“Frankly, 99% of retail investors out there are acting like complete morons.”
So says Jonathan Rodriguez, Wall Street Daily’s Senior Analyst and a renowned pattern-trading expert.
What’s more, Jonathan tells me that he’s discovered a surprisingly simple way for everyday investors to improve their performance using nothing more than their home computers.
“In 2014, over a third of investors combined to produce negative returns. All of those losses could’ve been avoided,” Jonathan says.
I decided to dig into the world of a pattern-trading expert and figure out exactly what’s going on.
Getting Ahead of Wall Street
I walk into Jonathan’s office, and he’s looking at stock prices on each of his three monitors.
The candlestick charts are overlaid with an array of lines, some curving – moving averages – and others perfectly horizontal – Fibonacci retracements.
Now, you may have heard of these lines. They’re used by many analysts, after all. But they barely scratch the surface of what Jonathan is doing.
As soon as I’m in the door, Jonathan pokes a monitor displaying Home Depot's (NYSE:HD) chart and starts talking. He shows me levels of resistance and support, and explains how we can identify the best entry points.
Isn’t this just basic technical analysis, I wonder?
As it turns out, that couldn’t be further from the truth.
In short, Jonathan’s strategy relies on huge, market-wide patterns that are emerging from the chaos of the Cyborg Finance Revolution.
Though complicated in practice, the gist of it is simple: Wall Street has unintentionally tipped its hand.
Supercomputers are trading tens of millions of shares every day, and they’re all searching for the most efficient price points. With so much automation in the market, including the matching engines that facilitate dark pool trades, it was inevitable that patterns would emerge from the chaos.
I mentioned yesterday that dark pools leave “footprints” – subtle but telling clues to the trades taking place within them. Well, Jonathan spotted these footprints, and he’s figured out when they’re going to appear again.
You see, even the largest financial institutions in the world, trading in invisible pools of liquidity, are inevitably trading along certain patterns.
By using these patterns, which can’t help but repeat, Jonathan is able to identify better entry and exit points for literally any trade.
The Cyborg Finance Revolution
Now, if the computerization of the stock market was just a passing fad, then this wouldn’t be a worthwhile strategy.
But automation is the new reality. The days of the frantic pit traders are behind us, and supercomputers, dark pools, and matching equations are here to stay.