THINK LIKE A WHALE TRADE AS A SHARK -Combining Fundamentals, Technical Analysis, and Market Sentiment to Trade Forex Equities, and Cryptocurrencies
There are three important conditions to trade successfully in any financial market: a strong fundamental landscape, a nice market structure, and an accurately-measured trading range. If fundamentals agree, and the market structure has proven itself, knowing the trading range is the only thing you need. This book contains a wide variety of technical analysis methods and techniques in order to help investors recognize market structure in early stages, identify support and resistance, and accurately measure the trading range. However, the complex world of financial trading is a zero-sum game. Someone has to lose in order for someone else to make a profit. And as there are a few people making a lot of money, there are a lot of others who lose constantly. This is why clever investors always add a contrarian flavor to their decision-making process, and most of the time, trade against the public sentiment.
Any successful trading decision must have a fundamental background. Chapter 1 begins with the basics of fundamental analysis when trading equities, Forex currencies, and cryptocurrencies. The main goal of studying fundamentals is to identify investment opportunities. Opportunity can be defined as the difference between the current price of an asset and its real value. Fundamental analysis can recognize risk and reward, the two most crucial inputs of the decision-making process.
In Chapters, 2, 3, 4, 5, and 6, you will find various technical analysis methods with many examples and charts. Trading charts can be read significantly easier than raw data. Reading charts is useful not only for identifying key trends but also for recognizing major support and resistance levels. Furthermore, you will learn how to use moving averages, RSI, the Fibonacci Numbers, the Fibonacci Retracement, and the definition of the long-term trend in any financial market. By combining all these different technical analysis tools, you will be able to recognize any market conditions, identify strong trends, spot the potential levels of a trend reversal, but most importantly accurately measure the trading range.
In Chapter 7, you will learn about the role of market volatility and its importance for managing risk and achieving portfolio diversification. How to use the Bollinger Bands and ATR when trading indices, and Beta when trading individual stocks. In addition, you will learn about the VIX Index and its ability to predict a financial crisis, but also how to use options contracts to spot incoming market volatility. Finally, you will learn about the basics of Foreign Exchange and cryptocurrency volatility.
In Chapter 8, you will find information about seasonality statistics and seasonal patterns. Seasonality refers to a time period in which market data tends to experience common and predictable behavior. Whenever a seasonal pattern has been repeated regularly, it becomes statistically significant. However, seasonality reflects an average reliance on past market data. That means seasonal patterns provide a window of opportunity and not an independent forecasting framework. A seasonal pattern can be any price pattern correlated to a particular month, quarter, or semester. You will be able to find seasonal patterns for Dow Jones Industrial, three popular currency pairs (EURUSD, GBPUSD, and USDJPY), and two key cryptocurrency pairs (Bitcoin and Ethereum against the US dollar).
In Chapter 9, you will learn about market sentiment. The market sentiment refers to the views, opinions, and expectations of investors toward the future market conditions. It is very important to distinguish between the experts’ sentiment that you should trade in line with it and the public sentiment, that you should generally trade against it. The greatest trading opportunities in life are against the general public sentiment. You will learn also about the Fear & Greed index, the Overnight Repo Rate, the Perpetual Contracts, and how to use the Commitment of Traders (COT) report.
If there is one golden rule when investing, it’s to always diversify your investment decisions. This rule is applicable in every aspect of our life. In Chapter 10, you will learn about money management. Money management refers to the process of achieving risk control over your portfolio by eliminating the unnecessary risk, and it is a key ingredient of long-term trading success. You will learn about market correlations, cross-market connections, position-sizing, the 2% rule, the Reward/Risk Ratio, the Win Ratio, and why you should always trade small account sizes.
By combining the information and tools presented in this book you have the opportunity to better understand the mechanics of the global financial markets and significantly increase your odds of winning in the long-run. Success is all about education and building the right character. The more educated you become the stronger your character when others are greedy, and the stronger your hands when others are fearful.
George M. Protonotarios,
Financial Analyst - M.Sc “Int. Banking & Finance” Salford, UK