Revisit Phyisc applied to the financial markets.

Every now and then I need to refresh and remind myself that market is less of financial theory and more of Physics applied.

Law of Motion states clearly an object in motion will remain in the inertia state until an opposing force can change the motion and direction. Inertia is a lazy state and the easiest thing for an object to do. 

Energy flows the path of least resistance. The trend of the market flows the path of the least resistance. Other matters will come in to substantiate and justify the action(s).

Every motion has a cycle attached to it. There is UP cycle ... DOWN cycle ... REST cycle. Each UP and DOWN will follow the Law of Diminishing return. The acceleration ... steady state ... deceleration and reverse.

Kinetic Energy 1/2(mv2)= Potential Energy 1/2 (mgh)

Conceptually the changing state between KE and PE is no different from the changing state of UP trend and DOWN trend.

The intensity or the strength of the trend is NO different from the sound amplification and it is never static nor linear. I think it a form of both LINEAR and non-LINEAR state.

It is by plotting and understand the 2 dimension of the chart with PRICE (Y-axis) and TIME (X-axis) that one is able to visualize the actions and what are the most likely unfolding action and the probability of it happening.

I wish I can and want to admit that the financial market is a complex sphere, unfortunately the truth  ---- IT IS NOT. All we need to do, is to go back to basic things we learn in school (NOT UNI) to seek the truth.

 

Happy Weekend