Based on proven scientific conclusions, the established trading system can correctly and accurately locate resistance and trends.
We know that the theory of physics is a science that studies the laws of nature, then the financial trading market is a subset of nature, so the same applies.
Next, we use scientific theories in physics to deeply analyze resistance, trends and the relationship between them, and how to accurately locate them.
What is a trend? Trend means direction.
Many investment theories do not give a clear scientific definition of direction, and many concepts are vague or even wrong.
So how is direction defined in physics?
First look at the first law of physics, the law of inertia.
Any object must keep moving in a straight line at a uniform speed or at rest until an external force forces it to change its state of motion.
The law of inertia is part of the laws of nature. Since it can be applied to nature, it can also be applied to the financial trading market.
why? Because the financial trading market is part of nature.
Then people's inner world, the price of the financial market also obeys the law of inertia, the translated meaning is as follows.
The price must maintain an upward or downward movement or a static state until reverse funds enter the market and force it to change the original trend movement state.
From the above, we get several elements: the price starting point of the trend movement, the price end point of the trend movement, the reverse capital action force, and the reverse capital action point.
Inference 1: When price A is the starting point of the trend and price B is the end of the trend, the market price fluctuates from price A to price B to have a trend.
If there is no reverse financial force to force it to change the direction of fluctuation, then it will only end when it reaches price B.
Inference 2: The action point of reverse funds is in three places: the starting point of the trend, between the starting point and the end point of the trend, and the end point of the trend.
Concluded as follow:
First case:
If the opposing force lies in the starting point of the trend, then this kind of market is a resonant market.
Second case:
If the effect is in the middle of the trend, then the price will have a callback. As long as the starting point of the trend is not broken, the final price will still reach the end of the trend, or the starting point of the trend will be broken directly due to the excessive strength of reverse funds, which will directly lead to a trend reversal.
Many investors lose money by doing long in this kind of market, because the trend is not over, and they can only make orders that cross the previous resistance. Do not make reverse callback orders. What you see are opportunities, but in fact they are all traps.
Even if there is a reverse push in the middle of the trend, it is generally a callback caused by the previous liquidation funds.
People who operate institutional funds are very wise, but they will not buy bottoms in the middle like retail investors. Without enough wisdom, retail investors will not be able to pick up cheap ones.
The third case:
If the end of the trend is reached, then a large amount of funds entering the market at the starting point of the trend will close the position, and at the same time there will be reverse funds, and the trend will reverse rapidly.
The rapid reversal of the market all occurs here, so if you want to maximize profits in this place, you must enter the market at a certain position.
Summary: Through the above analysis, reasoning and examples, only a trading system based on natural science can accurately locate resistance and trends.
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