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 Market is the place where people meet to buy and sell.Demand and supply causes price movement. You can trade in any market where price moves.

Market operates in two phases or two modes-:

1   The Vertical Mode      (Expressed in Price)

2   The Horizontal Mode(Expressed in Time)

The market moves when in the near term, more people wnat to buy than sell at a particular price or vice versa.In practice the result is that the market moves vertically to bring about a new price range where the buy-sell demand is more or less equal.This area of approximately equal demand tends to hold or contain prices, with the result that the market starts to move in a more or less horizontal fasion.

As a generality, then, we can say that the market has two phases (the vertical and the horizontal) and that particularly speaking, the market movement will almost always be a blend of the two.Traders take advantage of these opportunities to speculate in the markets.

The market moves from equilibrium to non-equilibrium (Demand and Supply) and back again, in an endless progression of swings back and forth as market participants attempt to correct states of disequlibrium. (Swing trading style make use of these opportunities to trade and make money)

Market Profile Method

The first step is a strong vertical movement up or down, the market established a series of prices in one direction (this movement is the best and most profitable) trading opportunity available in the market.The first step occurs because there is a market imbalance, a large shift of capital into or out of the market causes prices to shift rapidly.

The second step occurs when the market finds a price that stops the directional movement.After all when the market is moving, something has to stop prices, since the cannot rise indefenitely and step two stops the market.

The third step is when the market begins to move sideways as the market begins to develop, prices move up and down in a smaller range around what emerge to be the control price of general area.

In the fourth step, the market lives to move to lower efficiency.This move to efficiency can be thought of as the market tendency to fillout the price change defined by the step one.In other words the market will retrace and develop the larger distribution

Cycles of a trend.

Stage one.  Market is flat.Market is ocillating in certain range.As this stage ends you often see a brek-out of the previous range. The break-out can be explosive particularly if it has been in consolidation for a long period of time.For markets that can measure volume, an increase in volume is an early indication that the break-out is real.

Stage two.  Stage two is after the break-out has occured and we begin to head north depending on the force of the move the market may rally and not come back to the break-out point OR it may come back and test that area.Stage two continues making higher peaks and higher valleys and may come back to test the moving averages a few times.

Stage three.  Stage three is the final thrust of the cycle. You may notice a spike or double top formation as the trend begins to run out of steam.

Stage four.  This is the final stage of the cycle and perhaps the most interesting.Depending on market conditions some traders may now go short. The market in our example is making lower valleys and lower peaks.This tells us that now there is a move to the downside.Stage four may be difficult as the market may go into consolidation again or continue down.The first thing to do before you enter the trade is decide where in the cycle you are.If you are at stage two then it could be dangerous to go short.It could also be dangerous to enter short if stage two had been building for a long time.Remember the market cant go up for ever.

On the other hand if you are entering stage four, you would not want to be long .Just by indentifying the different stages in the market it can help you lock in profits, make better judgements and decisions on whether you should be in the market at all and perhaps  give you clues for enty and exits.

Three Principles.

1     The market move has only two possible directions.This means whenever there is an existing market position with a certain profit target and protected by a stop loss level, the market will eventually reach one of those trading points.It also implies that price action on the way between the two points is ' market noise' and should be disregarded.

2    The market is in perpetual motion.This means that over any period of time the market is progressing either towards the target or the stop level and that one of these will be reached within a reasonable period of time.

3    The market completes certain trading ranges over certain period of time ie in a day, week, month. This allows traders to evaluate the specefic probabilities, a market will reach certain price levels, with in a certain time frame.

Look for following sequence of events.

 1   Change in volume. This will be the first sign that something is about to change.You will need to be aware of the amount and speed of the volume and its relationships to price movements.

 2   Changes in the relationships of highs and lows with respect to the volume.After changes in volume this will happen next, highs and lows will change.Examining this relationships will reveal if the price move that is developing is strong or not.If the move is strong enough it will cause the momentum to follow suit.

3   Momentum. This is the last event to occur . It is the snow ball effect of the volume supported by price movement, which if you capture before it occurs will give you high returns.


Most of the time, the markets are not in a tending mode but rather in a lateral range.On such occations the market is in a relative state of harmony with neither the bulls nor the bears in charge.

 As previously mentioned when the markets are in a state of 'WA', they will trade in a quiet, horizontal band.At times the bears or bulls may assault a prior high or low level.

Trading opportunities can arise in these occations, specefically if there is an unsustained break-out from either a support or resistance level.In such a scenario there is a strong probability the price will return to the opposite side of the congestion band.This type of false break-out is called upthrust.If the upthrust coincides with a bearish candlestick indicator it is an appealing opportunity to short.

The opposite of an upthrust is the spring.The spring develops when prices break through a prior low.Then price spring back above the broken support area.In otherwords new lows could not hold.Buy if price push back above the old lows.The abjective would be for a retest of the congestion zones upperband.The stop would be under the lows made on the day of the springs.

Trading upthrusts and springs is so effective because they provide a clear target ( the oppsite end of the trading range) and protective stop ( the new high or low made with the false break-out).Upthrusts and spring set ups work very well.

The Change of Polarity Priciple.

(It is an underutilised Gem).Pick up just any chart be it intraday, daily, weekly or longer the chances are high that you will see examples of this change of polarity in action.The change of polarity principle is so successful because it is based on sound trading psychological principles.

The most important price on any chart is the price at which you entered the market.People become strongly, keenly and emotionally attached to the price at which they bought or sold.Consequently the more trading that transpires at a certain price area the more people are emotionally committed to that level.

Do not let the simplicity of the rule fool you.It works especially well  when welded with candlestick indicators.