Market theory - page 147
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State of the markets at the opening of the session on Tuesday 30 06 15:
Euro/Dollar - the market went into an exceptional and extraordinary Leo rule, Leo and Leopard levels coincided perfectly, suggesting a pure Zugzwang with nowhere for the Price to go, no room for movement, although technically the market went from Bears to Bulls:
Pound/Dollar - finally the Lion hit the naughty Bulls and passed the Price to the Bears:
And the competitive market turned into a monopoly market:
Audi/Dollar - The Lion passed the Price to the Bears and chased them to the top as, ruled himself:
Gold - Ruled by the Lion, the market, formally, passed from the Bulls to the Bears:
State of the markets at the opening of the session on Tuesday 30 06 15:
Euro/Dollar - the market has moved into an exceptional and extraordinary Leo rule, Leo and Leopard levels have perfectly coincided, which suggests a pure Zugzwang, when the price has nowhere to go, no room to move, although technically the market has moved from Bears to Bulls:
Something ominous is happening, the markets are beginning to undergo a difficult transformation, although with time, clarity will come and add more certainty to such a complex situation.
Can we move from theory to practice? Where will the market go today for example the Euro???
Yusuf is having trouble with the specifics. :)
I come to this forum as a pantry of ideas. TA is 10 steps behind FX in the stock market.
I have such a theory, maybe it really is the Grail, but I have not yet understood how to use it in practice.
Why no evidence? Read the thread from the beginning, carefully, and you will find all the evidence for their existence. Like Lion and Leopard. I haven't found any other levels on forex.
It is true that they are named conventionally.
Bears are C1, the first break-even level in real trading and the first break-even level in Forex;
Bulls are C2, the second breakeven level in real trading and the second no-loss level in Forex;
Leo is Copt, the optimum selling price which guarantees maximum profit, and also, the third, global break-even level in real trading and the third, global break-even level in Forex. Forex never allows profitable trading at this level unlike the real market;
Leopard is the average market price in both the real market and Forex. Mash, in short.
Which of these levels require proof of their existence? If you demand to prove them, you admit to being completely illiterate in your knowledge of the market.
I can prove it to you again:
The profit equation I have derived, which is fully supported by the classical representation of it as the difference between income and all kinds of expenses (the proof is given in the bowels of the branch), contains, as a component, a quadratic equation of the form:
P = K*(Ts^2 - 2*Cr*C + Tsopt^2)
By equating the first derivative to zero, we find two break-even points. By equating the first derivative to zero, we find Tsopt and Cr. That's all it takes to prove it!
Yusuf, how does your theory take into account that the necessary condition for the existence of the speculative market is its openness?
The market, in my theory, is always assumed to be open to participants, even for the entry of monopolists, not to mention traders engaged in speculative trading, taking all risks on themselves and not hedging their open positions. The market simply reacts immediately to the appearance of such participants, quickly recalculating S - the maximum virtual income and Y - price elasticity of this income. Immediately the marginal selling price Cpr = - S/Y is calculated. This will be the new, virtual (estimated) level of the Market (P), let it be Ts1 (the Bears level). On the other hand, its level is formed by market participants, let's call it Ts2 (level of the Bulls), it is currently traded. Hence, the current price Ц = Ц2. Between these two price levels two more virtual price levels are formed: the geometric mean of these levels Ц1 and Ц2 that I named as optimal price level (Lion level) Цот = (Ц1*Ц2)^0.5 and the arithmetic mean that is called market price level (Leopard level) Цр = (Ц1+Ц2)/2. I did not find other price levels on Forex, though there must be theoretically 9 of them considering expenses of participants for exchange operations. Since these costs are negligible compared to Forex turnover, they can be ignored, which was confirmed later. Since the Forex market was originally invented and implemented not for profit, but for the purpose of currency exchange, I assumed that Forex trading can be organized only around levels of nonprofitability, which theoretically there can be two of them:
Ts1bezub = Tsr - A;
Ts2bezub = Tsr +A;
A = (Tsr^2 - Tsopt^2)^0.5.
But, the case is not excluded when it turns out that Tsopt = Tsr and then A = 0 and there comes a third (!), global, break-even level Ts3 = Ts1 = Tsopt = Tsr = Ts2.
