Saturday, May 9, 2015

The Wonder (Wander???) of Trend

The beauty of trend is it almost never and rarely moves in a straight line. The only time trend move in a straight line is ALWAYS briefly for a short period vertically either UP or DOWN. This is caused by many factors which are only academic. Most if not nearly all the time trend moves in non-uniform oscillating waves in ONE direction. Such action will persist until the task is completed and changes to a new direction.

Everyone will never cease to explain and rationalize the price actions using different techniques be it "fundamental or technical". To complicate matter many different variables are introduced into the analysis. An objective analysis without adulteration and complication should and must address simple basic issues assessing the CURRENT DIRECTION, UNDERLYING STRENGTH, PROBABLE NEXT ACTION and GPS POSITION. Without understanding these, it is futile and risky to act. Always reconfirm the analysis with higher time frames.

Often the mistakes are committed when one act on a lower time frame without reconfirming with the higher time frames if they are all in synch. This is more prominent with intraday traders expecting and hoping for a quick kill. A top reversal in a 5 minute chart if not confirmed by 30 or 60 minutes (hourly) chart is not a SIGNIFICANT reversal and most likely it is only a temporary short term reversal follow by a quick retracement subsequently climbing higher to the disillusioned 5m trader.  Yes, it is emotionally and mentally challenging to wait for all time frames to synch as it is inherent human nature to preempt and the need to be RIGHT (another ego journey).

The quest to be profitable and successful trader is easy but again not equates to "easy". Generally, it is not the system factor but the human factor that need to be changed. The ability to analyze OBJECTIVELY without OPINION BIAS. The ability to follow the RULES without HESITATION.

One should not fool himself or herself to think that a better or new system is going to overcome all the obstacles. The onus is on the trader to have a complete and comprehensive analysis what he or she expects and what is layout to achieve the objective in a systematic manner.

Light when shines as seen by naked eyes as directional uniform luminous. An atomic microscopic analysis of the light actually appears as wave components. It has a directional path with waves oscillating in the direction of the projection.

Similarly when we look at price trend, it moves in the direction of the trend except it is not uniformly oscillating like light waves. It is immaterial to understand and rationalize why the trend waves are not uniformly enveloping the directional trend. It is critical to know and understand that the oscillation is not and never will be perfect equal waves replicating like light waves but it will non-uniform waves oscillating in the trend direction until it is exhausted. 


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