A variant of the proof of the first axiom of Dow
Axiom (Greek ἀξίωμα, statement, position), postulate: a statement of a theory that is accepted by the theory as true without requiring proof and is used in proving other statements, which in turn are called theorems.
Axiom (Greek ἀξίωμα, statement, position), postulate: a statement of a theory that is accepted by the theory as true without requiring proof and is used in proving other statements, which in turn are called theorems.
True, but the axiom remains so only until it is proven to be a theorem. If the scientific community accepts the above version of the proof, then, the first Dow axiom will become a theorem. I am ready to defend this statement in all possible ways, including by reference to the law of supply and demand, the basic principles of which I used in deriving formula (2). Welcome.
Dear Yusuf, forex is a free market and also an unregulated market. At any given time, those giants banks or major currency countries that can influence the market push the price wherever it suits them.
No theory or theorem works here.
Forex is like a battle between two opposing sides, it is like a military battle or like a football game. This is a game. You have to apply certain tactics and strategy.
The one, who constantly changes or applies the corresponding tactics and strategy, wins.
No theory can help you here, it's all absurd.
I repeat, in forex, you have to use the appropriate tactics and strategy and the necessary tools or weapons to win.
In other words, you have to act according to the situation, observing the MM and NOT guessing where the price will go, up or down.
And the practice also shows that to act according to the situation with MM, one must have on the deposit at least 10 000 or more and obtain a profit of no more than 3-5% a month.
And practice also shows that in order to act in the environment with MM, you need to have a deposit of at least 10,000 or more and get a profit of no more than 3-5% per month.
where are the figures taken from?
where are the figures coming from?
That's what I said, practice shows. After all, prices don't move indefinitely in one direction, there are certain limits.
And it's interesting no one asks why the minimum lot= 0.01, and 1 point costs ~10 cents, not one.
That's what I said, practice shows. After all, prices don't move indefinitely in one direction, there are certain limitations.
And it's interesting no one asks why the minimum lot = 0.01, and 1 pip costs ~10 cents instead of one.
No, you misunderstand me. Where do the numbers come from?
No, you misunderstand me. Where do the numbers come from?
You're the one who doesn't get it, the figures are from years of experience.
Costs (P) are variable (Pper), which depends on income (E), and fixed (Ppos), which does not depend on income:
P = Pper + Ppost
Unfortunately I can not agree with this statement, it must be understood that the costs in profit taken differently, depending on the type of activity and accounting policies of the enterprise.
And in practice the dependence can be very weak, because in fact pricing is very dependent on competitiveness and stupidity (coolness) of the client.
So we have a unit of production, which includes variable and fixed costs that are better grouped as direct and indirect - so you can put the cost (PSZ (fixed) and PRZ (variable)) to create a unit of production or cost of services, but we have a cost of maintaining the administrative staff, which, depending on the accounting policies will be included in the cost of production or will be written off each month, regardless of sales volumes. Thus, an organization can spend 1k on the purchase of raw materials, wages, depreciation, utilities, produce 100 units of the product, and sell only 50 units for 0.6k. The market may be stagnating, and in the next period the product price will fall, and then you will not make profit but a loss - you will sell the remaining 50 units for 0.3kk. Thus, you cannot take into account costs to find profit as the sum of fixed and variable costs incurred in the same period as the revenue (Revenue).
P=V-CS
P - profit
Q - sales without VAT (other indirect taxes)
D - in this case, direct and indirect costs, including selling and distribution costs
Net profit - PE= PE - income tax
Founder's Profit = PE*Percentage of founder's share*(1Income tax rate)
Accordingly, the market is only interested in the founder's (shareholder/investor's) income, everything else is a tool to generate income.
Describe in more detail how you found"K - proportionality ratio" - it is not clear how it is calculated without information on the share of fixed costs per unit.
Which states: "The market price takes into account all the factors affecting it according to the law of supply and demand, and in order to forecast it it is necessary and sufficient to have data on its change over time" (Rhea, Robert. Dow Theory,- New York; Barrons, 1932. and Greiner, P. and H. C. Whitcomb: Dow Theory, - New York: Investor's Intelligence, 1969. and other sources).
The authority of Dow does not let us doubt the validity of this axiom, and most market researchers use this fact and direct their efforts on studying the price behavior. But it would be useful to prove this axiom, to give it more confidence and warn some people from overzealous search of other factors such as volumes, OM, news and other factors influencing the price, and thereby, in their subconscious, questioning the globality of the Dow's conclusion.
We would like to present you one of the possible variants for proving this axiom, which is based on analysis of profit of commercial structures on real competitive market of goods and services, because the main goal of any commercial structure is profit and I think that Forex does not stand far away from the real market of goods and services.
