Parallel Universe: Expert's Guide to the Art of Losing MoneyDisclaimer:
Warning! The given tips are born from the minds of financial disasters and for entertainment purposes only. These are the results of the imagination of unsuccessful traders with a knack for making impressive losses. These master traders are known to make their financial mistakes by making huge losses. Unsuccessful traders are honored members of FRBF - Financial Ruins of Big Fortune with lifetime achievement of negative portfolios and returns. We do not recommend following the suggestions from the unsuccessful traders otherwise we have to add you to FRBF club.
Well, well, if it isn't the tired soul tired of seeing green numbers in their trading account. Can you believe it? I always have seen a dream of world's biggest loser trader. Apparently, 99% of traders out there are making money, and we're stuck in the miserable 1% who might be losing. But hey, if you're sick and tired of making money, you've stumbled upon the perfect spot. Get ready for a wild ride as I unveil the secrets to drain your hard-earned cash and proudly join the prestigious FRBF - the Financial Ruins of Big Fortune. Buckle up, my friend!
1) Borrowing Money:
You should borrow money from every possible resource. Remember that Saving money and working hard for financial stability is just for cowardly people. Debt is the only key to get success in the trading world. If you have bad luck, you can get your creditors good luck by borrowing their money. Imagine when your creditor will knock on your door, and you will be running and hiding from them! How thrilling is this! It's a surefire way to reach new heights of financial ruin.
2) Avoid Using Stop-loss:
We should totally ignore those stop-loss orders. There's this fascinating study that suggests traders who actually use stop-loss orders tend to have lower losses compared to those who don't. who needs that kind of useful information? Not us! We're not beginners here, are we? If you use stop-loss, it will exit the trade when market sentiments are changed. You will never be able to make huge losses. Let's just toss those stop-loss orders right out the window and dive headfirst into the exhilarating world of uncertainty. Because what's more exciting than watching our trades go haywire with no safety net? So let's embrace the thrill, ignore risk management, and revel in the rollercoaster ride of potential financial ruin.
3) Hold Losing Positions & Never cut losses:
Who needs to admit defeat when we can simply cling to hope and pray that the market will miraculously turn in our favor? It's such a fantastic strategy to hold onto those sinking ships, watching our losses pile up like trophies of our unwavering determination. Cutting our losing positions? Pfft, that's for amateurs who actually care about preserving their capital and minimizing losses. We, on the other hand, choose to ride the wave of delusion and hold onto our sinking investments with unwavering faith. After all, why learn from mistakes when we can repeat them endlessly? So let's keep clutching those losing positions tightly, and maybe, just maybe, the market will eventually bend to our will.
4) Avoid Managing Risk:
Risk management will not let you become an unsuccessful trader. Forget about preserving your capital and protecting yourself from substantial losses. Let's just dive headfirst into the deep end and throw caution to the wind! So, according to your brilliant logic, let's ignore risk management and trade in five stocks with a 1:3 risk-reward ratio. We'll lose $3 in three stocks and $6 in the remaining two trades. Brilliant strategy, right? Who needs profits when we can lose money consistently?
5) Never Pay Attention to News & Events:
Who needs to stay informed about current events and news when it comes to trading? Ignorance is truly bliss, especially when it comes to making informed decisions and understanding market dynamics. Let's just close our eyes and ears to all those pesky news articles, economic reports, and major events that could potentially impact the market. Who needs to know about interest rate changes, geopolitical tensions, or corporate earnings releases? They're just distractions, right? Instead, let's rely on our sheer intuition and gut feelings to guide our trading decisions.
(6) Overtrade Consistently:
Overtrading is the key to financial prosperity in the trading world. Forget about patience, strategy, and carefully planned execution. Instead, let's indulge in a frenzy of excessive trading and drown ourselves in a sea of transactions. Who needs quality over quantity when it comes to trades? Let's throw caution to the wind and execute as many trades as possible, disregarding any semblance of rational decision-making. Because, clearly, more trades automatically translate into more profits, right? Why bother with analyzing market trends, studying charts, or conducting thorough research when we can just click that "Buy" or "Sell" button incessantly? After all, trading is just a game of chance, and blind luck is definitely on our side.
