The realities of the market are complex, influenced by numerous factors that can’t be captured solely through axiological or theoretical analysis. In addition to seasonality, news, rumors, weather, and general observations, traders must consider the market conditions at the moment they decide to enter a trade. Is the market volatile? Is it trending? Are there unusual price fluctuations? Are market makers driving the market? Is it an options expiration day or the day before a holiday? Is a major announcement expected? Has the market entered a state of panic or euphoria? Are you buying or selling? It’s the combination of all these realities that shape the trading environment.
Reality Trading
We believe that the best approach to trading should be called “Reality Trading.” In fact, we are so confident in this approach that we’ve coined the term for future use. Reality Trading treats the market as a living, dynamic entity that includes fundamentals, technicals, and situational factors such as news, rumors, psychological tendencies, and market conditions.
Let’s look at an example of a trade based on these realities. Consider a trade on a financial asset that has performed well over the past 15 years. Suppose this is a trade to buy a particular commodity between September and December of the current year.
The first step is to observe how the commodity is behaving in the months leading up to the target time period. For example, let’s focus on a commodity like gold. We start watching gold futures closely from early September, anticipating potential movement through to the last week of November. We don’t particularly care about how the gold futures behave before September; however, historical patterns suggest that gold prices typically rise or at least remain stable during this period. If prices fall during this time, it would indicate an over-supply, which signals the trade may not be viable. The key thing to avoid is seeing a downward trend in gold prices after September, as that would signal a year of abnormal conditions.
Of course, there are variables like weather patterns, export data, and supply factors that can’t be predicted with certainty. However, market psychology, like the tendency of traders to respond to certain stimuli, often keeps prices stable or rising during these periods.
The same approach can be applied to other markets that exhibit seasonal trends. By observing patterns in price behavior and understanding the broader context, traders can gain insights into the optimal time to enter or exit a trade.
Olymp Trade Demo
When applying these principles to platforms like Olymp Trade demo, traders can simulate market conditions to practice understanding and predicting these market realities. Using the Olymp Trade demo account, one can experiment with trading during different market conditions, testing how well they can anticipate trends based on both technical indicators and situational awareness. The demo account allows for risk-free trading, offering a realistic environment where traders can learn how market psychology, news events, and technical setups come into play.
In summary, Olymp Trade demo serves as a valuable tool for honing the skills needed to navigate the complex, real-world markets. It enables traders to understand how factors beyond basic technical analysis can impact their trades and to practice making decisions based on the full range of market realities.
