Market theory - page 65
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Yusuf, again confusing the terminology. The support line is always below price and the ones responsible for creating it are bulls, and above price is the resistance line and the ones responsible for it are bears. Either you give your line another name or use a commonly accepted term. But in the latter case, don't violate the meaning of the term.
I don't have it any other way. If the Bulls now agree to let the Bears lead the market, then they should always support the Bears in this, especially as you see the battles in which this consensus is reached, sometimes lasting for months. We are simply in a season of wars that has not taken place since at least the beginning of April, as you can see from the chart. If you look at my theory from the other point of view, I could agree with definition of this Bulls line, in this case, as the resistance level, because of this reason. Since the market is now at Bears, there is nothing stopping them from going down. But, if the Bears decide to correct too high, they may meet the resistance of the Bulls. Then, everything falls into place, only partially. The fact is that if the trend changes to upward, then, already they have to arrange a resistance line to the Bulls, which does not agree with the previous explanation of the meaning of the resistance line. Conclusion: I will not use the concepts of "support" and "resistance" ever. I will formulate very brief and clear rules for trading on this strategy:
Rules for entering and exiting the market:
1. Always enter the market in the direction of the side, which is leading the market, if the opposite side does not make any abrupt moves, and moves parallel to the price;
2. If the market is led by Bears - enter NETWORK and do not go out and buy NETWORK in case of a corrective downward price movement while the Bulls are calm and do not make sharp movements, which can be easily identified on the chart and immediately exit the market, closing all positions, if this condition is not met;
3. if the market is led by the Bulls - enter the market in the BAY and do not go out of it and buy in the BAY at a corrective movement of the price down while the Bears are calm and do not make abrupt moves that are easily identified on the chart and immediately exit the market, closing all positions, if this condition is not met;
4. Always protect the profit or take a loss with stop orders at some distance from the entry line and periodically move it towards the price if the profit increases.
I don't have it any other way. If the Bulls now agree to let the Bears lead the market, then they should always support the Bears in this, especially as you see the battles in which this consensus is reached, sometimes lasting for months. We are simply in a season of wars that has not taken place since at least the beginning of April, as you can see from the chart. If you look at my theory from the other point of view, I could agree with definition of this Bulls line, in this case, as the resistance level, because of this reason. Since the market is now at Bears, there is nothing stopping them from going down. But, if the Bears decide to correct too high, they may meet the resistance of the Bulls. Then, everything falls into place, only partially. The matter is that if the trend changes to an ascending one, they must draw a resistance line to the Bulls, which does not coincide with the previous explanation of the resistance line meaning.
A correction in a falling market is created by the predominance of bulls, and in a rising market by the predominance of bears. I think you initially misnamed the lines as bulls and bears. The upper red line should have been given to the bears and the yellow one to the bulls. Then everything stands in its place and the upper line is a resistance line created by bears, and the lower one is bullish support.
What matters to me is who is driving the market here and now and how the opposing side is behaving. I don't want to know about any lines. I wanted to discard Bulls and Bears as not corresponding to the nature of the formation of break-even levels Ts1 and Ts2. If you give them animal names, then, need I choose among animals from the same genus, let alone their families, as they form very similarly. Indeed:
Ts1 = Tsr - (Tsr^2 - Tsopt^2)^0.5;
Ts2 = Tsr + (Tsr^2 - Tsopt^2)^0.5;
Since, at this stage, I decided not to take into account fixed and variable costs, due to their insignificance, then
Cp = 1/2*(Cp + Cpr);
Tsopt = (Цn * Цpr)^0.5;
Cp^2 = 1/4*(Cp^2 + 2*Cp*Cpr + Cpr^2);
Tsopt^2 = Tsp *Cpr;
(Tsr^2 - Tsopt^2) = 1/4*(Tsp^2 + 2*Cp*Cpr + Tspr^2) - Tsp*Cpr = 1/4*(Tsp^2 +2* Tsp*Cpr + Tspr^2 - 4* Tsp*Cpr) = 1/4*(Tsp^2 - 2*Cp*Cpr + Tspr^2) = 1/4*(Tsp - Tsp)^2;
Cp1 = 1/2*(Cp + Cp) - (1/4*(Cp - Cp)^2)^0.5 = 1/2*(Cp + Cp) - 1/2*(Cp - Cp) = 1/2* Cp +1/2* Cp - 1/2* Cp +1/2* Cp = 1/2* Cp +1/2* Cp = Cp
Ts2 = 1/2*(Tsp + Tsp) + (1/4*(Tsp - Tsp)^2)^0.5 = 1/2*(Tsp + Tsp) + 1/2*(Tsp - Tsp) = 1/2* Tsp +1/2* Tsp +1/2* Tsp -1/2* Tsp = 1/2* Tsp +1/2* Tsp = Tsp;
Ts1 = Tsp- the purchase price of the commodity = Ts?
