Probably all of you have might have heard of 'states' of 'matter', let me remind you once again "state of matter is one of the distinct forms in which matter can exist" but why am I talking about this stuff it's because the Market also has 'states' of 'market' you can define them in the same way "state of the market is one of the distinct forms in which market can exist".
I know many of you can't grasp it now but I can ensure you that by reading the entire article you would surely encounter one of the most striking observations.
As we all know fundamental states of matter are:-
-> Solid
-> Liquid
-> Gas
So what are the fundamental states of the market? let me recap the definition once again "state of the market is one of the distinct forms in which market can exist".
Okay, now I think many of you have figured out the 'states' of 'market', they are the following:-
-> Sideways
-> Downtrend
-> Uptrend
Yes, ' states' of 'market' are the trends cause the market can exist only in any form.
If I wanted to talk about trends I could have simply described trends but that's not the case cause this publication will establish a relation between the 'states' of 'matter' and 'states' of 'market'.
How are 'states' of 'matter' and 'states' of 'market' related?
Let me relate them by their properties-
-> Relation between Solid and Sideways
- Solid
The property of solids is they cannot move freely but vibrate due to strong intermolecular force.
Solid has a stable and definite shape and requires external force when it's to be molded.
- Sideways
The property of a sideways market is that in a sideways market price doesn't move freely but consolidates in a range due to strong calls and put writers who bound the price in a range.
The sideways market is stable and definite and requires an external buying/selling force to break the range in either direction.
-> Relation between Liquid and Downtrend
- Liquid
The liquid being a fluid tends to flow.
The density of liquid a quite high compared to gas hence it requires no external force while flowing downstream but requires a strong force to keep it flowing upwards.
The speed of liquid downstream is always greater than upstream due to gravity in action.
-Downtrend
In a downtrend price also flows down the same as a liquid flowing downstream without any external force.
Usually, the price plunges much faster as compared to the rise in price.
If somehow a rise is witnessed in a downtrend then it fades out quite fast because to keep the price flowing upward a huge buying force as compared to the selling force is required. This is also the case when liquid flows downstream.
-> Relation between Gas and Uptrend
- Gas
The gas being a fluid tends to flow.
The density of the gas is quite low hence it rises naturally but requires external pressure in a downward direction to keep it flowing downwards.
Gas has a very large intermolecular space hence its movement in a particular direction is quite slow and random.
- Uptrend
In an uptrend price naturally rises without any external force.
Usually, the price rises much slow as compared to the fall in price.
The nature of price in an uptrend is much similar to gas, as price movement in an uptrend is slow and random. Random because in an uptrend price gives more jerks as compared to a downtrend.
Phase/Trend Transition:-
Sideways <-> Uptrend (transition from sideways to uptrend market and vice-versa)
- RSI can be used to identify the transition, in a sideways market RSI usually trades in the band of 40 - 60, when RSI crosses above 60 along with breaking the range indicates the beginning of an uptrend.
- We can also term this transition as 'sublimation' cause the solid is changing to gas.
- Same for vice-versa just the term would be changed to 'deposition' as the gas is changing to solid.
Sideways <-> Downtrend (transition from sideways to downtrend market and vice-versa)
- RSI can be used to identify the transition, in a sideways market RSI usually trades in the band of 40 - 60, when RSI crosses below 40 along with breaking the range indicates the beginning of a downtrend.
- We can also term this transition as 'melting' cause the solid is changing to a liquid.
- Same for vice-versa just the term would be changed to 'freezing' as the liquid is changing to solid.
Uptrend <-> Downtrend (transition from uptrend to downtrend market and vice-versa)
- RSI can be used to identify the transition, when a divergence is witnessed in RSI and price chart this indicates the loss in strength of the internal force i.e. exhausting buying interest but still to confirm we could use 20 EMA if the price breaks below moving average with RSI divergence then it's quite possible a beginning of downtrend so what can we do is book our profits.
- Downtrend is only confirmed when RSI starts trading below 40 but we can't wait till then and let our profits vanish so as soon as you get an indication book your profits.
- We can also term this transition as 'condensation' cause the gas is changing to a liquid.
- Same for vice-versa just the term would be changed to 'vaporization' as the liquid is changing to gas.
In my prior post, I tried to relate "As above so below" harmony of nature with the market and now "States of Matter" with market trends this is all to make everyone know that 'Stocket' science is equally difficult as 'Rocket' science probably more cause here 'emotion' also comes in play which any other science lacks.
