70-80% of retail traders fail.

Let that sink in for a moment. Despite this depressing statistic, countless new traders think they will be the exception to that rule. Most of these newer traders have a small trading account, technical indicators that everyone else is looking at, and some knowledge gained from free websites and YouTube videos. Of course, this is enough knowledge to be dangerous…to their own trading accounts. This is no way to follow the smart money and trade like the smart money

The “smart money”, or the group of winning traders that include market makers, large institutions, hedge funds, and algorithms, rely on “dumb money” retail traders for their steady stream of profits. The smart money is very skilled at sucking retail traders into false market moves (both up and down) to shake them out of their shares, only to create a much larger move in the opposite direction in their own favor. These tricks occur all day long in virtually every stock and market, which racks up healthy profits for the smart money and painful, account-destroying losses for retail traders.

Why do retail traders keep getting faked out? There are a wide variety of reasons for this, but here are a few of the most common ones:

Relying too heavily on charts and indicators

Charts and technical indicators are very popular forms of analysis…and that’s the problem with them. Too many eyes are on them, which makes them less effective. If everyone is watching the same signal, the market tends to do the exact opposite of the crowd; this is simple contrarian logic.

Also, in this day and age, trading algorithms are able to easily scan the market for common chart patterns and technical setups and throw a wrench into the works. These algos will make it look like a pattern is about to break out, help to draw in the dumb money, and then create a sharp, unexpected move in the opposite direction. The problem with technical indicators is that they’re based on price, which makes them a lagging indicator that results in many “whipsaw” signals.

Selling because a stock is “too high” and buying because a stock is “too low”

This is a classic and very common beginning traders’ mistake. The “dumb money” thinks that it’s a good time sell just because a stock is rallying, as if it automatically has to fall. At the same time, they see a stock falling hard and think it’s on “sale” and a good time to buy. The problem with this logic is momentum: stocks that are rallying are in a strong uptrend and tend to continue on in the same direction. When a stock is falling hard, chances are that it will continue to fall hard. What’s cheap tends to get cheaper and vice versa.

The smart money tends to do the opposite, preferring to “buy high and sell higher” rather than “buying low and selling high.” This is know as trading with the trend instead of against it.

Come join our $9 one week CyberGroup trial to see exactly how powerful our system is and to trade like the smart money yourself.

Acting as a part of the herd

Retail traders typically think alike at the same time, which is the worst time. Retail traders are usually the most bullish and heavily invested just before a stock tops out and plunges, while they become the most bearish and short before a stock forms a bottom and rallies. The reason for this is because retail traders rely too heavily on news and others’ opinions, which are wrong a good portion of the time. The smart money, on the other hand, waits for the dumb money to form an extreme opinion on a stock so that they can do the very opposite.

How to follow the smart money

While everything written so far may sound discouraging, don’t despair – there is hope…if you’re willing to change your mentality. We at Cyber Trading University have developed an effective trading system that allows us to follow the smart money, do the opposite of the dumb money, and reprogram your trading mindset. This is not knowledge that you’ll likely come across in your research or from reading trading books. The basis of our system is a modern form of tape-reading that allows us to see exactly what the smart money is doing and to discern whether they actually believe in a market move or if they are just creating a fake-out move designed to trap the dumb money.

While we can write about this until we’re blue in the face, there’s no substitute for actually showing you how our system works in the real world. We’d like to invite you into our CyberGroup trading room, where we have over 100 successful members including instructors and students who are scanning the market all day long, spotting high probability trade setups, and posting their results.

Come join our $9 one week CyberGroup trial to see exactly how powerful our system is and to trade like the smart money yourself.