Stock market trading

Days have changed, so have the markets. Stock Markets are today dynamic happening places where investors look to make a profit and companies look to raise capital. With the emergence of online trading, it has become easier to place money and analyze stocks. It is also no longer good enough to perform technical analysis on just one market at a time.

Why risk losing your trading capital, missing out on the big moves, or getting into or out of trades at the wrong time? Today's market is a whole different ball game than it was even perhaps a decade back. Now, you are taking unnecessary risks if you restrict your analysis to a single market, no matter how much strategy testing you do or how many single-market technical indicators you may look at.

Now the best way to identify trading opportunities on a consistent basis and to protect the capital is to carry out intermarket analysis. As an eminent market guru has remarked, “To ignore these interrelationships is to cheat oneself of enormously valuable price information. What’s worse, it leaves technical analysts in the position of not understanding the external forces that are moving the market. The days of following only one market are long gone. Technical analysts must understand the impact of trends in related market all over the globe. Trying to trade the markets without intermarket awareness is very dangerous.”

However, many traders have very little awareness of market globalization and therefore, rely only on trading strategies or approaches, which do not take into consideration how other markets affect the market they are currently trading in. And even the traders who recognize that the global economy has dramatically altered the way the world’s financial markets interact, often draw a blank when asked how they take these intermarket effects into consideration in their own trading.

The focus of technical analysis has continued to be limited to each individual market – maybe because it is just easier to do it that way. But the price paid for taking the easy way out can be enormous.