Today’s Exponential Investor is a guest piece from whip-smart trader Eoin Treacy. I asked Eoin to share with you his approach to overcoming nothing less than our embedded human failures. I think you’ll enjoy it – Harry.
Humans are hardwired for trading failure…
Sorry to start the week on a bum note, but that’s the sad truth.
As a species we make emotional decisions, not rational ones. We are ill-disciplined creatures. Our thoughts cloud over with desire and fear – especially when making financial decisions.
If you’re an investor at the starting line, you face a number of psychological hurdles that you are very unlikely to overcome. In a moment I’ll show you how it is possible to defeat these hardwired flaws.
But first, let’s look at a few of the most challenging ones now…
Ever heard of the “bandwagon effect”?
If you have never actively identified it, I am certain you have fallen foul of it.
This is a common psychological trap. Essentially, the bandwagon effect is a form of psychological comfort. The opinions of others reinforce our own. So we seek those opinions to gain confidence in our positions, creating a false reality.
Think investing in Tesla is a good idea? You’ll go online and find 50 other analysts who agree. So you invest in Tesla. You lose money. Why? Because you ignored the full picture. You made it so you could only see what you wanted to see.
When you spot other investors piling in to a trade and you join them, for no other reason that the fear of missing out… that’s called “herding” – another encoded instinct that is extremely hard to overcome.
Next up, we have another practically inescapable flaw…
It’s called the “ostrich effect”.
The ostrich effect is the phenomenon of ignoring dangerous or negative information by “burying” one’s head in the sand, like an ostrich. Smokers do this all the time. As do those who feast on junk food. You know it’s bad for you. It will probably kill you… but, it doesn’t stop you.
When traders find themselves in losing trades, but cannot accept that they are wrong, they will turn into ostriches. Trapped in losing trades, they “average down”, which means they pump more money into failing positions. That’s only going to go terribly for them – unless they are blind lucky.
So what else holds us all back from making clear-headed decisions?
Well, there’s a big trouble-maker known as outcome bias.
This is one of the most costly mistakes… and investors and traders repeat it over and over.
The outcome bias describes the fact that we, as a species, judge the merit of a decision based on the outcome, rather than how the decision was made.
So if you put your life savings on the Grand National and win… it’s a great outcome. But you’d be a fool to do it again. Still, that is exactly what traders do. They show allegiance to lucky decisions. Or a particular asset class they were fortunate to make a profit on. A guess is a guess and if you play a hunch and it comes off – take the money and run, don’t assume it will happen again.
Looking at all this, the evidence is damning: we are evolutionarily destined to lose out in the markets.
And these are just three of the many (many!) psychological barriers standing between you and consistently making good money from your trading.
But I’m not here just to deliver hammer blows.
You can beat these biases and costly evolutionary flaws.
And the way to do that is to remove the decision-making process entirely.
No decision trading
I’ve been a trader for almost 20 years.
I now manage a $600m fund. And I consult some of the swankiest investment houses in the world.
But when I started out, I barely knew up from down. I was a slave to my flaws and biases just like the average punter. Like most people, I tried it all. Systems, algorithms, blind instinct. And they all worked out about the same – they all lost me money.
What I was looking for was predictability. Repeating patterns. A way to reduce my anxiety of never knowing with any confidence what was likely to happen next.
And I found it.
I discovered a repeating market pattern that transformed the way I look at the markets and it kick-started my successful trading career.
What’s perfect about it – in my eyes – is this: once you know about it and see how powerful it can be, you never need to make another trading decision again.
That means it eliminates all the costly biases I ran through above.
Sounds good, I’m sure you’ll agree – so what is it?
The 25 “windows”
Through my research, I discovered something very liberating…
I discovered that there are certain days each month when a surge of cash flowed into the markets, reliably, like clockwork.
There are two of these surges every month.
That works out at 25 opportunities – or “windows” – every year. Really, these are the only 25 trades you need to make every year.
If you know when those days are, then you could simply be in the market on those days, and out of the market on all the other days.
Click the above link and you’ll see that I know exactly when those days are, down to the precise time to get in and out of each trade.
And, these dates are available to download right now, straight to your phone’s calendar or on to your computer.
Like I said, follow this simple routine and you never need to make an anxious, hurried, misinformed trading decision ever again.
It just takes 2-3 minutes to get in ahead of the cash-surge window every month.
Based on my calculations, you could be looking at anywhere from £3,930 to £5,710 in profit per trade, with two opportunities per month.
That means a potential extra income of up to £11,420 per month, tax free.
(This is because you use a spread-betting platform, assuming a bet of £10 per point.)
Of course, this strategy isn’t for everyone, and it does involve risks too. With leveraged trading like this, you can lose more than you put in, if you’re not careful. (Of course, as a veteran in the markets, I de-risk the strategy as much as possible.)
I have back-tested this strategy over a period of 17 years. And the results – I think you have to agree – are incredible.
Based on that, just being in the market during the right calendar days would have enabled you to outperform the market by +322%!
Buying the market on the other days? A LOSS of -61%.
Pretty compelling stuff. But that’s the theory. What about in practice?
Ask those who use it. Here’s what some of those that follow this predictable cash-surge strategy have to say:
Eoin, I put £10 on and made 310 points on first transaction, therefore – £3,100 profit on first trade. FYI, on the [other] trade, I was stopped out for a £1,575 profit.
The first pay day window I place £1 per point, I cashed out early and took £230 profit. The second pay day window I opened a £1 per point position…Once again I cashed and took £480 profit. I am very much enjoying the information Eoin shares and I am fascinated by the reflex trader. Regards and keep up the great work.
Eoin I went in slightly early on the day…I made £831…2nd day I made £218. I’m enjoying you videos and learning how I should have traded many years ago!
I’d like to invite you to learn more about this “cash-surge” strategy. I believe it defeats all of those hardwired biases that traders and investors so often fall victim to.
Remember… it’s all about trading on the days that are highly likely to be more profitable. Following the cash surges that tend to occur with a high degree of likelihood every two weeks.
And if you’re keen to see how it works right away, some good news…
The next cash-surge window opens very soon. THIS Wednesday, in fact.
If you want to steal in on the next chance to make £3-5k from the imminent window…
Southbank Investment Research