Overview

Depending on which market we are currently in one have to put emphasis on certain patterns which may emerge from the apparent chaos (incomprehensible complexity).

Depending on which trend we are currently in, one has to look at particular parts of the chart, such as lower or upper edges of a range.

Basically, the most powerful patterns are Double Top in a bull market (signalling a possible major reversal) and Higher Low, signalling a “resuming” of an uptrend after a failed, false reversal.

False breakouts in a bear market are fast and violent, fueled by hopium of amateurs and FOMOing in. They usually create nice, long wicks.

The end of a major panic selloff is also a wick. It is called “to catch a falling knife”. A bounces (reversals) are fast and powerful, just like “physical” bounces of a tennis ball.

If there is no bounce this is not a local “bottom” (and this is an example of a useful heuristics).

All the sharp moves and market “runs” are due to particularly strong emotions of fear of a loss, or Fear Of Missing Out which is the main force behind hopium-fueled rallies.

Everything so far sounds logical and reasonable. The only problems is that these advices are advices of a coach outside of a boxing ring.

Trading is the same as taking an actual fight inside a ring - a completely different experience from studying the theory and patterns (that is why there are so few book about boxing).

Another analogy is a theoretical training of a pilot versus actual flight experience, or the same like participating in a Moto Grand Prix. Or in a war on actual front lines.

This is why sellers of books and of few day curses are just boxing coaches and they make consistently more money safely and easily. No coach is going inside a ring or actually ride that suberbike.

Similar to actual MMA or Boxing match, trading has too many aspects and factors which makes it vastly complex. Just memorizing them won’t help.

It is not just a day of a week, Asian, Moscow and US timezones, major US macro events and US stock market moves. Everything contributes to the current market sentiments, including news, posts on social media, Elon’s tweets and shilling on major discussion forums, such as /biz/.

There is nothing random in the marker (and nowhere else), but the causality factors are complex and so intervened, had different weights every time, and even different combinations, including new emergent factors, that it is ok (for them) to think of it as random.

Requrrent patterns emerge from “chaos” when similar factors come into play again and again. The factors are never exactly the same, just like actual chart patterns are never identical. But they have unmistakable, definite common shapes.

Some people would say that they form a fractal, but fractals are abstract, pure mathematical concepts and do not exist anywhere.

The analogy (or a metaphor) however is useful, because similar patterns indeed emerge on time-frames of a different scale, from 1m to 1W.

The name of the game is to react to patterns emerging from chaos, which implies to be prepared (well-capitalized, so one could sustain a series of inevitable loses) and ready (watch constantly, especially at the crucial time-intervals).

Just like with boxing, loses are inevitable, just as hits from an adversary. One has to learn to take blows before one even think of winning.

Winning in this game is not losing (too much).

Again, theoretical book knowledge is very valuable for understanding what is going on in the market, but it by no means enough for trading. Trading is a competitive action endeavor, just like competitive spots.

There is no substitute for daily practice, inevitable loses and developed stress and pain tolerance. And the pain is very real.