It is a business. It is a money business. It has the best product line available, the promise of wholesale money. Everyone wants some but at the expense of someone else. How hard do you work in your business to get yours? Why should this be any different. There are 50,000,000 people out there waiting to charge you a fee again and again to learn this business. The only way to learn this one, is from each other in all respects.
When you go to a doctor, an exam will be perfomed to get your current state of condition. This by itself can be informative but must be put in the proper perspective. Knowing how you were in the past completes the picture. From here, your future can be evaluated given your particular tendencies. The same analogy goes for any market. The main tool for our examination here is any chart of recent price activity.
Look at any price chart. Why does it look that way? Groups of people! Nothing else. Why? One idea is there is something so-called "in the air" that affects human emotions which in turn alters our perception of value when pertaining to things we want or own. When dealing with the markets, these viewpoints show up as the price activity seen on bar charts. In this respect all people are the same.
One of the things that seperates us into groups is our type of trading style. We might be categorized into one or more of the many different time frames of trading such as to scalp, daytrade, weekend watch, invest monthly, adjust annually, long term buy and die etc. For whatever the reason (our level of expertise or the amount of time available), we are attracted to some comfortable time frame. Now we have something else in common.
Most of the time, each group seems to act together, moving to similar internal or external reasons. Some might be confident while some confused. All of this shows up on the price chart because the markets are all groups acting together yet independently.
Things seem to go in cycles of active then passive, positive then negative. People buy a stock, then depending on their expectations they will hold it or buy more or sell it. Each group does it again and again because people are habitually people. On the other hand there is always the option of altering your trading style periodically. In essence, you join a different group to satisfy your changing needs or realizations.
Let's say a rally just occurred, wouldn't you want it to happen again so this time you can get something out of it. How about if something bad just happened, wouldn't you be cautious and wait for someone else to prove it is safe again. Whatever gets you excited or scared, you will play, trade, or invest accordingly based on your future expectations. Our job is to always try to find some of these group tendencies at the right time to take advantage of.
Some types of market action has been called market noise or random activity. Noise is really the smallest time frame of price activity for which you can not explain its' motivation. Someones definition of what constitutes the noise level is also a reflection of Their understanding of the markets. Whatever You understand the markets to be, make sure they Are understood. Simply put, just like in any business, learn from your competitors.
What we should also try to do is disect the markets composite chart form into the groups of people which made it in the first place. This can be done by putting yourself in their place. Each group is important but not always well defined. An interesting observation is how the smaller groups tell us where the bigger ones are going while the bigger ones tell us where the smaller ones must go.
Each group tries to obtain their goals while only a larger group might prevent this because their expectations and needs are contrary to yours. Besides, they have more time and money to accept the risk of proving themselves right. People of all levels are quite consistent that a market chart becomes an excellent graphic representation of human emotions and logic.
In summary, markets are groups of people with different expectations trying to do their own thing at the same time in an arena where the strong will survive. The professionals have better toys and tools, faster and cheaper executions and deeper pockets with more time and money. They also seem to be deafened by the markets noise. For the rest of us, all we have is each other to learn from.
The above is from the documentation of an interactive computer program which teaches a different perspective on how all markets work. (CYCLEKT.EXE)