lately i've been going through my scan and wondered...what moves commodities? how can commodity prices move up and down and what affect does that have on the economy / markets?
so i googled a few pages and found some interesting stuff. commodities affect the whole economy by changing the price of goods. if cotton goes up, clothing goes up and this increases the sales revenues of vendors / companies and decreases the pocket change of your average consumer. this applies to oil as well, and if oil goes down, well everyone has some extra money to spend and money will circulate through the economy. most of what i read involves how many exchanges hands. so even though i don't know much about money circulation and its effect on the economy, i'm sure i will in the near future.
this brings me to inflation; the latter topic i stumbled upon. inflation also has to do with money circulation as well. many economists believe that inflation and hyperinflation is caused by money pumping by the central banks. funny thing is that i read an article maybe 2 months ago that Ben Bernanke (currently the chairman of the US federal reserve) has been pumping money into the economy like CRAZYYYY trying to turn around our current "recession". i still don't really understand how we are in a recession. so i guess those are all inter-related into the markets and economy.
i also read about bonds and interest rates. interest rates go up, bond values go down because at the time the current bond was purchased, it would've had a lower interest rate. currently our us interest rate is 0.25. if you look at the history if american interest rate, 0.25 is probably one of the lowest possible. i saw some shit that in 1980's the interest rate was like 20%. wtf? 20%? that is better than any market return ever. i am curious to why the interest rate is so low and the govt is encouraging spending...i feel as though we are not in a recession but they found a way to keep interest rates low to encourage spending and drink all that milk that pours into corporate america.
anyway...i have a new goal. currently my trading is doing pretty well. started with $10,000 in my acct in april and at 11,128. have been ups and downs but have learned from a lot of my mistakes. shorting stocks definitely takes a lot of precision and tracking of the stock. can't just go short assuming that because the price is going to fall, it will fall at that exact time. also, news matters!!! always make sure you know when the earnings announcements are coming out and if there are also any big hype news coming. i shorted bbry right before the bbry 10 came into the market. hahaha smh. well i learned my lesson from that short, because it costed me around $800. my risk is still very high in my trades. trading with almost my entire capital. however many of the trades, i am confident will not go against me so much that it will threaten my capital. most of them i have been watching for a while and also i understand much more how the market moves from looking at charts alot. it's crazy because i can tell how a stock will move based on its chart but i cannot verbalize it. i just pay attention to volume, day candlesticks, week candlestcks, and month candlestick and look at the general market. actually the general market has very little to do with the stocks i even trade. they have a life of its own, so i learned to also eliminate that from the equation. minute charts also help to figure out at what point in the day is best to buy/sell.
i digress, my goal is to raise my capital from 10,000 to 20,000. use 10,000 as a trading account and 10,000 as an investment account. once i reach that point, i will have two "separate" accounts have use my funds for one strictly for trading and strictly for investing. this will give me the ability to track my progress and also not worry so much about the volatility of daytrading for my investing account.
also, confidence matters. faith.