Now, answer yourself do you still have a fantasy about 'Rocket' science or 'Stocket' science is enough to fulfill anyone's
fantasy and do you know what's the best part of 'Stocket' science? it's everchanging.
I know many of you can't grasp it now but I can ensure you that by reading the entire article you would surely encounter one of the most striking observations.
As we all know fundamental states of matter are:-
-> Solid
-> Liquid
-> Gas
So what are the fundamental states of the market? let me recap the definition once again "state of the market is one of the distinct forms in which market can exist".
Okay, now I think many of you have figured out the 'states' of 'market', they are the following:-
-> Sideways
-> Downtrend
-> Uptrend
Yes, ' states' of 'market' are the trends cause the market can exist only in any form.
If I wanted to talk about trends I could have simply described trends but that's not the case cause this publication will establish a relation between the 'states' of 'matter' and 'states' of 'market'.
How are 'states' of 'matter' and 'states' of 'market' related?
Let me relate them by their properties-
-> Relation between Solid and Sideways
- Solid
The property of solids is they cannot move freely but vibrate due to strong intermolecular force.
Solid has a stable and definite shape and requires external force when it's to be molded.
- Sideways
The property of a sideways market is that in a sideways market price doesn't move freely but consolidates in a range due to strong calls and put writers who bound the price in a range.
The sideways market is stable and definite and requires an external buying/selling force to break the range in either direction.
-> Relation between Liquid and Downtrend
- Liquid
The liquid being a fluid tends to flow.
The density of liquid a quite high compared to gas hence it requires no external force while flowing downstream but requires a strong force to keep it flowing upwards.
The speed of liquid downstream is always greater than upstream due to gravity in action.
-Downtrend
In a downtrend price also flows down the same as a liquid flowing downstream without any external force.
Usually, the price plunges much faster as compared to the rise in price.
If somehow a rise is witnessed in a downtrend then it fades out quite fast because to keep the price flowing upward a huge buying force as compared to the selling force is required. This is also the case when liquid flows downstream.
-> Relation between Gas and Uptrend
- Gas
The gas being a fluid tends to flow.
The density of the gas is quite low hence it rises naturally but requires external pressure in a downward direction to keep it flowing downwards.
Gas has a very large intermolecular space hence its movement in a particular direction is quite slow and random.
- Uptrend
In an uptrend price naturally rises without any external force.
Usually, the price rises much slow as compared to the fall in price.
The nature of price in an uptrend is much similar to gas, as price movement in an uptrend is slow and random. Random because in an uptrend price gives more jerks as compared to a downtrend.
Phase/Trend Transition:-
Sideways <-> Uptrend (transition from sideways to uptrend market and vice-versa)
- RSI can be used to identify the transition, in a sideways market RSI usually trades in the band of 40 - 60, when RSI crosses above 60 along with breaking the range indicates the beginning of an uptrend.
- We can also term this transition as 'sublimation' cause the solid is changing to gas.
- Same for vice-versa just the term would be changed to 'deposition' as the gas is changing to solid.
Sideways <-> Downtrend (transition from sideways to downtrend market and vice-versa)
- RSI can be used to identify the transition, in a sideways market RSI usually trades in the band of 40 - 60, when RSI crosses below 40 along with breaking the range indicates the beginning of a downtrend.
- We can also term this transition as 'melting' cause the solid is changing to a liquid.
- Same for vice-versa just the term would be changed to 'freezing' as the liquid is changing to solid.
Uptrend <-> Downtrend (transition from uptrend to downtrend market and vice-versa)
- RSI can be used to identify the transition, when a divergence is witnessed in RSI and price chart this indicates the loss in strength of the internal force i.e. exhausting buying interest but still to confirm we could use 20 EMA if the price breaks below moving average with RSI divergence then it's quite possible a beginning of downtrend so what can we do is book our profits.
- Downtrend is only confirmed when RSI starts trading below 40 but we can't wait till then and let our profits vanish so as soon as you get an indication book your profits.
- We can also term this transition as 'condensation' cause the gas is changing to a liquid.
- Same for vice-versa just the term would be changed to 'vaporization' as the liquid is changing to gas.
In my prior post, I tried to relate "As above so below" harmony of nature with the market and now "States of Matter" with market trends this is all to make everyone know that 'Stocket' science is equally difficult as 'Rocket' science probably more cause here 'emotion' also comes in play which any other science lacks.
Now, answer yourself do you still have a fantasy about 'Rocket' science or 'Stocket' science is enough to fulfill anyone's
fantasy and do you know what's the best part of 'Stocket' science? it's everchanging.
