How to use Basic Economic and Finance classes in Trading

In college, I was taught supply and demand, standard deviations, and mean. I would ask my Economic teacher and my Finance teacher on what they invest in.  Most of them would say they do not invest because they tried, and lost money. So, I am sitting here and thinking how are you going to teach this class and test me correctly. School makes everything harder than it is. The clear fact is they do not know how to apply the tools they teach. Let first look at Economics. We learned the supply and demand curve, and we want to have the equilibrium price to be efficient.
Well, trading is similar but equilibrium is a bad thing.  Why is it bad?  It is bad because price would not change much.  If a stock is going up, that means there is greater demand for a higher price and if price is going down, there is a greater demand to sell.  It is like the demand curve but upside down. Instead of the prices are to high for the consumer to buy the product,  the prices are to low for a trader to keep the long positions. When the prices are to low for the product, the consumer buys more product. In trading, the price to low mean  there will be less willing to buy at a higher price.  Hint, it is why I said the supply and demand curve is backwards in trading.  The main part is to try to find where the demand will be.  Now lets look at standard deviations and mean.  Standard deviations we learn in college is this:







It looks tougher than it is. In trading, we use this to test a strategy to find if a number of points inside the standard deviation. Let go back to school.  You know how they say 1 SD is 68.2% of the points are inside there and 2 SD 95.4% are inside the points, and 3 SD are 99.7% inside the points.  We can apply this to trading. We can collect the prices and measure to see what SD are according to price.  If we find a set of points that are 3 SD, there will be 99.7% of price will be within the 3 SD. Now, let go to the mean.  This is what the mean looks like in school:






Looks confusing. It is not, It is adding up all the prices and dividing it by the total number of prices.  We use this everyday in trading. It is called the moving averages. The moving average is the average prices for the period.  There are different moving averages like the SA and the EMA.  I like to using the EMA myself since I am a momentum trader and EMA puts more weight on the latest data.  Most intra-day traders use EMA because of this reason. Well, there is a basic and quick lesson on how to apply your Economic and Finance classes to trading. I will go more into this topic later in the blog, but I wanted everyone to understand the basics.