10 Minute Read

Friday Feature: Thriving in Bear Markets – Part 2: Smart Money vs. Dumb Money

May 1, 2020

By | 1 Comment


The most foundational skill of smart money is the ability to separate their bias, emotions and opinions from their data driven analysis.  For example, on April 28th, 2020, I asked a group of traders within Tackle Trading community about their trading outlook for the month of May, 2020.  Virtually all of them are still bearish or neutral.  Although I understand where they are coming from because I feel the bearish bias as well, but I am a bull for the month of May simply because price action have firmly crossed MA 50 and bullish setups are everywhere in majority of the sectors. 

Look at the data please, stop watching the news or try to put reason behind why price moves the way it does.

Is it hard to trade bullish moves in an overall bear market?  Not if you think like smart money!  Try to use your counterintuitive thinking to observe how the masses are reacting and do NOT do what the masses are suggesting in the news or media.  I’m not trying to say all of news is bad and untrue, but what 90% of people believe in will NOT work in your trading.  You will NOT be on the profitable side of the trade if you still act like the 90% of dumb money.  In fact, the existence of dumb money is for the smart money to be profitable.  90% of the population transfer their wealth directly to the 10% in the markets based on popular beliefs.

Let me give you some examples.  We have had some very popular views in the media about what’s going to happen in the market that plays to the tune of the dumb money:

  1. Test the bottom theory that may not happen
  2. Sell in May get to be important with no real data
  3. Recession is here. Hmmm…I don’t see it on the chart

No one knows what’s going to happen.  Smart money follow price action and data driven approach to their analysis to trade accordingly. 

QQQ has had higher high and higher lows breaking above all Moving Averages.  If you learned anything in Technical Analysis, you would know this is a bullish trend with outlook to be bullish.  What prevents you from this logical smart analysis is your own cloud of emotions still stuck with the dumb money.

Pearl Li. The Theta Finder. In the Making.

Tackle Trading: Pearl Li.

Pearl Li previously has been a product management professional for more than 10 years working at well-known companies such as Amazon and Nielsen Company. She took the leap in 2016 with Elite Legacy Education to learn about building long term wealth through financial market trading/investing. In 2018, Pearl happily left her job to pursue investing/trading fulltime producing theta style trading that generates monthly cashflow. She is thrilled to be a voice on the Tackle Trading platform to share her transformation as she goes through various phases of her growing experience.


Tackle Trading: Financial Freedom is a Journey. Sign up now for a 15-day free trial.

Financial freedom is a journey

The Tackle Today series is brought to you by Tackle Trading.

Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.

# Sign up now for a 15-DAY FREE TRIAL #


Legal Disclaimer

Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.

All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.

1 Reply to “Friday Feature: Thriving in Bear Markets – Part 2: Smart Money vs. Dumb Money”

  1. Avatar Kerk LeBlanc says:

    Good blog. This is right on the mark.

    Thanks

Leave a Reply

Chart Modal

Tackle Trading