Profitable trading and investing comes down to two groups, those who know what they are doing (banks and financial institutions) and those who don’t (average traders and investors). In the trading and investing world, those who know what they are doing simply get paid from those who don’t. This is no surprise as banks and financial institutions are very educated in the financial markets, average traders and investors are not.

I began my career on the trading floor of the Chicago Mercantile Exchange on the bank side of the business, so I learned what the smart money does and how the smart money thinks. When it comes to consistent profits for the short-term income trader or longer-term investor, there are only two questions that matter.

Most people think you can’t predict market turns and market moves in advance. I say you can and with a very high degree of accuracy. Let me explain.

Let’s start by simply answering the two questions and see what this looks like on a price chart. Once we do, we can apply this strategy to any market, whether investing in stocks, bonds, futures, forex, options, bitcoin, real estate, etc., and for any financial purpose (short-term income trading, long-term investing for wealth, asset protection, retirement planning, etc.).

How do you tell where will price turn?

Market price turns at price levels where supply and demand are out of balance. Banks and financial institutions are consistently very profitable, and they create the largest imbalances as they buy and sell the largest quantities. So, if we can see where they are buying and selling on a price chart, we can buy and sell there also. Here is what that looks like.

Live Trading/Investing Session

During a recent live trading session in one of our live trading rooms, we identified a buying opportunity in Gold. Looking at the chart on the left (the setup), the yellow shaded area represents demand, where banks are buying Gold. How do we know this? Price was trading for a short period of time and then rallied strong from that level. That rally can only happen because demand exceeds supply. Shortly after, price declined back to that demand level, as seen clearly on the chart on the right (the result). When price revisits the demand level, we know novice traders are selling. We know this because only a novice trader or investor would sell AFTER a decline in price and AT a price level where demand exceeds supply (banks are buying). This is where we bought.