Ella, a soon to be senior in high school was on a cruise with her family over the summer break. She was a smart and curious girl who loved to travel and cruise with her family each summer. During this vacation, given her age and with college around the corner, Ella was really thinking about life, her future and creating the life she wanted to live. She wanted a family of her own but also wanted a career that would allow her to really live life on her terms. Doing what she wanted when she wanted to do it was very important to her.
One night on the ship as they were in the middle of the Pacific, Ella couldn’t sleep as she was deep in thought, excited for her future and wanting to capture all this in her journal. Not wanting to wake her family, she took her laptop and headed out onto the deck of the ship to find a quiet place under the stars to sit and journal her future…
The waters were rough that night, but that didn’t stop Ella. She found a seat on the deck near the back of the ship next to some life boats. Just as she was about to sit, a huge wave smashed into the ship, knocking Ella off her feet. Without thinking, she reached out and grabbed onto a life boat and just like that, her, the life boat and laptop fell into the sea. With the fall, she hit her head on the life boat and was knocked unconscious. Two days later, her boat hit something and woke her up with a sore head and quite a bit of confusion. Ella had floated to a deserted and somewhat unusual island.
It was just her, her laptop and more mangos and bananas than she could ever eat. Strangely, she wasn’t afraid… The incident almost felt like it was meant to be. She figured she would be rescued at some point in the coming days so she decided to be as productive as she could be. Once again, she began thinking about her future, to design it exactly as she wanted it with freedom of choice and time. She turned on her computer and to her surprise, nothing looked the same. All that was on the computer was a trading/investing platform with charts and live data. For some mysterious reason, her market data was live but she had no access to the internet or media noise that leads many traders off track. Also, she had no idea what trading or investing was or how markets work other than the basic market talk in high school.
With nothing but time on her hands, no trading or investing experience and no access to the outside world, she decided to try and figure out what everything on her screen was and meant, and how she could make some money.
With no resources available, she asked herself some very simple questions and figured out the answers:
- How do you make money buying and selling in markets?
Buy low and sell high or vise versa
- Where is “low” and where is high?
At market turning points. Low is where price stops falling and turns higher. High is where price stops rallying and turns lower.
- How do I find market turning points?
Price always turns at price levels where supply and demand are out of balance. So, I need to find those areas on the price chart. I need to buy at price levels where demand exceeds supply and sell at price levels where supply exceeds demand, that’s all.
Ella looked at her charts for a while to see why price was turning where it did and what that picture looked like…
- What does supply and demand look like on a price chart?
When price spends little time at a level and rallies in strong fashion, demand exceeds supply. When price spends little time at a level and declines in strong fashion, supply exceeds demand. She started to mark all these areas off on the chart and saw that the same thing happened every time.
S&P Trade – 2/7/18
After thinking and some self-reflective Q&A, she found a supply level in the S&P and sold short. She profited when price fell and made about $1,100.00 in about 30 minutes. She didn’t know anything about technical or fundamental analysis. She had no idea how to value a stock or company. The lack of any information period forced her to think in simple terms, which led to simple questions with simple answers. Did she really need anything else?
The older we get and the more access to information we have, the more we tend to over complicate everything. Like anything in life, proper trading and investing isn’t just about mastering the basics, it’s about mastering the right basics. Had Ella had the resources like the internet, books, teachers and so on, she likely would never have arrived at the simplicity of markets and how you profit from them. In turn, she, like most people, would never get to live the life she chose to live. Instead, like so many who don’t make the right financial decisions and have a faulty money belief system, key life choices are unfortunately made for them.
As for Ella and how life is now going for her, stay tuned. I plan on speaking with her next week and will let you know. I have a feeling she has an amazing life story to tell with her new skill set.
Live the life you choose.
Sam Seiden – firstname.lastname@example.org