The Supply And Demand Strategy That Made Me A 7-Figure Prop Trader

Summary

In this introductory lesson of the Supply and Demand Pro Trader series, viewers learn the fundamentals of trading, emphasizing the importance of supply and demand. The video explains how institutional investors, who control over 90% of market volume, influence stock prices. Using Warren Buffett's strategic buying of IBM shares as a case study, the narrator highlights the need for institutions to scale purchases to avoid price spikes, showcasing the advantage retail traders have in making quick trades. By tracking institutional footprints, viewers can enhance their trading strategies and achieve better outcomes in the market.

Takeaways

• 📈 Understanding the principles of supply and demand is essential for successful trading.
• 💰 Institutional investors control over 90% of trading volume, significantly impacting stock prices.
• 🔍 Identifying when and how institutions buy and sell stocks can provide retail traders with valuable insights.
• 📊 The best buying opportunity on a stock chart is where there are more buyers than sellers.
• ⚖️ Institutions must scale their purchases to avoid disrupting market prices, which presents an advantage for retail traders.
• 📉 If retail traders can execute trades quickly, they can capitalize on price movements more effectively than institutions.
• 🤔 Warren Buffett's investment strategy demonstrates the importance of gradual scaling in large purchases.
• 🎾 Competing in trading without proper preparation is like playing tennis against a professional without experience.
• 📚 Continuous learning and adapting strategies are crucial for navigating the financial markets successfully.
• 🐟 Following institutional investors is akin to being a remora fish attached to a shark, benefiting from their movements.

Q & A

What is the main focus of the video?

The video focuses on understanding the science of supply and demand, specifically how large banks and institutions influence stock prices.

Who is the presenter of the video and what is his background?

The presenter is Burn, a full-time trader with 10 years of experience, managing $2.4 million in prop capital and leading an investment consultancy based in Dubai.

What fundamental principle does Burn emphasize for making money in trading?

Burn emphasizes the principle of 'buy low, sell high' as a fundamental strategy for making money in trading.

What are the two principal groups that control money in the stock market?

The two principal groups are retail investors (individuals managing their own money) and institutional investors (hedge funds, pension funds, insurance companies, and big banks).

What percentage of stock market trading is done by institutional investors?

Institutional investors account for over 90% of stock market trading, leaving only 10% for retail investors.

How does institutional buying affect stock prices?

When institutions buy large quantities of stock, it drives prices up due to increased demand, as they have substantial amounts of money to invest.

What strategy does Warren Buffett use to buy large amounts of stock without disrupting the market?

Warren Buffett uses a strategy called 'scaling in,' where he buys shares gradually over time instead of all at once to avoid driving up the price.

What analogy does Burn use to explain the challenges of entering the financial market?

Burn compares entering the financial market without proper experience to a novice tennis player facing a professional like Roger Federer, highlighting the difficulty of competing against seasoned institutions.

What is the advantage that retail traders have over institutional investors?

Retail traders can buy and sell stocks quickly and in larger quantities without affecting the market as much as institutional investors, who must scale their purchases.

What is the key takeaway from the video regarding trading strategies?

The key takeaway is that retail traders should follow institutional buying and selling patterns, as institutions have significant influence over market movements.