I will teach you how to see markets from a third dimension, using INNER-Market analysis.
It is the study of factors that influence price movements such as volume, cycles, volatility and market sentiment. Each area provides excellent information on when, how far and how fast the price of any asset should move.
By knowing such information with a high degree of certainty, we can benefit greatly and enjoy a hassle-free retirement.
I will show you the difference between single price analysis and INNER-Market analysis. Put your hand over one eye and try walking around the room. With only one eye open, your field of view is limited and your ability to visualize your surroundings is severely limited. Most importantly, you have no sense of depth. This is how most investors make their trading decisions from a one-dimensional perspective on their investments. Now release your hand and look around the room with both eyes. You can instantly see where everything is and most importantly, its distance from you. You benefit from the three-dimensional depth of the room and all its furniture.
If you’ve ever been to a shooting range, you’ve probably observed that 99 percent of people fire their pistols or rifles with only one eye open. But those with higher education usually shoot with both eyes open for a clear field of view.
Would you have an advantage if you handled your investments in the same way with both eyes open?
INNER-Market analysis adds depth to your trading decisions. As we tackle this issue together, remember to keep your eyes wide open and have a clear field of view. The world’s best investors have an uncanny ability to see the invisible. This is because they understand and use all the relevant parts of a particular investment. They understand what drives the price and have created a trading strategy that largely holds the odds in their favour. This means that you can predict market movements most of the time and position yourself appropriately before a move.
INNER-Market analysis gives us great insight. Do not limit yourself to a single price analysis to determine market direction. Many popular indicators based on single price are useful to some extent for analyzing market behavior.
However, they are most effective when combined with INNER-Market analysis to obtain a three-dimensional view of the market. This is not mutually exclusive. Single price indicators should be used as a confirmation filter for INNER-Market analysis. In this way, marginal transactions can be filtered out and avoided.
This distinction can be visualized by comparing the rectangle on the left (representing single price analysis) and the three-dimensional cube on the right (representing INNER-Market analysis).
INNER-Market analysis should be your basis for analyzing the market. While it has the strengths of single price analysis, it adds multiple other dimensions to the analytical framework so that the behavior of the market can be analyzed internally and externally.
Market Analysis Styles Comparison
In terms of practical investment, I have summarized some of the differences between INNER-Market analysis and single price analysis in the table below:
One of the mistakes some investors make is to do nothing. Either they have a hard time understanding trends and potential at any given time and are frozen with analysis paralysis, or they use the old-fashioned buy and hope strategy, which carries a very high level of risk for all investors over 50.
There is a fine line between action and inaction and understanding when you need to re-evaluate your assets. Moving your money into rising assets and disposing of falling-price assets is the best way to take advantage of tax-loss harvests and increase your account value even as stock and bond prices fall. But analysis paralysis is never good because it can put you in a hold-and-hold cycle, which can be quite stressful and costly during market corrections.
Most investors and traders don’t realize that exiting losing positions and realizing losses can be a good thing. In this article, you’ll get a better understanding of how this works. You’ll learn how to abandon the old buy-and-hope strategy and start investing in a way to keep only assets that have risen in value in your portfolio. This is the opposite of the way everyone else invests and experiences the market.
Let’s dig a little deeper into analysis paralysis because if you’re managing your investments and participated in the stock and bond market dips in 2022, then you’re a victim and need to figure it out before the next stock market correction happens.
In analysis paralysis, a person is so lost in the process of examining and evaluating various data points that they are unable to make a decision with them! Imagine you are a bullfighter in the ring paralyzed because you don’t know which way to turn. The bull takes action and attacks in seconds; If you wait, it’s too late now. Inaction can kill you. As an investor, this means missed opportunities and can easily lead to unprofitability and huge losses in your portfolio.
Often when examining a chart to determine in which direction the price will move next, the pros outweigh the cons or vice versa, and the individual has a clear direction and a decision to make. When analysis paralysis begins, it may be because you never feel comfortable stopping to look for additional criteria to examine in hopes of a definitive buy or sell signal. The pros and cons can be of equal weight. Or it may be an indecisive personality trait that needs to be identified and overcome because individuals allow themselves to be trapped in a cycle of inactivity. Just like writer’s block or other sedentary moments that cause deadlock or missed opportunities. The brain processes a lot of information at the same time and as a result, the human connected to the brain is locked! Analysis paralysis is the trading version of information overload.
Traders can be overwhelmed by multiple scenarios, the possibilities for price action, and a dozen or more indicators. In any case, the investor has an opposing view in his mind. Conflicting opinions create confusion and make it nearly impossible to act and trade with clarity and discipline.
I’ve had my share of analysis paralysis before I learned to keep things simple. I would dig into all the details, putting together speculative theories that sounded great. But when it came to pressing the button to perform an action, I couldn’t!
Too Many Examples of Knowledge – Analysis Paralysis
As you can see from this chart full of indicators, it is not easy to understand what price will do next. The price has reached the 200-day moving average and is trading below and testing the upper Bollinger band, which should act as resistance. Other indicators are trending up and down, giving mixed signals.
My market trend signal allowed us to buy GDX (NYSE:GDX) with 7% profit in just a few days.
The vast amount of information available on the internet to quench your thirst for more information is literally endless. You can search and search and search some more until your mind is paralyzed. The dividing line between useful and necessary analysis and overanalysis is thin. Whether you are a technical, fundamental trader, or a combination of the two, we are all susceptible to analysis overload. The amount of information available to us cannot satisfy our desire for analysis. But we have a choice: We can say, “Enough is enough.”
It took a lot of self-discipline to regain control of my emotions and actions. I believe in being around motivating people or listening to motivating content. While I’m driving, I tell Siri to play YouTube Motivational Speeches and randomly listen. I never know who is speaking, but I am constantly uplifted and energized. It’s incredible how many different ways the same points and theories can be explained.
It’s also crucial to understand that whatever you think and say, your life tends to unfold and be experienced that way. I touched on this topic a while ago in an article titled “Investors with Positive Self Dialogue, Right Expectations, and Engagement Succeed”.
You probably know as well as I do how the relentless search for more information paralyzes your decision-making processes. You miss good moves because you are not fast enough to understand your signal. You miss out on good moves because even if you “know” that the move is imminent, you’re too busy looking for more confirming indicators. This leads to disappointment.
We can easily justify the need for over analysis, especially in the current economic environment. We are at the beginning of a great transition from one great cycle to the next. Individual investors are nervous and you are probably trying to analyze everything, but you are not sure exactly what to do.
In part 2 of this article, which I’ll be posting in a few days, I’ll show you what it takes to be more successful in your trading and investments with less effort, stress, and account volatility. Until then, be sure to read and learn how you can turn lost trades in the link I mentioned above into a monetization opportunity and how to overcome negative prejudices and thoughts with positive self-dialogue.
Also, feel free to browse my website and learn how you can use my INNER-Market analysis signals to aid your trading and investment success.
Please do not hesitate to reach me via e-mail