Market theory - page 52
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1.3 - THAT'S THE THEORY!!!
IMHO.
Dear participants, the moment you have been introduced to the simplified representation of the market, I can introduce you to the true structure of the market within this theory, so that you can fully sense all the elegance, the beauty, the fantastic nature of the self-organization mechanism operating in the market without intelligence, but capable of managing itself as a reasonable being from the sole premise and the need to balance the interests of the parties of it, lest it be destroyed by the efforts of one of them, around the break-even principle, which This mechanism, being omnipotent before, unenlightened into its mysteries, market participants. will become totally fragile and unprotected if anyone learns of this secret, as the analysis of the chain of interrelated formulas shows. I will try to explain it to you in a simplified form, leaving the key points secret, though, understandable. You must have felt it in full measure when I, in a gush, told and showed. how the market struggles with the invasion of its space by monopolists with their bears. You have seen the scenarios of the market's response in the form of negative prices and skyrocketing prices. I have exposed to you the true nature of the market. In fact, while they are fantastic for us, in the language of the market, they are real and they are based on calculated formulas. For example, you have seen that, the calculated bull embraces the real price, and the accuracy of the price value calculation by the algorithm is, believe you not. plus 0.000000006 points or minus 0.000004 points, each time it is different, but, very accurately. At the same time I mentioned that the strength of the Market Bulls worked out by the market was 50 times greater than the strength of the Bears who invaded the market without the consent of the Market Bulls, who were instructed by the price to lead it to the breakeven level. Of course, such an onslaught, perhaps virtual, was not sustained by the Bears, who hurriedly dumped the price and left it to its fate, although this should not be the case in normal moments of passing the baton from Market Bears to Market Bulls and vice versa. I switched to the Minutes at this point and watched the price dashing around, deprived. for a moment. of its master and enjoyed the triumph of the theory. The price was quickly picked up by the Bulls, which I showed graphically should have belonged to them. The Bulls, having dealt with the situation the ice-bears had created, led the market in the right direction, as we all later witnessed. Such violent struggles of the parties are rare, for instance, in 2010 there were 7 such scenarios, of different duration and intensity, which you can observe in the final screen above. The rest of the time the market moves quietly according to its own laws, which I will try to familiarize you with. Moreover, it works in such a way, that if the bull market needs to decrease the price to reach the equilibrium, then this decrease is organized in the best way, which is called a "correction" of the price, then go back up. If it happens that this cannot be accomplished by the Bulls' ability to break-even around the second breakeven point (level), which is always at a higher level, the Bears are called in to organise and break-even around the first, which is a lower level, breakeven point. Moreover, this procedure takes place smoothly and the market participants do not have time to notice it, and, perhaps, cannot notice it, but after a certain period of time, they state the accomplished fact of trend reversal. Everything I have had time to say, to say further, or not to say at all, will be said for me and/or will be said by myself, using or not using my hints, which I will leave in a proper place and at a proper time, reveals, plans and executes itself - its Majesty Price. How can one not recall the prophetic axioms of the Dow, cited in particular herehttps://www.mql5.com/ru/articles/250. I think that soon they will cease to be axioms and will find their full confirmation. This is the end of this small prelude to understanding the true mechanism of market functioning in its fullest sense. The market operates everywhere that is called a market, starting from a single entrepreneur, a shop, retail outlets, supermarkets, regional and/or national markets of individual states, their community, world markets of goods and services, stock, currency and other financial markets, including Forex.
Dear participants, the moment you have been introduced to the simplified representation of the market, I can introduce you to the true structure of the market within this theory, so that you can fully sense all the elegance, the beauty, the fantastic nature of the self-organization mechanism operating in the market without intelligence, but capable of managing itself as a reasonable being from the sole premise and the need to balance the interests of the parties of it, lest it be destroyed by the efforts of one of them, around the break-even principle, which This mechanism, being omnipotent before, unenlightened into its mysteries, market participants. will become totally fragile and unprotected if anyone learns of this secret, as the analysis of the chain of interrelated formulas shows. I will try to explain it to you in a simplified form, leaving the key points secret, though, understandable.
But after I read Associate Professor Yusuf's "Market Theory" thread, my view
of the world was completely overturned. My life was filled with colour, I threw off the shackles
of 1-bit calculations and discovered the path to enlightenment. I have found my inner
balance and confidence in tomorrow... that I could never have dreamed of...
Thank you!
Dear participants, the moment you have been introduced to the simplified representation of the market, I can introduce you to the true structure of the market within this theory, so that you can fully sense all the elegance, the beauty, the fantastic nature of the self-organization mechanism operating in the market without intelligence, but capable of managing itself as a reasonable being from the sole premise and the need to balance the interests of the parties of it, lest it be destroyed by the efforts of one of them, around the break-even principle, which This mechanism, being omnipotent before, unenlightened into its mysteries, market participants. will become totally fragile and unprotected if anyone learns of this secret, as the analysis of the chain of interrelated formulas shows. I will try to explain it to you in a simplified form, leaving the key points secret, though, understandable.
Let's continue:
I began to unravel the mysteries of the market, just as I usually do when solving many complex problems, whether economic, as in the case of (18), technical or otherwise, which I will talk about when I retire and the time comes to write my memoirs, if it is not C. And this time this ironclad principle did not let me down.
