Trading Stock Market Indices. A Simple Approach

In this article we will present a simple model that can be used by the people that do not have profound financial knowledge and, despite that, could be tempted to try to obtain gains on different financial markets without paying a professional. In fact, the model presented here is developed on some ideas that we presented before in an article on the sports betting industry, adapted to the financial markets. The general idea that we will present in detail in this article is that someone can start and stop trading market indices looking at just one indicator that can be found everywhere: the trading volume. The position that should be taken is, in our opinion, in the opposite way of the last trend that that was ended by the high market volume. In the end, the following article represents just a case study made on the general principles presented here taking into consideration a concrete market. We will try to present the model that we developed on a very well-known and highly traded index, the DJIA (Dow Jones Industrial Average) even if the origin of this index is, as almost every trader knows, american. The reason we will do that is the fact that the traders from the whole world can obtain gains (or losses) on transactions made on DJIA even if they trade from the European Union or other countries that exist in our world so, the gains or losses obtained by the trades we mentioned before can contribute to the value of the traders economy (in our case to the value of EU's economy).