Predicting Market Movement

By: Kelly Price
Market timing is the key to successful trading and we all know that human nature is constant so if we know the scientific law related to it, we can use it for more effective execution of our trading signals. Let's look at this important argument more closely.

Human nature has been constant since the time he first walked the earth. When he participates in buying and selling currencies he is no more sophisticated than Stone Age man

Why?

Because he is ruled by emotions including hope greed and fear and many others and these are reflected in market trends which repeat overtime (the basis of technical analysis) and these can be traded for profit.

The two most notable people in investment history to try and put this into investment theory are Gann and Elliot.

Fibonacci is another whose theories were not devised for financial markets but have been used by many in the investment community.

So do these theories work?

No they don't - but that doesn't mean you can't trade human nature for profit.

First let's sate a fact:

No one has discovered the scientific theory of human nature and how it relates to market movement.

1.If any of the scientific theories worked they would be objective and work ALL The time.

On the contrary, Gann and Elliot's theories are totally subjective and don't work all the time. In fact Gann had to sell courses to make a living and Elliot died a pauper. Fibonacci retracements simply don't work at all on their own and the theory was never meant to be used in financial markets at all - it was devised to solve a problem related to the copulation of rabbits!

2.This reason is common sense - if there was a scientific theory of market movement there would be no market as we would all know the price in advance.

The above two points are obvious yet, forex traders don't believe facts that stare them in the face.

Lets look at how to take advantage of human nature the RIGHT way.

Can you make money from the theory of human nature being constant?

Absolutely!

But you need to see trading as an odds game - not a game of certainties.

On any price chart you can human greed and fear push prices to far in either direction up or down however, this huge mass of people don't move to a single theory.

Millions of traders make the price each day and this cannot and never will be predicted by science EXACTLY But:

You can estimate when traders have pushed prices to far due to their emotions and when the odds of a pullback are due - sure you will get some trades wrong with your market timing - but if you do it correctly, you will get more right than wrong and pile up huge profits overtime.

Losses in the short term are part of trading - but you want to make money and if that's your goal, you can trade high odds trades you can do this.

A Problem and a Solution

There is a view in all areas of life that science is the answer to everything but its not in the markets. Here you deal with the same problems as traders faced 50 or 100 years ago working out where a huge mass of people are going to send a single price next.

Science is not the answer - probability theory and the odds are and if you understand this, you can enjoy profitable market timing and enjoy currency trading success.

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