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Buying at value areas in trading like you do when you shop

By March 15, 2017Blog
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The house you see in this photo is a home my wife and I purchased in 2012.  It was the end of a harsh real estate downfall in California especially, where homes where super over valued before the real state fall in 2008-2009 which led to several years of housing supply and not enough demand to buy.

I remember when we found this home it was sitting as bank wholesale inventory.  We paid about $250,000 for this home in 2012.  We invested about $15,000 in painting the complete interior, exterior, landscape, appliances, and some general maintenance over the course of two years.  The peak almost hit in 2014 when we sold this home for $391,000.  2 and a half year later this home is now only gone up to about $431,000.  A good increase but sitting at its first peak levels, or prior highs of $500,000.  The momentum of the markets this time around has slowed down, one from past experience of consumer and banking markets, I would guess.

The cream of the profit was taken in.  It was bought at areas of value, and sold at areas of peak to another party of interest.  Just like a car.  If there are 20 sellers of a car for $10,000 at the offer, and there are 10 buyers offering $9,000 at a bid, then eventually there are more sellers than buyers and thus can drive a price to meet the limited amount of buyers.

 

This is the same situation in the markets, especially in futures and commodities.  Supply and Demand.  We learn from experience what these levels are.  It is all natural when we are driven to get a good deal on a home, or the best deal on a new car that you can wait and buy at the right timing from the right and willing dealership.

We need to keep this in mind when buying and selling equities, and commodities on the markets.  Whether you are buyer, or a seller, understand where the right places if a trade are based on or biased or you end up putting the odds against your own trade.

This is many other trade strategies can be taught and with repeated practice put into your trading career just like you do when you shop.  It is a mindset.  We offer this at our academy at Forte Trader.  With a 20 veteran lead instructor and other traders with the same goals to adapt and learn form one another in ever changing market conditions.

Peter Karaverdian

Founder, Forte Trader

Join our mailing list for more information on upcoming webinars and course information.  We look forward to working with one another to be successful on your trading goals.

 

 

RISK DISCLOSURE:
Futures trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one’s financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

HYPOTHETICAL PERFORMANCE DISCLAIMER:
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES LIKE THOSE SHOWN; IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK OF ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL WHICH CAN ADVERSELY AFFECT TRADING RESULTS.

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