Investment basics haven't changed in centuries. The rule has remained "buy low and sell high". But this is just about the only thing that's been constant. In pretty much every other aspect, investing has changed.
Today, dynamism is the name of the game. From the volume and speed of information, finding the right sources, dealing with reactionary markets and managing risks, the landscape changes daily. I wanted to pick the brain of someone who's in the trench and spoke with Paul Rosenberg, a market analyst for EconomicCalendar.com. Paul is a fun, likable expert on investing and trading who tells it like it is and isn't embarrassed about admitting when he's wrong.
What are the biggest investing and trading mistakes you see made again and again?
The following are a few mistakes that I see over again.
1. Poor risk management, for example, using too much leverage. Having a bad risk/reward profile on trades is a staple of poor risk management that I come across (as a rule of thumb a trader should not enter into a trade unless analysis suggests they can make at least ~$2 for every $1 risked)
2. Over-complication of the analytical process. Many traders utilize too much information to arrive at decisions, which causes contradiction and indecisive behavior.
3. Not understanding the difference between a 'good' and 'bad' market environment, whether it be in general or for a particular style or strategy a trader implements.
4. Trading their P&L (profit and losses) and not the position, which spurs poor judgment. This often times stems from either being under-capitalized or using too much leverage.
What's going on with crude oil?
I think on a basic level there is a supply and demand imbalance that is not going away any time soon. The market continuously shows that there is a supply glut, which isn't being helped by the crashing economies in major producers such as Saudi Arabia, Russia, and Venezuela.
Those countries have obligations to deliver oil futures and aren't going to cut production; it's not in their interest. They need money now and will sell as much oil as possible to make up any budget shortfalls, which may seem counterproductive but is the reality.
On top of all that, Iran isn't making it easy for oil prices, as they recently had sanctions removed and are back pumping oil, adding even more of the commodity to the oversupplied market. Iran is looking to increase production even more by the end of the year, so any supply cut will have to be significant to really impact oil price.
Further, I think that they don't realize that the US shale producers that OPEC is trying to price out of the market are not going to go away. They will still be there but as soon as they can't meet their debt obligations or go bankrupt, a major oil producer such as Shell or Exxon will simply swoop in and buy them out. This is just my opinion and with market dynamics quickly changing, the situation can make a 180 at any moment.
How did you end up writing analysis for traders and what is your motivation?
Well, I was a trader myself for many years and couldn't find a source that I liked for news and commentary. I had to jump from source to source to combine various trading information and analysis in my head. To make my life easier I started writing my own analysis for myself, then it grew to my colleagues who would use my analysis for their own trading, and eventually I was approached by some acquaintances with the idea of providing our analysis to the financial community. It sounded great and ever since I have been involved in writing market commentary for traders, with an emphasis on forex and equities.
I like to see traders succeed and win trades; it's a win-win, as I'm actually quite proud of my winning trade recommendation percentage.
What separates your team's analysis from other sites?
The difference between what our team and I write and the analysis I see elsewhere is our research is more actionable than others'. We strive to cover nearly the entire economic calendar. Rather than packing in fluff to inflate word count, we focus on what we, as traders, would want to know. Basically, we opt for quality over quantity. Plus, I don't think traders have a comprehensive site with detailed analysis for most economic calendar events.
What is the best part of working for EconomicCalendar.com?
The most rewarding aspect of the job is helping people pick winning trades. Additionally, the team and management are fantastic and very supportive, which is a great recipe for leading the company forward to the next level.
Even though it's a small company, their ideas and aspirations are big and I truly believe they will become successful. In a period of six months, we were able to develop a functioning site with quality content, grow our analysts from one to seven, whose research has been cited by Zacks, Forbes, and other prominent financial publications.
We have big plans to provide our readers with more features and improve their experience in the near future, including bringing on more great writers, producing analysis for other industries that are often overlooked. Our team is excited to expand!
What are your and your team's favorite assets to trade?
Personally, I love forex crosses, EUR/GBP, AUD/JPY, and so on. It is very difficult to find decent coverage of crosses and hope to contribute more of these types of trade ideas as we grow. Also, commodities are exciting, especially as we are seeing volatility around gold, silver, and copper.
I can't speak for my entire team, but I know others like trading most of the hard commodities as well as soft commodities, some examples would be sugar, soybeans, and steel.
Where do you picture yourself and EconomicCalendar.com in 5 years?
I think by then we will have an established readership, who will continue coming back for our analysis and diverse coverage of assets that you would be hard-pressed to find anywhere else. I believe the site will stick to its core principal and put users first, as it currently does.
Personally, I hope to grow in my position and contribute more to our readership, including exploring other financial areas that are largely ignored by others.