7) Never Use Technical Analysis:
Technical analysis? Nah, it's all smoke and mirrors, right? Who needs those fancy charts, indicators, and patterns to make smart trading decisions? I mean, who has time for that? Sure, by using technical analysis, you could potentially have a better sense of when to enter or exit trades and where to set stop-loss levels. You might even be able to forecast market movements using theories like Elliott wave, price action, chart pattern analysis, or volume analysis. But who needs all that when you can just wing it and tap the buy and sell buttons without any plan or analysis? Who needs strategies or insights anyway? Forget about those losers who waste their time studying charts and analyzing market trends. Real traders, the ones who consistently lose money, don't bother with technical analysis or any other form of analysis for that matter. They rely solely on their gut feelings and blind luck. That's the way to go!
8) Emotional Trading:
emotional trading Is a brilliant strategy! Who needs logical decision-making when you can base all your trades on impulsive emotions? Forget about analyzing charts, patterns, or market trends. Just let your feelings guide you like a compass in a hurricane. Why bother with calm and rational thinking when you can succumb to the rollercoaster ride of fear, greed, and impulsiveness? It's truly a magnificent way to sabotage your trading success and ensure that your portfolio becomes an emotional wreck. So go ahead, throw logic out the window, and embrace the chaos of emotional trading. Because nothing says financial stability like making impulsive decisions based on fleeting emotions! Good luck on your wild emotional trading adventure!
9) Always Trust Unregulated Brokers:
Unregulated brokers are the epitome of trustworthiness and reliability. Who needs regulatory oversight and investor protection when it comes to handling our hard-earned money? Why bother with ensuring the safety of our funds or verifying the legitimacy of a broker? It's so much more exciting to entrust our financial well-being to anonymous individuals operating in the shadows. Who needs transparency, accountability, or adherence to industry standards? Unregulated brokers provide the perfect opportunity to navigate the treacherous waters of the financial world without any safety nets. It's like playing a high-stakes game of roulette with our life savings!
10) Always trade on others' advice
Trading on others' advice is the secret recipe for success in the trading world. Who needs to develop their own knowledge, skills, and expertise when we can rely solely on the wisdom of others? Let's throw out our own analysis, research, and intuition, and blindly follow the advice of random strangers on the internet or that "hot tip" from a friend's cousin's neighbor's dog. After all, they must be financial geniuses with impeccable track records, right? Who needs to understand the underlying fundamentals or technical aspects of a trade when we can just mimic the actions of others without question? It's so liberating to surrender our autonomy and decision-making abilities to the masses. It's a foolproof strategy that guarantees confusion, frustration, and, of course, financial ruin.
11) Never Ever Take Profit
It's such an intelligent strategy to watch our gains evaporate right before our eyes.
Why bother with securing our profits and protecting our capital when we can hold on to winning positions indefinitely? It's so much more thrilling to experience the roller coaster ride of market fluctuations and see our unrealized gains dwindle away. Let's ignore those pesky market indicators, trailing stops, and profit targets. After all, who needs a concrete plan when we can simply rely on greed and the hope that our winning trades will magically keep going up forever? And let's not forget the joy of regret when a once-profitable trade eventually turns into a massive loss. Who needs financial stability and consistent growth when we can embrace the unpredictable nature of the market and bask in the glory of missed opportunities?