It is known that, the most obvious, simple, radical, reliable and indisputable way of defining profit (P) is its representation in the form of the difference between income (E) and all kinds of expenses (P):
P = E - P
Expenses (P) are variable (Pper), which depends on income (E), and constant (Ppos), which does not depend on income:
P = Pper + Ppos
Therefore, the profit formula is usually represented as
P = E - Pper - Ppos
Using the definition of variable costs as Pper = K*D, we obtain, where K is the coefficient of proportionality, we write
P = (1-K)*D - Rpos
Expressing Profit (E) as the product of the volume/quantity of goods (V) by their selling price C, we obtain the following formula for determining profit in the traditional way:
P = (1-K)*V*C - Ppost (1)
Any person looking at this formula (1) will exclaim: the profit depends on both the volume and the selling price of the commodity! And he would be right.
But, the articlehttps://www.mql5.com/ru/articles/1825 shows how to derive an alternative formula for profit taking into account the provisions of the law of supply and demand, which coincides exactly with the traditional formula (1):
P = A*(Ts^2 - 2*Cp*C + Tsopt^2)/C (2)
Here, A, Tsr and Tsopt are constant coefficients calculated experimentally on the basis of actual trade data within selected data sample, where A>0 for monopolistic and A<0 for competitive markets, Tsr is market price and Tsopt is optimal sales price providing maximum profit.
Based on the absolute equality of the formulas (1) and (2) we conclude that the Dow prophecy in the form of the first axiom can be a proven theorem as it contains no other variables besides the price, and traders and market researchers can safely rely on the price analysis in their market research without being distracted by other market parameters.
Here is what I wanted to inform you briefly. Your opinions. Respectfully.
But...your calculations do not take into account supply and demand...therefore, these formulas cannot be considered correct :),
And if you look closely, they're not proving, they're trying to put forward an alternative interpretation and refute
the accepted axiom of reasoning:
"The market price takes into account all the factors that influence it according to the law of supply and demand,
and in order to predict it, it is necessary and sufficient to have data on its change over time", depending onsupply and demand!!!!!!!!!!!!!
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Which states: "The market price takes into account all the factors affecting it according to the law of supply and demand, and in order to forecast it it is necessary and sufficient to have data on its change over time" (Rhea, Robert. Dow Theory,- New York; Barrons, 1932. and Greiner, P. and H. C. Whitcomb: Dow Theory, - New York: Investor's Intelligence, 1969. and other sources).
The authority of Dow does not let us doubt the validity of this axiom, and most market researchers use this fact and direct their efforts on studying the price behavior. But it would be useful to prove this axiom, to give it more confidence and warn some people from overzealous search of other factors such as volumes, OM, news and other factors influencing the price, and thereby, in their subconscious, questioning the globality of the Dow's conclusion.
We would like to present you one of the possible variants for proving this axiom, which is based on analysis of profit of commercial structures on real competitive market of goods and services, because the main goal of any commercial structure is profit and I think that Forex does not go far from the real market of goods and services.
It is known that, the most obvious, simple, radical, reliable and indisputable way of defining profit (P) is its representation in the form of the difference between income (E) and all kinds of expenses (P):
P = E - P
Costs (P) are variable (Pper), which depends on income (E), and fixed (Ppos), which does not depend on income:
P = Pper + Ppos
Therefore, the profit formula is usually represented as
P = E - Pper - Ppos
Using the definition of variable costs as Pper = K*D, we obtain, where K is the coefficient of proportionality, we write
P = (1-K)*D - Rpos
Expressing Revenue (E) as the product of the volume/quantity of a commodity (V) by its selling price C, we obtain the following formula for determining profit in the traditional way:
P = (1-K)*V*C - Ppost (1)
Any person looking at this formula (1) will exclaim: the profit depends on both the volume and the selling price of the commodity! And he would be right.
But, the articlehttps://www.mql5.com/ru/articles/1825 shows how to derive an alternative formula for profit taking into account the provisions of the law of supply and demand, which coincides exactly with the traditional formula (1):
P = A*(Ts^2 - 2*Cp*C + Tsopt^2)/C (2)
Here, A, Tsr and Tsopt are constant coefficients calculated experimentally on the basis of actual trade data within selected data sample, where A>0 for monopolistic and A<0 for competitive markets, Tsr is market price and Tsopt is optimal sales price providing maximum profit.
Based on the absolute equality of the formulas (1) and (2) we conclude that the Dow prophecy in the form of the first axiom can be a proven theorem as it contains no other variables besides the price and traders and market researchers can safely rely on the price analysis in their market research without being distracted by other market parameters.
Here is what I wanted to inform you briefly. Your opinions. Regards.