Topic: nature of financial markets... (Read 122 times)
There are quite a few aspects that drive the financial market, but more often the market uses two types of analysis, fundamental and technical, on these two elements and builds the market as a whole and it is not particularly difficult to predict the tendency of any asset and therefore many people learn to use these types of analysis for earnings in financial markets.
Another phrase used in financial markets describes how markets move in trends. When trending down, the market is sliding down the slope of hope, and, when trending up, the market is climbing up the wall of worry.
At first glance, sliding down the slope of hope and climbing up the wall of worry don’t seem to impart too much wisdom, but, under the surface, these phrases describe not only crowd behaviour but also one of the biggest causes of the crowd’s losses.
As markets move down, news that has the potential to stop the rout gains more attention. And, as markets move up, news that could end the rally becomes the focus.
The process of sliding down the slope of hope and climbing up the wall of worry is continuous. Even in the sideways accumulation and distribution phases of the price cycle.
The 5% use this process as one of the checks before they take a position because paradoxically all liquid markets, including cryptocurrencies, exhibit the worst news typically portraying a near hopeless situation at major lows, and vice versa, when markets are soaring, and the news is good, when everything looks fantastic, and the thought of a market selling off looks highly unlikely, it’s then that markets typically print major highs.
The catalyst could be exogenous, external to the market, like a natural disaster, a geopolitical shock event, or a cryptocurrency exchange collapse. Or, it could be endogenous, something internal; a shock report exposing corruption within an organisation, an earnings miss or a profit warning.
The tendency for the worst news to coincide with the end of a down move and the best news to coincide with the end of an up move has, like the slope of hope and the wall of worry, been turned into a handy aphorism.
It shows up in the stock market, the forex market, the bond market, in fact, all liquid financial markets, including cryptocurrencies exhibit this behaviour - even real estate markets: When the only way is up, the only way is down, and when the only way is down, the only way is up.
In financial markets, including the cryptocurrency market, there’s always someone willing to stand in front of an oncoming train.
As markets move through the stages of the price cycle, moving from downtrends into sideways accumulation, and from sideways accumulation into uptrends, eventually cycling into sideways distribution and finally new downtrend, there is always some genius who thinks that the bottom is in or the high has been made.
Occasionally they are right, but even then, they get out too early and rarely exploit the true potential of their position, typically exiting without any understanding of return on risk.
At first glance, sliding down the slope of hope and climbing up the wall of worry don’t seem to impart too much wisdom, but, under the surface, these phrases describe not only crowd behaviour but also one of the biggest causes of the crowd’s losses.
As markets move down, news that has the potential to stop the rout gains more attention. And, as markets move up, news that could end the rally becomes the focus.
The process of sliding down the slope of hope and climbing up the wall of worry is continuous. Even in the sideways accumulation and distribution phases of the price cycle.
The 5% use this process as one of the checks before they take a position because paradoxically all liquid markets, including cryptocurrencies, exhibit the worst news typically portraying a near hopeless situation at major lows, and vice versa, when markets are soaring, and the news is good, when everything looks fantastic, and the thought of a market selling off looks highly unlikely, it’s then that markets typically print major highs.
The catalyst could be exogenous, external to the market, like a natural disaster, a geopolitical shock event, or a cryptocurrency exchange collapse. Or, it could be endogenous, something internal; a shock report exposing corruption within an organisation, an earnings miss or a profit warning.
The tendency for the worst news to coincide with the end of a down move and the best news to coincide with the end of an up move has, like the slope of hope and the wall of worry, been turned into a handy aphorism.
It shows up in the stock market, the forex market, the bond market, in fact, all liquid financial markets, including cryptocurrencies exhibit this behaviour - even real estate markets: When the only way is up, the only way is down, and when the only way is down, the only way is up.
In financial markets, including the cryptocurrency market, there’s always someone willing to stand in front of an oncoming train.
As markets move through the stages of the price cycle, moving from downtrends into sideways accumulation, and from sideways accumulation into uptrends, eventually cycling into sideways distribution and finally new downtrend, there is always some genius who thinks that the bottom is in or the high has been made.
Occasionally they are right, but even then, they get out too early and rarely exploit the true potential of their position, typically exiting without any understanding of return on risk.
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