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Introduction
Have you ever wondered if you're being lied to?
Ever wonder why stocks go up in price over time and who benefits the most from this?
Here are 5 Secrets They Don't Want You To Know!
1. Your Savings Account is a Depreciating Asset.
Some of you may not know this, but on average your buying power goes down by 2-3% every year due to rising prices.
If your money is sitting in a savings account, you're basically burning 2% of it every year for the right to have it sit there.
The good part of a savings account is that they are highly liquid, you can spend it easily.
The bad part, you're losing an insane amount of money due to how compound interest works.
You're losing 2% the first year, then with the 98% left you lose 2% on that the following year, and so on.
This equates to a big loss for you over time. Think of the stuff you could have bought with all those 2%'s.
Solution
The solution is, just put some of your savings each month into a low cost index fund for the stock market, like SPY or VOO. On average, stocks go up 9% per year. You can prevent the 2% loss and make money over time! Amazing.
2. Those "Free" Trades Aren't Actually Free.
Trading brokerages have now released "commission free trading."
You can now trade stocks and options for zero commission on most exchanges.
They're making more money now than ever before.
How's that possible?
They now make money from selling your live trading data and from giving you a more expensive price than they paid their market makers for.
The buyers of your trading data uses this data to trade against you or to gauge general market conditions in real-time.
Using your trade data, along with millions of other traders, these data buyers are making a killing with their own trades!
3. The Gamblers Ruin
Let’s say you have $5 to play a game with me. I have much much more.
To play, you must bet $1. If you win, you get $1. If you lose, I keep the $1.
The game is determined by a fair coin. Yes, this game is a fair game.
The unfair part is, if you ever lose 5 times in a row, you will be gone forever (since you only have $5 and each loss costs you $1).
This is what casinos do, except at a larger scale.
Instead of $5 you might have $500 to play a game, and you are betting $10. Eventually you are going to run lower and lower due to bad streaks.
In the end you are left with no more funds to play, or to trade with in our case. This is called the Gamblers Ruin.
In trading, we are the player with $500 and the exchange is the casino with an infinite bankroll. If we lose 5 trades in a row, its over for us but the exchange can keep looking for other players to play and take their money.
4. Rich people don't short the market.
You may think the stock market is at an all time high and be scared.
You may think to short the market and that you can accurately predict the top to make a lot of money.
This is where you lose a lot of money.
The stock market has been going up for over 100 years.
If you think you can call the top on this uptrend you are seriously kidding yourself.
In general, stocks go up 85% of the time and go down 15% of the time. It's much easier to be on the 85% side than the 15% side.
This knowledge alone will save you thousands of dollars.
Rich people play the long game and stay long in the markets, they also add during crashes!
5. Your stop loss is being hunted in real-time.
Let’s say Apple is trading at $105 and you believe it will hit $115.
You set a stop loss for $99 and a take profit at $115.
Next thing you know, price drops very quickly to $91, your stop loss hits, and then pumps back up to $110.
What the heck just happened?
Simple, you put your stop loss in an obvious place and your stop loss was easily hunted.
Market makers know where most of the traders will put their stops and will try to move prices where there is a bunch of stop losses.
This causes huge volatility in prices, which market makers can use to buy in at the stop loss areas.
Once there is no more stops to be hunted in the general price range, prices stabilize until new stop losses build up in an area and the cycle starts all over again.
They are using your data to trade against you!
Conclusion:
It's always great to be educated to prevent being used in someones game.
The market has many secrets, some you'll have to find out on your own.
At SmartOptions®, our A.I screens options trades in real time from all the options exchanges and alerts us to big options trades right away.
If someone puts $10M into an options contract expiring in 14 days. they know something. We want in on that! Now, you can too!
Follow the Money & Trade Options with Our SmartOptions® Artificial Intelligence.