New article Market Theory has been published:
A logically complete market theory that would cover all types and
varieties of markets for goods and services, micro and macro markets
like Forex, hasn't been available until now. This article covers the
essence of a new market theory based on the profit analysis, reveals
patterns of the current price change and the principle of the mechanism
operation that allows the price to find its most optimal value by
forming a chain of virtual prices that can develop the controlling
influence on the actual price. Mechanisms of formation and change of
market trends are also identified here.
Let's look at the market theories that
are most well-known among traders who try to use them in order to gain a
statistic advantage when organizing profitable trading and creating
profitable trading strategies on the Forex market based on them. There
are three main theories:
Gann Theory is a product of practical study of the model, price and time ratios and their influence on the market.
— through practical research Mr. Elliott came to the conclusion that
any trend consists of the same repeated basic models (sections) that are
divided into two types:a) impulse section ("Impulse") that consists of 5 segments and acts as a moving section with a trend development; b) corrective section ("Correction") that consists of 3 segments and compensates for the previous impulse movement.
Strategy based on the Ichimoku Indicator — associated with "Ichimoku cloud" which is a product of the author's practical research of 30 years.
They all have a common feature — the absence of a strong theoretic
base showing the real connection to the process of real trading with
goods and services. These theories are the result of practical
investigations and assumptions of their authors. Furthermore, they are
connected with a united idea, namely, the understanding that along the
price movement there are some levels and powers affecting its pattern,
and the authors have devoted their lives to the frantic search for
regularities of forming the indicated levels and forces.
Applying indicated theories in the trading practice led to variable
success, however, due to the lack of more reliable theories, the
researchers aimed only at the positive results, regardless the
convention of their application and the actual money loss, explaining
this as the "wrong" interpretation on the trader's side or presenting it
as the disadvantages of one or the other theory.
I am trying to convey the essence of the
new market theory that doesn't have any disadvantages listed above. This
theory is based on a strong theoretical foundation, with equal elegance
it describes the process of real trading of goods and Forex trading on
the basis of price interaction between three virtual price levels, that
the brightest men dedicated their lives to find, but, unfortunately,
These are the levels:
Current price level that can
become bullish or bearish, depending on the situation. When the market
is bullish, the price becomes bearish, and vice versa.
Virtual price level is formed by
the market, and, like the current price, may turn bullish and bearish,
depending on the circumstances.
Virtual managing level of the optimal market price — lion level.
Virtual managing level of the average market price — leopard level.
The figure shows real and virtual price levels based on the considered market theory over the years 2010 and 2011:
Author: Yousufkhodja Sultonov