‘Here at timstuyts.com we believe the only way to deal with market psychology is by following a strict trading plan. Investment psychology is different from the market psychology of supply and demand. According to the law of supply and demand, if the price of something goes down, people buy more and when the price goes up they do not want to buy it or buy less of it. With investment psychology, things are very different. When a stock is soaring high, everyone wants to buy it. They catch the feel-good feeling coming from the higher stock markets and want in, and when stocks are down in the dirt, no one wants to buy. Just think of what is happening. Think of psychology. When stocks are down; people fear. In contrast when oranges are down, people feel good and buy. This is the opposite of what most think is taking place. There is only one method that can explain this apparent dichotomy—The Elliott Wave Principle.
It is this herd mentality that one must learn to go against. Fear and greed are two things one must learn to conquer before becoming a good trader.’
Technical Analysis:
‘The Elliott Wave Principle is a theory of rules that govern market price action. In the 1920s Ron Elliott, an accountant, discovered that market price action was not random but pattern in waves that formed predictable cycles. He postulated that these patterns were not the result of the law of supply and demand, but the summation of fear and greed and that market price action was the leading barometer of social mood. Moreover, this mass mood, when quantified, takes a form that can be measured and timed as it waxes and wanes.
Elliott Wave also was the first to postulate that these patterns were self-similar at different degrees of trend. He did not know it at the time, but what he found was that market price action was fractal. This humble genius also found a nomenclature that organizes this fractal system from the largest fractal to the smallest tick chart. In essence, the Elliott Wave Principle states that people buy stocks when they are happy, and they sell them when they feel bad.’
Fundamental Analysis
‘One thing investors have in common is that they all look at past data to make predictions about future price action. There are two main ways investors look for clues about future prices. Investors use fundamental and technical analysis to predict future price action. Technical analysts use past price action in the form of charts to predict future prices. Fundamental analysts use past macro and micro economic data to predict future price action. We use macroeconomic data related to central banking along with technical analysis.
Central banks communicate their intentions through press releases. For example, the monthly minutes is scrutinized by investors looking for clues as to the direction of rates. There is also macro-economic data that is much related to central bank intentions. Central banks communicate this to the public. When the Federal Reserve expressed their concern for the employment picture. They told the public that they wanted Unemployment to drop below a certain level. This is called Quantitative guidance. Then later that year when the level was reached, they switched to Qualitative guidance. This is when they not lonely look at the Quantitative number, but also look under the hood at the details of the employment picture—hence the quality.
This is when market expectation comes in. The market is always expecting price to move. And since price action moved on past central bank data, it expects it to move to future central bank data. This leaves the markets always anticipating the move once the data comes out. So, if a central bank communicates its intentions, if it is what the public expects, not much will happen. Later when data comes out in line with expectation, again nothing will happen. However, when data comes out skewed either way—less than or more than expected—the market moves—and usually in a big way. Traders try to capitalize on the volatility’.
Track record
2018
‘Here at timstuyts.com we believe the only way to deal with market psychology is by following a strict trading plan. Investment psychology is different from the market psychology of supply and demand. According to the law of supply and demand, if the price of something goes down, people buy more and when the price goes up they do not want to buy it or buy less of it. With investment psychology, things are very different. When a stock is soaring high, everyone wants to buy it. They catch the feel-good feeling coming from the higher stock markets and want in, and when stocks are down in the dirt, no one wants to buy. Just think of what is happening. Think of psychology. When stocks are down; people fear. In contrast when oranges are down, people feel good and buy. This is the opposite of what most think is taking place. There is only one method that can explain this apparent dichotomy—The Elliott Wave Principle.
It is this herd mentality that one must learn to go against. Fear and greed are two things one must learn to conquer before becoming a good trader.’