In today's trading environment we are seeing a mass of new traders around the world who are turning to trading as a get rich quick scenario. Some may be trading because they lost a job and some because they heard from a marketing guru, they could make 250k their first year. Statistics show that over 90% of these unfortunate traders are going to lose their money in the financial markets because they are not getting the proper education. What is the main reason for their losses, Manipulation!
Market Manipulation is an attempt to create misleading appearances in the financial markets. This leads to massive money for those who understand it and massive losses for those who don't. Looking at the last two months of trading is a great example of how the financial markets can be manipulated.
During the month of July the US Index Markets moved up quickly indicating that price wants to go higher. As an experienced trader it is important to filter out what is manipulation and what is true direction. There is a phrase that I use for the Index markets "What goes up Must come down, AND What goes down, Is most likely to go right back up". This holds true over and over again which creates volatility and shakes out many of the new traders. After an extensive rally, we violated previous structure highs on all major US Index Markets putting in new highs and creating market manipulation, in an attempt to generate more willing buyers. Why buyers? Because there were larger money sellers who needed someone to sell to! Most traders who purchased the markets are now taking large losses due to a lack of risk management.
For the past week of trading we have shown extreme selling pressure and many of the traders who had to take a large loss will now think it is time to reverse their positions and become short the markets. If you are wondering What Market Manipulation is, this is it in a nutshell! Smart money moves the markets enough to pull an influx of buyers/sellers in and then drives price in the opposite direction time and time again. What is important to remember is that price always has a destination, and nothing continues forever!
Short Term - US Index Markets have shown topping patterns for swing traders which can lead to a potential larger correction. Price should find a short term bounce Up to create more volatility / volume so DO NOT sell after the decline, WAIT for a correction up before attempting to short.
Long Term - US Index Markets remain bullish, look for support at the reversion to the weekly trend for buyers to step back in. With extreme levels of high altitude buying is becoming more aggressive with much less potential for a strong incline so we would look for quicker profits.
We will be trading this in the Live Training Room!