12) Learning From Mistakes
Learning from our mistakes and evolving as a trader is overrated. Who needs personal growth and improvement when we can stay firmly planted in our cycle of financial self-destruction? Let's ignore those pesky lessons that losses teach us. Why bother reflecting on our trading errors, analyzing our strategies, or seeking ways to improve? It's so much more exciting to repeat the same mistakes over and over again, expecting different results each time. Who needs progress and development when we can remain comfortably stagnant in our trading endeavors? Let's embrace the thrill of consistent failure and pretend that we're on the cusp of a breakthrough while repeating the same ineffective tactics. And why stop repeating mistakes? Let's add a touch of delusion and convince ourselves that this time, things will magically turn around. Because, clearly, doing the same thing repeatedly without learning from it is the secret to unbounded success.
13) Fall for "Get-Rich-Quick Schemes"
"Get-rich-quick schemes" are the epitome of financial wisdom and stability. Who needs a long-term, sustainable approach to wealth when we can chase after elusive shortcuts to instant riches? Why bother with hard work, patience, and diligence when we can throw caution to the wind and blindly trust those promising overnight success? Let's believe in the magic of "secret formulas," "guaranteed profits," and "hidden strategies" that are conveniently packaged in flashy marketing campaigns. Let's not forget the joy of handing over our hard-earned money to these self-proclaimed experts, who undoubtedly have our best interests at heart. After all, it's not like they're preying on our gullibility and desperation for a quick financial fix, right?
14) Trade Based on Rumors
Baseless rumors and gossip are the most reliable sources of information for successful trading. Who needs verified facts, data, or market analysis when we can simply rely on hearsay and unfounded speculation? Why bother with conducting thorough research or verifying the authenticity of information? Let's just blindly believe every rumor that comes our way and make trading decisions based on pure gossip. It's so much more thrilling to embrace uncertainty and place our trust in unverified whispers. Who needs to understand the impact of real market drivers or economic indicators when we can make impulsive decisions based on the latest unfounded chatter? It's like playing a game of financial Russian roulette with our hard-earned money.
To be continued... :D
Idea by @Money_Dictators on @TradingView Platform
Money_dictators
Guide to Recession - What Is It? Recession is a scary word for any country An economic recession occurs when the economy shrinks. During recessions, even businesses close their doors. Even an individual can see these things with his own eyes:
1. People lose their jobs
2. Investment lose their value
3. Business suffers losses
Note: The recession is part of an economic cycle.
If you haven't read that article, you can check it below:
What is the Recession?
Two consecutive quarters of back-to-back declines in gross domestic product constitute a recession. The recession is followed by the peak phase. Even if a recession lasts only a few months, the economy will not reach its peak after serval years when it ends.
Effect on supply & Demand - The demand for goods decreased due to expensive prices. Supply will keep increasing, and on the other hand, demand will begin to decline. That causes an "excess of supply" and will lead to falling in prices.
A recession usually lasts for a short period, but it can be painful. Every recession has a different cause, but they have the main reason for the cause of the recession.
What is depression? - A deep recession that persists for a long time eventually leads to depression.
During a recession, the inflation rate goes down.
How to avoid recession?
1. Monetary Policy
- Cut interest rates
- Quantitative easing
- helicopter money
2: Fiscal policy
- Tax Cut
- Higher government spending
3: higher inflation target
4: Financial stability
Unemployment :
We know that companies are healthy in expansion, but there is a saying, "too much of anything can be good for nothing."
During peak,
The company is unable to earn the next marginal dollar.
Companies are taking more risk and debt to reset the growth
Not only companies but investors and debtors also invest in risky assets.
Why does lay-off occur?
After the peak phase, companies are unable to earn the next marginal dollar. Now, the business is no more profitable. CCompaniesstart to reduce their costs to enter into a profitable system. For example - Labour
Now, Companies are working with fewer employees. Fewer employees must work more efficiently. Otherwise, they may be lay-off by the company too. You can imagine the workload and pressure.
You may argue that they should leave the company! Really? Guys, we just discussed the employment rate declines. How will you get a job when there is no job? Now, you get it!
Let's assume the effects of the recession on the common man:
Condition 1: He may be laid off.
