in spectacular gains.

Conclusion

Looking at the sentiment data, we have never had a period when the markets are rallying, and sentiment has remained negative for weeks.

The Fed is attacking this market at an unprecedented rate. We have been monitoring various options, and the strangle or straddle strategy usually leads to significant gains. This strategy has stopped working on options in less than six months as losses mounted on both ends.

This strategy involves buying a put and call with similar or different strike prices. If you need more details, you can Google it. When this strategy works, one side of the trade usually surges in value; this is no longer the case, and it indicates that the markets are being manipulated at an unprecedented rate.

Manipulation: The observer’s perspective

We will not waste several pages discussing how bad or wrong this type of manipulation is, as we don’t care. We don’t care because we can do nothing about it other than adapt and change the game plan. Additionally, the trend indicator does not care what the driving force behind the markets is. One could argue that the masses manipulate the markets, for eventually, they are tricked into jumping into the markets. Manipulation boils down to your angle of observance/perception.

We won’t be buying short-term options until this anomaly self-adjusts or dies. In general, options are risky, and short-term options are the most dangerous of all plays.

To put it mildly, the Fed’s current actions are unprecedented, and the Fed will ensure that the masses embrace this bull market willingly or unwillingly. Unwillingly by making it so expensive to hold onto cash, every Tom, Dick, and Harry will jump into this market. Now is the perfect time to come out with some insane projections, and the reaction will probably be the same as when we first announced Dow 30K.

The Dow

The Dow traded to a new all-time high of 29 551 on February 20, 2020. A new bull market will not start until 29,551 is removed monthly.

When that occurs, the path will be paved for a test of the 36K ranges. Preliminary patterns suggest that the Dow could trade in the 59,100 range to 60,000 range. Insane target right?

It sounds impossible, highly improbable, and something that could never happen in this lifetime, and that is why the odds are very high that it will/should come to pass. However, that is enough for now. We will revisit this debate when the Dow challenges 36k.