Ts2 = Tspr =- S/Y - Marginal selling price of the commodity; - Bull?
S - Estimated by the algorithm, the maximum virtual return of the market (MVD);
Y - The price elasticity of income.
Consequently, by organizing trading around these two levels, the market forces you to sell at the buy price, without making a profit. and sell at the marginal price. when no one buys the product at a high price, and leaves you without income and profit.
And about Bulls and Bears we need to think further, apparently we need to redefine our conceptions of macro markets like Forex .
Sincerely, Soultonov Yousufkhodja
...
Ts1 = Tsp - the purchase price of the commodity; - Bears?
Ts2 = Tspr = S/Y - the selling price of the commodity; - Bull?
...
And about Bulls and Bears we need to think further.
Since C1 is the bottom break-even level, bulls are more active here, as they always try to buy cheaper. Bears have nothing to do here, they try to sell at a higher price and low price is not their element.
It is the other way round at the upper break-even level C2. Bears are more active here, they want to sell at a high price, while bulls do not want to buy at a high price.
22 05 15 0000 MSC Opening of Thursday's trading session. Gentlemen, the situation is changing so fast that there seems to be no end to this cat and mouse game. Therefore, let's try to believe the recommendations of the algorithm, until they fully coincide with the results of further trading and them, for the time being, take note only, and not as a guide to action. Now, the algorithm says that the Bulls have got the price again, so BAY by closing the sells:
Gentlemen! Having doubts about the algorithm, I ran an experiment on it without changing anything in the settings and instructed it to analyse the entrepreneur's trading process, when he bought $10 worth of goods and started selling them in a competitive market at C prices, earning an income of D. The algorithm performed a complete analysis of the entrepreneur's work and passed the test with flying colors, accurately calculating profit according to both the traditional methodology, as the difference between income and expenses and according to my profit formula, as well as, the known virtual price levels C1, Copt, Cr, C2 and Cpr (!):
The profit calculation is a perfect match:
Conclusions of their analysis of the trading process: An entrepreneur immediately begins to make a profit. Having set the selling price Ц > Цпо = 10 $, the maximum profit of Pmax = 696.97 $ is obtained at the selling price Ц = 10.91 $, the trade stops at Ц = 11.90 $, which fully corresponds to the logic of the trading process and is confirmed by the fundamental representation of profit as the difference between the income and all types of expenses. This method of analysis is revolutionary in the field of practical trading, none of the coryphaei of economics including Nobel Prize winners could figure it out as a mere trifle, though on the contrary, this method of trade process analysis is a major, if not the main, element in predicting the process of selling goods that allows optimizing the trade process and organizing the most effective trade regime. Of course, such analysis can be and probably is being attempted on the basis of the fugitive profit formula, but it would look absurdly like cutting bread with an axe in the presence of a knife.
The calculation of the levels (our chart of virtual levels), indeed, shows that, the market is led by the Bulls, as the price has been increasing:
Conclusion: The algorithm reflects the market situation absolutely adequately and its results can be trusted.
22 05 15 0000 MSC Opening of Thursday's trading session. Gentlemen, the situation is changing so fast that there seems to be no end to this cat and mouse game. Therefore, let's try to believe the recommendations of the algorithm, until they fully coincide with the results of further trading and them, for the time being, take note only, and not as a guide to action. Now, the algorithm says that, again, the Bulls took over the price, so, BAY, closing the sells:
Yusuf, here's a note. If you give signals as I suggested above, the signal will be earlier than you give it. I suggested to give a buy signal at the moment when the price breaks away from the lower breakeven level (yellow line) and moves up. The price breaks up from the yellow line first, and the red line reaches the price later (when you give the signal).
The upward pullback from the yellow line is bullish, so it is a bullish support line.
Yusuf, take note here. If you give signals as I suggested above, the signal will be earlier than you give it. I suggested to give a buy signal at the moment when the price breaks from the bottom breakeven level (yellow line) and moves up. The price moves up from the yellow line first, and the red line reaches the price later (when you give the signal).
I have already given a signal to BAI. I will not be able to monitor the market continuously online until the indicator is made. Until then, the signals will be a bit delayed. On excel, it's time consuming.