Market Cycle

Topic Progress:

How do operators make money from fooling the public?

If operators have the chance to grab the public’s money, be sure that they will seize this opportunity. In order to fool the public, they will utilize all of their advantages and resources: financial, media, technological.
If the majority want the price to advance, operators make it will fall.

So, if you wonder why prices move up or down, there is the all-time correct answer — because this move is painful for the majority of traders.

The basic structural principle is permanent for all types of commercial activity — buy cheap, sell expensive for profits. But there is a difference between standard commercial activity and trading on financial markets.

 

In case of standard commerce:

  1. A trader buys some goodies at bargain prices at China;
  2. Transfers it to the USA;
  3. Advertises it in the media and sells it at retail prices to public consumers.
  4. Goes back to China to repeat again;

 

As financial markets are global, the operators transfer coins (stocks, futures, bonds etc) between periods of time:

  1. Operator buys some coins at bargain prices during panic and depressions;
  2. Does their best to push the price up;
  3. Advertises coins in the media and sells it at retail prices to public consumers;
  4. Pushes prices down to bargain levels to repeat again;

 

These four steps mentioned above create the market cycle that consists of 4 stages (we will cover in detail each stage in further lessons):

  1. Accumulation;
  2. Uptrend;
  3. Distribution;
  4. Downtrend.

 

Ok, let’s get back to the BTCUSD chart from the previous lesson.

The Peak of Crypto Mania

This is a very young market, so it doesn’t show all of the stages, but you can spot them:

  1. The final part of the uptrend stage. Media does not publish much (promotional) information about the rally. It’s too early.
  2. The start of distribution on the December, 6-7. Media explodes with articles about record highs (advertisement). This promotion attracts retail consumers to buy. Operators sold them coins which they bought earlier at bargain prices.
  3. December, 22. The downtrend already started. «Go back to China» to buy at bargain prices.

The Market Cycle

There is nothing new on Wall Street or in stock speculation. What has happened in the past will happen again, and again, and again. This is because human nature does not change, and it is human emotion, solidly build into human nature, that always gets in the way of human intelligence. All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why the numerical formations and patterns recur on a constant basis. Jesse Livermore.

 

We have all heard the pundits in the money section of our news programs telling us that this market or that market, has gone up, down or sideways, for some specific reason or another.

 

“The price of oil has gone up and the stock market has fallen” – for example.

 

Of course, at another time the price of oil will rise and the stock market will rise too – but nobody ever seems willing to explain this apparent dichotomy. The simple truth is that nobody really knows why news may have caused the markets to move in one direction or another. News doesn’t actually drive the markets, news follows market.

 

Prices are driven by supply and demand. When demand is strong and supply is limited prices rise. When demand is weak, or supply is excessive, prices will head lower. The market may even rise despite the worst possible news.

 

The key to trading successfully is to determine the balance of supply and demand in the market.

 

Many good traders have a built-in sense of this. They are “natural” traders who always seem to be on the right side of the market, but if you are not able to do this instinctively you can learn to do it through Chart Reading Course and you will be amazed at how much you will learn in a short time.

How to prevent being fooled?

Chart Reading gives you the power to read the market by analyzing the price-volume relationship. This is the knowledge which provides a trading advantage.

You will not follow the herd anymore because you will shortly understand the real inner workings of every market.

3 Comments
  • Ana Maria Costin
    Posted at 11:04h, 25 June

    Hi,

    Usually, we are reading the charts available on the exchange we are going to trade, and not always the one with the highest volumes in the market. But, most of the time the price is similar among exchanges. For example, ETCUSDT it was 15.11 on OKEx with 20.69% of volumes in the last 24 hours, compared with Poloniex with the same price, 15.11 USDT, but very small volumes, only 0.37%. My conclusion is that the price is influenced by the total volumes and not the volume traded by the exchange in question (Poloniex in this case).
    Considering the reasoning above, if I’m right of course, could we mistakenly interpreting the relationship between price and volume?

    Thank you!

    • olalexandrov
      Posted at 20:40h, 25 June

      I believe principles of price and volume interaction described in this particular Course are valid for all exchanges, markets, timeframes. For example, global crude oil trades on the various exchanges/markets/countries. But the price/volume interaction works everywhere as it relies on the basic demand/supply law. In case of exotic low-volatile markets during low-active hours, the signs can appear in the distorted view, hard to recognize. On the volatile active markets, the signs comes in more clear form. I will make the overview of ETCUSDT/Poloniex chart using the signs from this Course.

  • zerocashcool
    Posted at 21:39h, 06 November

    It’s fun to think about Bitcoin’s price being at $24,000 recently when their first exchange opened up, compared with approximately $6,400 globally. This happened 2 months ago.

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