Do you think you have to be smart to make money trading the financial markets? Think again. While there are strong studies on the correlation between IQ and income levels that show the higher the IQ, the stronger the income, I would argue the supply and demand strategy that I write about so often flips that equation. Meaning, from my experience, the less you use your smart brain and instead keep things at the kindergarten level with some discipline, the more likely you will have success.

Let’s take the same approach with this article and keep things really simple.

 

The chart above is a recent trade we took in one of my live trading sessions. It was in Crude Oil futures, one of the many markets we monitor and trade. The trading opportunity offered us a $3.00 gain for $0.30 of risk. Price rallied up to our predetermined supply zone (retail prices) where we sold short, and then it fell to our predetermined demand zone (wholesale prices) where we bought back for a profit.

As you can see on the left, many students reported reward to risk gains that were very ideal. So, what did we need to master to identify and take advantage of this opportunity? Let’s dive into that question…

  • Question: How much do we need to learn about the fundamentals of Crude Oil and that market?

    • Answer: Nothing at all.
  • Question: How much do we need to focus on the fundamentals and news around Crude Oil?

    • Answer: Not at all.
  • Question: Do we need to know or focus on whose supply and demand it is at our levels?

    • Answer: No, we don’t at all, it doesn’t matter.
  • Question: Do we need to be an expert in math or economics?

    • Answer: No, not at all.
  • Question: Does it matter if we really don’t understand what Crude Oil is and think Oil is something that grows on a tree and we eat it?

    • Answer: Doesn’t matter at all.
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