Hello there fellow options traders,
Last year brought us all kinds of crazy headlines. if we didn't know any better we could make the assumption that the market was only reacting to what the news pundits were preaching. So much to digest in the media so I thought I would share some of my tips and tricks on staying informed about macroeconomic events and other drivers that may impact the financial markets going into 2023.
As a retail options trader, it is crucial to keep up to date with these factors in order to make more informed trading decisions and potentially increase your profits. But it's not just about following the news - it's also important to consider the efficient market hypothesis (EMH), which suggests that financial markets are efficient and it is impossible to consistently outperform the market using only historical data or other information. Here are a few tips from yours truly, GKT's C+Math Guy, to help you stay up to date while also keeping the EMH in mind:
Follow financial news: Subscribe to reputable sources such as Bloomberg, The Wall Street Journal, or CNBC to get the latest information on macroeconomic events and other drivers that may affect the markets. Just don't believe everything you read - remember, even the best financial journalists can't predict the future (despite what their crystal ball may tell them).
Use economic calendars: Keep track of upcoming economic events and indicators using economic calendars. Just don't get too attached to your predictions - the markets can be unpredictable, and the EMH suggests that these events may already be reflected in the market's expectations.
Monitor market trends: Regularly review charts and use technical analysis to identify market trends and make predictions about future price movements. But don't put all your faith in your indicators (I've been there and lost a lot of money doing that)- the EMH suggests that it is difficult to consistently outperform the market using only historical data or other information, as our Head Honcho of Hindsight likes to say "past performance is not indicative of future results."
Understand the fundamentals: In addition to technical analysis, it is also important to understand the fundamental factors that may impact the markets. This includes things like a company's earnings, management, and industry conditions. Just don't get too carried away - again EMH suggests that these factors may already be reflected in the price.
Seek out expert opinions: To gain a deeper understanding of macroeconomic events and other drivers, consider seeking out expert opinions from financial analysts or economists. These professionals can provide valuable insights, but don't take their word as gospel—their human beings, not Stock Market Jesus.
By following these simple tips, you can stay informed about macroeconomic events and other drivers while also considering the EMH and using a combination of fundamental and technical analysis to make informed trading decisions. Happy trading (and try not to let the markets drive you too crazy)!
Sincerely, A C+ Math Student