Condition 2: Perhaps he will be forced to work longer hours. The company is unable to maintain a positive outlook. Fewer employees are doing more work due to massive lay-off. His wages decline, and he has no disposable income.
As a result, consumption rates are reduced, resulting in lower inflation rates. A slowdown in the economy is caused by lower prices, which decrease profits, resulting in more job cuts.
Four Causes of Recession:
1. Economic Shocks
2. Loss of Consumer
3. High-interest rates
4. Sudden stock market crash
1) Economic shocks - When there is an external or economic shock the country faces. For example, COVID-19,
2) Consumer confidence - Negative perception about the economy and the company from consumers who lack confidence in their spending power. Instead of spending, they will choose to save money. As there is no spending, there is no demand for goods and services. The absence of spending results in a lack of demand for goods and services.
3) High-interest rates - High-interest rates will reduce spending. Loans are expensive, so few people take them out. Consumer spending, auto sales, and the housing market will be affected. There can be no good demand if there is no lending. There will be a decline in production.
4) Sudden stock market crash - evade people's trust in the stock market. As a result, they do recall their money and emotion drives them crazy. It can also be considered a psychological factor. As a result, people will not spend money and GDP will decline.
Consumer Spending:
During the recession, consumers don’t have additional income called disposable income.
Consumer spending parts
-- Durable goods - Lasts for more than one year
-- Non-durable goods - Lasts for less than one year
-- Service - Accounting, legal, massage services, etc.
Durable goods surfer during the recession. Non-durable goods are recession-proof because their day-to-day fundamentals are not affected by recessions.
Let's take an example of two stocks,
ABC Food vs ABC car
But, will you stop buying food because of the recession? Will you reduce your consumption of toothpaste, bread, and milk?
The answer is "NO".
Consumers buy the same amount of food in good or bad times, On the other hand, consumers only trade in or trade off their car purchase when they are not only employed but optimistic about the safety of their jobs & confident that they could get a promotion or a high paid job with another employer. And People's disposable income is absorbed during the recession.
Consumer spending is the crucial point to displacing recession.
Auto sales:
As we discussed, few people buy cars during a recession. New car sales count as economic growth. You may have heard about 0% loans. The company facilitates a 0% loan to increase auto sales. Mostly, people repair their cars or buy old cars during the recession.
You may see a boost in the used car market and spare parts selling companies’ sales.
Home sales/housing markets:
I have a question now!
Which is your biggest asset? Most of you will say, my home!
New home sales are part of economic growth. Also, house price impact how wealthy consumer feel. Higher the home prices, the more they feel rich, and vice versa. When home prices are higher, consumers feel they are wealthy and they are willing to spend. But when house price declines, they reduce spending/consumption.
If your biggest asset price declines, you don’t spend and the economy takes a longer time to recover. A higher rate stops increasing the home price because they have to pay more EMI. central bank reduces rates during the recession, and the housing market rate boosts because the loan/EMI is cheap.
Interest rates:
Generally, interest rates decline during a recession. Central banks cut interest rates that’s why loans become cheap.
Benefits of Lower interest rates -
- - Boost in the housing market.
- - Increase sales of durable goods
- - Boost in business investment
- - Bonds and interest rates have an inverse relationship. An economic downturn tends to bring investors to bonds rather than stocks, which can perform well in a recession.
- - During the recession, interest rates are lower and banks higher the criteria for getting loans, so that people can face the abstracts while lending money.
Stock Market:
I want to clarify that, the stock market is not an economy. The economic cycle is lagging behind the market cycle and sentiment cycle. It gives me a chill as a technical analyst and a sad moment as an economics lover. Sometimes it's ahead, and sometimes it's behind. Recession = bear market .
Recession-Proof Industries:
* Consumer staples
* Guilty pleasures
* Utilities
* Healthcare
* Information technology
* Education
I will write about this in the future, but for the time being, let's get back to technical analysis .
