Stock Market Logic Series #10Do you think the above is a coincidence?
There are no coincidences in life - only cause and effect.
You are where you are because of a cause that is bound to physical and natural laws.
The same pressure of physics that works on the airplane wing, or the balloon that wants to push its way up when pressed into water (pool), also works in the stock market.
You just have to KNOW how to SEE it. follow my explanation.
If you follow the price action, you can see clearly where the high-pressure volume comes in, you can't miss it. It is obviously seen.
Then you need to wait for the correction, and you want to see that the correction is demonstrating a low-volume pressure behavior.
When you see this low volume pressure behavior, the stock has DRIED UP.
This DRYING-UP effect is a key indicator of a probable future LIFT and stock movement.
You want to ask yourself the question:
Why the stock is not falling down anymore?
The question of "WHY" is searching for the cause BEHIND the stock movement.
The stock movement is only the effect!
In previous posts, I explained the other LOGIC behind this pattern, and explained why the price should not fall down and with a high probability of going up.
If you read any of the books of Jesse Livermore, he clearly states that you need to "KNOW" that the stock will move your way, first let the market "SHOW YOU" exactly what will happen, and only then you put in a trade.
The KEY CONCEPT in this idea is the DRYING UP OF VOLUME.
When you understand the WHY behind the stock movement, buying and selling are emotionless.
The focus should be only a trading setups that you "KNOW" it is highly probable to move in your expected trade direction. You "KNOW" because you have stock market LOGIC to back it up.
If you want a specific post about Jesse Livermore's trading rules, let me know in the comments.
It is always important to make sure that you have the correct perspective on the stock market, otherwise, you get confused. There is only at every given time only ONE side to the market as Jesse Livermore said, "The RIGHT SIDE". This goes back to my idea, that at every given time the puppet master ONLY buys or sells but NOT BOTH.