The principle is that by first studying a simple representation of a problem that turns out to be difficult to understand. Then, armed with the principle of inviolability of material balance, I reformulate the simple representation and find out whether this representation satisfies the principle of material balance. When convinced, I start complicating the simple notion, bombarding it with all the power of the laws of mathematics and logic, constantly looking over my shoulder and going back to the simple version.
The situation heats up to the limit and then I activate my brain power, which helps me to reach the climax of complexity, after which I gradually return to the original simple variant without losing the elements of the complex variant.By the time I come down to the initial simple variant, I have in my hands a simple but different variant of the simple including elements of the complex variant of the problem, which I compare for correspondence in all imaginable and unimaginable horizons of change of the variables involved, when correspondence is achieved in all, the problem suddenly becomes simple in representation and understanding - the problem is solved.
In the case of the market, I started by finding out the aims and objectives of market participants. It is natural to assume that the main goal of market participants is to make profits, benefits or conveniences, which, indirectly, can be traced back to the search for profit. Some market participants, including organisations, aim to maximise profits, so the object of the study was to identify patterns of profit making in commercial activities.
Profit (P) is defined as the difference between income (E) and all types of costs, which include costs of production, purchase or acquisition of goods (Ptov), other variable costs (Pper) and fixed costs associated with the sale of goods (Ppost):
P = E - Ptov - Pper - Ppost (1)
or in our view:П = Elephant - Rhinoceros - Wolves - (Wolves + Wolves)(1а)
This classical profit formula along with its simplicity, obviousness, fundamentality and omnivorousness has one, essential disadvantage - it does not give an opportunity to study the trading process depending on the selling price in the market within the whole range of price changes using the limited amount of actual data on changes of income and other variables included in it.
The reinterpreted form of (1) is as follows (in our variable designations):
P = (1-e)*E*/Lisa*(Fox^2 - 2*Lion*Lisa + Buffalo^2) (2)
Where:
Elephant = E - income or gross income;
Rhinoceros = Ptov; (the steepest animal after Elephant;
e = Pper / Elephant - share of variable costs in income E;
E - elasticity of income to price:
Lees - current (actual) price;
Leo = 1/2*(Dragon + Antelope + Wolves - Wolves - Wolves) - market price (so far called);
Dragon = - Devil/E - the limit price above which the product becomes unattractive in the market, the upper limit of the market;
Antelope - purchase price that may turn into a Stag (profit) or into an Elk (loss) during trading;
Wolf = e/(1-e)*Aptilope - the price of variable costs (commission and swap);
Volchata = - Ppost/E - price of fixed costs (spread);
Volchata = e/(1-e)*Aptilope - increment of Volchata due to the presence of Wolf;
Devils - the virtual income of the market for a given, traded, commodity, indirectly estimates the maximum, virtual, market demand for a given commodity;
Buffalo = (Dragon*(Antelope + Wolves))^0.5 - optimal price to maximize profit.
After having achieved computer coincidence of results of profit calculation according to formulas (1) and (2), because it is impossible to achieve coincidence of calculation results on the calculator because of the problem of digit capacity of variables.
By equating (1) to zero, we obtain the coordinates of the 2 break-even points as the solution of the quadratic equation included in the profit form, as the Bears and Bulls break-even levels:
P = (1-e)*E*/Fox*(Fox^2 - 2*Leo*Fox + Buffalo^2) = 0
Bears = Lev - (Lev^2 - Buffalo^2)^0.5
Bulls = Lev + (Lev^2 - Buffalo^2)^0.5
Now, (2) can be rewritten as: P = (1-e)*E*/Fox*(Fox - Bears)* (Fox - Bulls) (2а)
We conclude that the breakeven condition depends on the difference in levels between Fox and Bears and/or Fox and Bulls .
Adding and multiplying the levels of Bears and Bulls, notice that, Leo is the arithmetic mean and Buffalo is the geometric mean of the levels of Bears and Bulls:
Lion = 1/2*(Bears + Bulls )
Buffalo= (Bears* Bulls)^0.5
Let's continue:
I proceeded to unravel the mysteries of the market, just as I usually do when solving a lot of complex problems, which have an economic. as in the case of (18), technical or other nature, which I will talk about when I retire and the time comes to write my memoirs, if it is not C. And this time the iron principle has not let me down. The principle is that, first, I study a simple representation of a problem that has proved difficult to understand. Then I armed myself with the principle of inviolability of material balance; I formulate the simple representation anew and find out whether this representation satisfies the principle of material balance. After making sure, I start complicating the simple representation by giving it all the power of the laws of mathematics and logic, constantly looking over my shoulder and going back to the simple form. Gradually, the situation heats up to the limit and then I activate my brain power, which helps me to reach the climax of complexity, after which I gradually return to the original simple variant without losing the elements of the complex variant.By the time I come down to the initial simple variant, I have in my hands a simple, but different variant of the simple, including elements of the complex variant of the problem, which I compare for correlation in all imaginable and unimaginable horizons of changes of the variables involved, when correlation is achieved in all, the problem suddenly becomes simple in representation and understanding - the problem is solved.
Lots of letters!!! It's hard to see - it's just impossible to read!!! Wouldn't it be nice to divide it into paragraphs?
Wow, 54 pages already and I just noticed this thread. Couldn't you describe this theory in 3 sentences?