Translation under review. The illustrations are still in Portuguese.
"For a song to make sense, it has to follow something. Each song has a style and a rhythm, and each market has its own flow."
You stopped in the middle of this chapter.
You don't dance forró to a funk step. A comparison with music. Each genre has its own beat. If you try to dance to one song with the steps of another, you trip. The market is the same: each shelf on the menu has its own rhythm.
Market
The rhythm
What it's like in practice
Mini and futures
fast electronic music
Moves a lot, all day long, with sharp turns. If you don't have the stomach for it, you get dizzy fast.
Stocks of fast-growing companies
rock
Lots of energy, strong ups and downs, but one direction over the long run.
and metals
samba school drum section
A heavy beat that depends on the physical world: harvest, rain, war, inflation.
and real estate funds
bossa nova
Smooth, steady, no jumps. The rhythm is the interest or the rent dripping in every month.
The good DJ. A good DJ doesn't play the same song all night. He knows the dance floor changes, the hour changes, and each song calls for a different dance.
In the market, whoever treats the mini index like fixed income gets hurt. Knowing the rhythm of the dance floor before you step on it is what separates people who dance well from people who keep stepping on everyone's toes.
Time of day is rhythm too. The Brazilian stock exchange opens and closes at set hours. The American one, at others. And the way each market moves during the day is something the chart shows, not a rule.
Words in this chapter
Index
It's not a company, it's an average. The stock exchange index shows whether the overall mood is good or bad.
Mini index and mini dollar futures
Small slices of the giant futures. The most famous ones, and the most dangerous for day traders.
Commodities
Oil, soybeans, corn, cattle, coffee. And gold and silver, where money runs when panic hits.
Fixed income
You lend money to the government, a bank or a company, and get the agreed interest.
