2012

Oct
22

Postulates Lance Beggs

The nature of the market lies not in price, it's something else.

-One of the reasons, where traders can not achieve success lies in the fact, what they don't understand, what game they play. They don't understand the nature of the market. They don't understand the nature of trading.

-To understand the real nature of the market, we will need to go through several stages. We have to start over, what is price and why it moves? What causes price to move? This will lead us to a new understanding of the nature of the market.



The price of this decision 2 traders and selling or buying.
The price movement is the result of imbalance between demand and
offer. This imbalance is created by trader's urgent to make a deal.

Price does not reflect fundamentals, it shows the mood of the crowd, they build their forecasts based on the analysis and concrete solutions.

The price behavior based on psychology. It is rather emotional sphere, than math, therefore, the behavior of prices cannot be predicted with the help of mathematics.

Simple setups on the market do not work, they can't adapt to unknown and uncertain nature of price behavior. Fixed rules don't work. Any model, for example head and shoulders, will not work, if it points down, and people want to buy.

The market is the traders, decision-makers. The market is not price movement.

The problem is, traders focus only on price. Price movement is a consequence. These traders are just going for the result, hoping that the movement will continue and they will get profit.

— Look at the price movement through the lens of another – cause and effect.
Price movement and signals indicators is a consequence. Most traders focus only on this. It all, what they see and all, what they sell.
To truly understand the market, we must focus on the cause.

The most effective analysis, this is not analysis of price, and the analysis of decisions traders.

— You have to buy there, where else will too buy and after you, because it will create a bullish pressure, the price will go higher, that will allow you to profit.
— Sell there, where you know, that others also will sell after you, because it will create bearish pressure and the price will go lower, and you will get profit.
— Simply put, you need to buy there, where others will buy after you, and sell there, where others will sell you. You get it, if you focus your attention on areas, where traders make decisions. What they think? Where they will make decisions?

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Find the area, where traders will decide, and you can earn.

We draw zones, no lines. The most important, not afraid of subjectivity, and don't get hung up on accuracy. Later you will see, that is more of the area of interest, than the zone, which will roll back the price, sometimes we will trade the pullback, sometimes the breakdown.

When we can determine the area, where most market participants will experience stress, we can determine the zone of possible market entry.

– Market transactions occur in real time, the concept of time intervals only exists, so we can see the past and present behavior of prices. The higher the time interval, the better visible to the overall picture of the market. The lower the time interval, the more detailed the trader can consider the behavior of prices.

Translation

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