The combination of two major theories leads to the "worst ending." To break free from the trap of the masses
I’m Pro Trade Coach Max.
I will talk about the extremely serious logical conclusions that occur when the “lies” of FX, which we have exposed up to now, accumulate.
■Logical conclusion: the outcomes brought about by the combination of two grand theories
Many losing traders think, "1If one indicator fails,2by combining two things the accuracy should improve," and the prime example is the so-called “hybrid of the two grand theories”— confirming the Dow Theory trend reversal (shape) and waiting for the moment when the direction of the oscillator (indicator) aligns. At first glance, it may seem like an unbeatable entry signal with strongest possible evidence.
However, the conclusion drawn from market physics of supply and demand is exactly the opposite.
Waiting for Dow Theory to neatly complete the form of “lower lows with higher highs” introduces a first delay. Furthermore, waiting for the oscillator to have “two lines fully aligned upward” adds a second delay. As a result of multiplying a lagging indicator by another lagging indicator, the trigger for your entry will be drawn at a point far from the market bottom, in a high-energy, fully stretched “desperate high (or low) zone.”
As public sentiment sees such a perfect shape and indicator signals aligning, everyone rushes in shouting, “This is it! Buy!”. But that is precisely the face of the largest traders who were accumulating near the bottom, waiting with bated breath for the ultimate profit-taking spot (a crowd of prey to hit with sells).
What we truly need to continue making profits is not to chase the “appearance of shape” or the delayed signs of indicators created by the masses. Before the mass crowds in, identify the turning point (the wall) where the market’s energy shifts, and pinpoint the initial impulse—the fastest breakout signal. Theoretically correct answers and actual market supply-demand answers are always inverted by 180 degrees. Please engrave this cruel fact deeply in your brain.
■Step out of “wrong conventional wisdom” and into the world of essence
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