SG Investor Hub Blog

How does Smart Money take my money, as a retail trader?

I can write this the whole night. But I will give u the summarised version in italics:
The Smart money will force you to take the shares that they want you to, and sell back to them when they want you to.
The best part of this is, you will be willing to do so without any forceful or conceit means.
The current generation of people, young and old believe in doing their own research and reading reviews. All these smart money gotta do is to feed retailers with different forms of sophistry via research articles and whatnots. That said, have you realised why most brokerage houses give FREE market updates on buy and sell calls? (bear with me, coming to this point soon)
Though I am not saying paid subscriptions are better or accurate, this is only one side of the industry that most retail traders do not realise. Retail traders are blinded by the fact houses are giving FREE market updates/report, taking for granted that brokerage houses have to do so because they, the clients, are paying trading fees to the houses.
Sadly, they, the paying clients, did not realise that at the same time, they are bargaining for cheaper brokerage fees too. It’s almost like asking someone to work longer hours for lower wages. As the saying goes, you pay peanuts you get monkeys. Market reports or stock research are given for FREE for a reason. Not because brokerage houses or smart money are evil to write such reports, but retails traders are always wanting the most but not wanting to pay for it.
Everything has 2 sides to it. These research reports are still correct and accurate, but merely the flip side of certain facts of a company. The key point is that the research reports will have a certain agenda to be fulfilled in favour of the smart money.
After all, there will be a certain cost for doing up retail traders’ shares settlements. These costs have to come from somewhere. IF brokerage houses were to increase trading fees, they will lose business because retail traders are unhappy.
Research reports may come from the houses or the smart money themselves. So brokerage houses will team up with smart money to push and pull stocks to the retail clients.
And FINALLY the successful model will be like this:
  1. Smart money can load or unload according to their needs based on their private research.
  2. Brokerage houses continue to have ongoing businesses even the fees are lower than low as times go by.
  3. Retail traders still have their low fees for individual trading. And they are ok if they lose money in the market. But certainly not ok with high trading fees.
The final results?
Smart money continues to be smart, churning out obscene profits for investors.
Brokerage houses are happy because their business can survive and be making a profit supporting the smart money and, keeping low fees for retail traders too.
Retail traders have their low fees and are happy too. When they got trading losses, the retail traders blame themselves for wrong perspectives or the current market conditions.
VOILA everyone is happy.
(this is only 1 side of the story for investing. If I have time I will explain the other side of the story on trading.

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