Is It a Duck or a Lobster

When it comes to general trading Sam Seiden asks the question – Is It a Duck or a Lobster ?

If it looks like a Duck, walks like a Duck, quacks like a Duck, smells like a Duck, it’s probably not a Lobster. No matter what the leading research analyst on Ducks and Lobsters says. Even if someone wins a Nobel Prize because they have determined that a Duck is actually a Llama based on a sophisticated mathematical equation, it’s still a duck. The bottom line, it’s a Duck. Adam Smith, who many call the father of economics, laid out the ground rules for Supply and Demand hundreds of years ago. In his book, “The Wealth of Nations,” supply and demand is explained in very simple terms. Smith, however, didn’t invent supply and demand, it has been here all along and guess what, it hasn’t changed; it never changes. When price is at a level where willing demand exceeds willing supply, price will rise. When price is at a level where willing supply exceeds willing demand, price will decline. Over the centuries, certain big name self promoting economists have tried to twist this simple equation with fancy math to make a name for themselves, sell some books, and win fancy prizes, only to eventually be proven dead wrong. The math works but it’s the old garbage in, garbage out.

However, gravity is always gravity. There are certain principles of how the world works that NEVER change. In our world of proper trading, the only way to profit consistently is to buy low and sell high. This is how you make money buying and selling anything. A successful business buys or produces at wholesale prices and sells at retail prices. Good news, this is exactly how the profitable market speculator does it as well.

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Figure 1

When you become a graduate at Online Trading Academy, you gain access to some powerful tools and hand holding services. One of these is Pro Picks. This is an educational service for Grads that produces daily trading ideas in the Stock, Futures, and Forex markets. These trades are given with exact entry, stop, and targets. Above is a picture of one of the Pro Picks created for students. The opportunity was to buy at a “fresh” demand level in the Euro Futures. Price had been declining and was nearing this demand level. At the same time, the Euro was nearing demand on the daily chart, the US Dollar index was nearing a supply level. This means that the odds were higher than normal for this opportunity. The price given for the long entry as seen above was at 1.3085.

A day or so later, price reached our demand zone and our trading idea met entry. As I said above, another word for demand is “wholesale.” So, when price reached wholesale levels, I was also an aggressive buyer in some of my accounts. Who was I buying from? I was buying at wholesale levels from people who are trained and comfortable selling at wholesale levels. Why would someone sell at wholesale levels? They obviously don’t understand that proper trading is no different than how the gas station profits on chewing gum. They buy the gum for $0.25 and sell it to us for $1.00. They just keep repeating that simple process over and over. If they sold the gum for $0.25 and bought it for $1.00, two things would happen. First, they would have plenty of very happy customers who love them (the buyers). Second, the gas station would be out-of-business at some point.

Figure 2

Figure 2

The market ended up turning higher at the level which is when I started taking profits. While the trade was called a swing trade, I used the level to take a couple shorter term trades for a profit of around $4,400.00.

Figure 3

Figure 3

If you are an Online Trading Academy graduate and have not been using this relatively new service, I strongly encourage you to do so if you’re looking for trading ideas that are delivered in a very educational format.

If you’re having issues with trading and ready to pull your hair out with frustration, perhaps you’re complicating something that is actually quite simple. Maybe you’re trying to turn the reality of how markets really work into a way that they don’t. Maybe you’re really just looking at a Duck, thinking it’s a Babboon. It’s just a Duck…

Hope this was helpful, have a great day.