Here, my assumption is fully confirmed and trading in the Forex market is organized only at these three break-even levels (losslessness) and the current price can take one of these three levels! I.e., it can be Ts = Ts1, Ts = Ts2 or Ts = Ts3. There is no other. Depending on which level the price moves towards, the corresponding trends will emerge. When the price=C3, a severe flat sets in, as there is no room for the price to move. This market condition I have defined as a Zugzwang condition because, in theory, any price movement only worsens the market position and its participants. So, the Forex market is open for any participant.
...
Here, my assumption is fully confirmed and trading in the Forex market is organized only at these three levels of break-even (profitless) and the current price can take one of these three level values! I.e., it can be Ts = Ts1, Ts = Ts2 or Ts = Ts3. There is no other. Depending on which level the price moves towards, the corresponding trends will emerge. When the price=C3, a severe flat sets in, as there is no room for the price to move. This market condition I have defined as a Zugzwang condition because, in theory, any price movement only worsens the market position and its participants. So, the forex market is open to any participant.
I do not understand what is meant by " ...Forex trading is only organised at these three break-even (profitless) levels and the current price can take one of these three level values! " . Are you saying that when the price is not at any of the three virtual levels trades cannot be executed? To be true, price must jump from one virtual level to the next or the levels must touch or cross.
The price can take one of the three levels, but it may not, because it can sometimes be in between and this can be seen on your charts.
I do not understand what is meant by " ...Forex trading is only organised at these three break-even (profitless) levels and the current price can take one of these three level values! " . Are you saying that when the price is not at any of the three virtual levels trades cannot be executed? To be true, price must jump from one virtual level to the next or the levels must touch or cross.
The price can accept one of the three levels, but it may also not, because it can sometimes be in between and this can be seen on your charts.
Maybe I didn't put it that way. Let's say Ts = Ts1, i.e., trade is organised around the first level of booziness. This is the level of C1 that moves across the price field in the guise of Price. Wherever the price is, this will be the breakeven point. There will come a moment when it will be more profitable to organize trading around the second break-even level. The transition can be organized in three ways:
1. All levels meet peacefully at Tsopt and Price moves from Ts1 to Ts2 and levels diverge again;
2. When a short distance is established between Ts1 and Ts2 and Price moves from Ts1 to Ts2 by one short hop;
3. As a result of an expected or unexpected strike of Tsopt on Ts1, followed by Price moving to Ts2 and an abrupt retreat, or pullback, of Tsopt, Ts1 far down. This is now how the Price has moved from Ts2 to Ts1 on the Pound/Dollar pair.
4. There are indeed places on the charts where, ostensibly, the Price does not belong at either of these levels. This is actually not the case. This feeling arises from the fact that we fix market conditions on a daily basis. If we were fixing continuously, we wouldn't see this.
The market, in my theory, is always assumed to be open to participants, even for the entry of monopolists, not to mention traders engaged in speculative trading, taking all risks on themselves and not hedging their open positions. The market simply reacts immediately to the appearance of such participants, quickly recalculating S - the maximum virtual income and Y - price elasticity of this income. Immediately the marginal selling price Cpr = - S/Y is calculated. This will be the new, virtual
The market may recalculate. But where is the consideration of the two components of the participants - speculative and non-speculative (let's call it that)? Do you think that elasticity is enough to account for?
You do realise that for the non-speculative part of the participants the price does not really matter (within reasonable limits), don't you?
The idea itself is interesting, but it does not give a clear answer to the question of where the price will go and most importantly when. Price and time are not related.
Price will always go up or down at some point, and for profitable trading it is very important to know WHEN to go there.
State of the markets at the opening of the Wednesday 01 07 15:
Euro/Dollar, market participants who are acting as Bears (C1) dragged the Price (C) down without regard to the state of the market itself, which is acting as Bulls (C2). Yesterday, Tuesday, there was a kind of GEP that happened over the weekend. Conclusion - Price should once again return to the Bulls level. The Euro is undervalued and forcibly held down from rising by interventions, which are, so far, of a market nature:
Pound/Dollar, the Bulls (CD2) have retaliated against the monopoly Market Bears (CD1), drove them back to the starting position and have recaptured the Price and intend to drive it up. There is an uncompromising struggle between the Market and its participants and a Euro/Dollar inverse situation has developed. Despite the tense situation on the market, the Price itself is showing the upper hand of calm, misinforming participants about the true state of the market:
The monopoly market has become competitive again:
Audi/Dollar, still. The Lion leads the Bear market upwards. Here market participants act as Bears and the market itself acts as Bulls:
Gold, there is a situation close to Euro/Dollar, the Price has to go up. Here the market participants act as Bears and the market itself acts as Bulls: