WHY PEOPLE BUY A PAIR BASED ON AN IMAGINARY TRENDLINE DRAW ON THEIR SCREEN AND ALL AT THE SAME TIME
Commento
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im waiting your opinion on it only if they are consistent of course
Commenti
Glastron
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We put the trend lines there to help make since of a potential pattern. That being said we do know that the market move in waves that can be grouped into meaning by basing it on patterns in nature.
Fractals
Fractals are structures that can be split into parts, each of which is a very similar copy of the whole. Mathematicians like to call this property “self-similarity”.
You don’t need to go far to find examples of fractals. They can found all over nature!
A sea shell is a fractal. A snow flake is a fractal. A cloud is a fractal. Heck, a lightning bolt is a fractal.
So why are fractals important?
One important quality of Elliott waves is that they are fractals. Much like sea shells and snowflakes, Elliott waves could be further subdivided into smaller Elliot waves.
Wave 1
The stock makes its initial move upwards. This is usually caused by a relatively small number of people that all of the sudden (for a variety of reasons, real or imagined) feel that the price of the stock is cheap so it’s a perfect time to buy. This causes the price to rise.
Wave 2
At this point, enough people who were in the original wave consider the stock overvalued and take profits. This causes the stock to go down. However, the stock will not make it to its previous lows before the stock is considered a bargain again.
Wave 3
This is usually the longest and strongest wave. The stock has caught the attention of the mass public. More people find out about the stock and want to buy it. This causes the stock’s price to go higher and higher. This wave usually exceeds the high created at the end of wave 1.
Wave 4
Traders take profits because the stock is considered expensive again. This wave tends to be weak because there are usually more people that are still bullish on the stock and are waiting to “buy on the dips.”
Wave 5
This is the point that most people get on the stock and is most driven by hysteria. You usually start seeing the CEO of the company on the front page of major magazines as the Person of the Year. Traders and investors start coming up with ridiculous reasons to buy the stock and try to choke you when you disagree with them. This is when the stock becomes the most overpriced. Contrarians start shorting the stock which starts the ABC pattern.
fxfxfx
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"Wave 4 tends to be weak" meaning the price variation is not that steep or exactly the opposite?
JohnQuid
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i mean wtf is this based upon millions of dollars are traded in the range of a poor drawn line with an imaginary pen
JohnQuid
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Because Trading is nothing more than an assumption and for retail traders this is the only way to "predict" a market..Same as the use of the fib lines and the possible "resistance or support" of a 200EMA. :/ and everbody draws the same lines? Trading is more like a game where everyone uses the same class setup like Modern Warfare 2. The Retail traders with their small USP gun get blown out by the glitched akimbo Models of the big banks.. Only the smart retailers with alot of hard work get to achieve a prestige and use the same weapon class as the big boys.. :/ LIFE blue.. -.-
Citoles1000mg
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I think some trend-lines ‘do' fit into the taught mathematical formulations well, and some don’t..
Because;
Those that do fit; are for ‘you' to collect the money from the ‘unpredictable’ dumbs,
and those that don’t; are for 'THEM’ to get the most back from the ‘predictable’ ones.. :)
We trade in a world in which they teach us where to put the stop-loss! ;)
harilaos
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because the whole of the market is based on imaginary lines, drawings and excuses far away from the real economy. milestones trigger reactions in relation to the actions of the forex community. money is not made on work and value Ricardian political economy.
TheYangGuizi
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Reversion to the mean!
Is my theory at least :P
YoussefRazak
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The power of supply and demand.
BLUE43
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supply and demand on a simple trendline ?
Glastron
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Forex and any other markets are manipulated 24/7. You can see the same patterns over and over.Only few major banks control almost 80% of all Forex market. These banks have even admitted rigging markets and have been fined for that with billions of $, but all that is quickly forgotten and practically not covered by the mainstream media.
This is how it works. Price is always moved to the level with the most stop orders. Either stop loss, buy stop or sell stop. In order to move the price up someone has to sell at first so that they can buy and move the market up. Sometimes it may be harder to notice, but that is just because it can not be done in too obvious way and they have to accumulate the positions over the time. This will appear as a range bound market.
Fractals
Fractals are structures that can be split into parts, each of which is a very similar copy of the whole. Mathematicians like to call this property “self-similarity”.
You don’t need to go far to find examples of fractals. They can found all over nature!
A sea shell is a fractal. A snow flake is a fractal. A cloud is a fractal. Heck, a lightning bolt is a fractal.
So why are fractals important?
One important quality of Elliott waves is that they are fractals. Much like sea shells and snowflakes, Elliott waves could be further subdivided into smaller Elliot waves.
Wave 1
The stock makes its initial move upwards. This is usually caused by a relatively small number of people that all of the sudden (for a variety of reasons, real or imagined) feel that the price of the stock is cheap so it’s a perfect time to buy. This causes the price to rise.
Wave 2
At this point, enough people who were in the original wave consider the stock overvalued and take profits. This causes the stock to go down. However, the stock will not make it to its previous lows before the stock is considered a bargain again.
Wave 3
This is usually the longest and strongest wave. The stock has caught the attention of the mass public. More people find out about the stock and want to buy it. This causes the stock’s price to go higher and higher. This wave usually exceeds the high created at the end of wave 1.
Wave 4
Traders take profits because the stock is considered expensive again. This wave tends to be weak because there are usually more people that are still bullish on the stock and are waiting to “buy on the dips.”
Wave 5
This is the point that most people get on the stock and is most driven by hysteria. You usually start seeing the CEO of the company on the front page of major magazines as the Person of the Year. Traders and investors start coming up with ridiculous reasons to buy the stock and try to choke you when you disagree with them. This is when the stock becomes the most overpriced. Contrarians start shorting the stock which starts the ABC pattern.