How can a Small Fish Find a Trading Edge in a Sea of Whales?
How can a retail trader be competitive in the markets when the list of market manipulators gets longer every day? It’s common knowledge that the activity of large brokerage firms or hedge funds drive the major market movements whether they intend to or not. The ‘quants’ with their high-speed trading algorithms can change market direction in milli-seconds. Added to this mix are the central bankers of all countries who manipulate the markets to control the strength of their domestic currency.
So the challenge is clear, how can a ‘small fish’ survive when surrounded by a sea of ‘whales’? There are several ways.
1.) Choose from the small pool of stocks and sectors that are in long-term growth cycles. This could include such unlikely sectors as water production and control and military equipment for the defense industries.
2.) Accept the new world of market realities and give up on long-term buy and hold strategies. Find a method to swing trade sectors and indexes.
3.) Learn how to track the movement of big money and follow the ‘whales’ in the market. Advisories such as David Vallieres ‘Tradingology’ is now perfecting a way to measure the internals of the daily market to determine the accumulation and distribution of the market makers.
4.) Become an expert in using conservative trading methods that can turn over trades and profits in short periods of time. The days of buy and hold until retirement are gone. The trading methods taught at MarketTamers using option credit spreads, are one example. Technical and fundamental analysis are first used to determine the stocks and ETFs with a likely near term trend, and then a credit spread is sold on the opposite side of that trend.
Several other advisories such as Don Fishback’s ‘ODD’s’ method and Peter Schultz’s CFH follow the same technique. Personally, I’ve been successful using the scanning signals at MarketTrend Signals to locate likely trade candidates.
All of these methods require a personal investment of time and self-education. If your heart isn’t in it, then it’s probably best to find an investment adviser with a record of success to manage your portfolio.