The Rubber Band Theory
The Rubber Band Theory There are two main forces driving the markets: Cycles and Sentiment. These forces are the foundation of the market action and are the root of the rubber band theory. Think of a stretched rubber band. It is loaded with force which urges to release and upon release the rubber band gets […]
What are Cycles?
Cycles can be found everywhere in nature. Our planet rotates around the Sun, which rotates around the Milky Way, day turns into night, living creature born and die, trees grow leaf’s in spring and drop them in autumn. Even time itself is said to be cyclical by some scientist. I’m not in the reincarnation camp, […]
What is Sentiment?
Sentiment is the measure of bulls and bear on the market. Sentiment can be measured on different timeframes from few days to multiple years. When prices increase, people tend to become more bullish and when markets decline, people tend to turn bearish. This is because of their recency bias which means that people tend to […]
What is Smart Money?
Smart money consists of the successful hedge funds and big banks that are right about the market directions time after time. Smart money plays with big volume and can in some cases force the market into one direction or another. Smart money is the opposite of dumb money which consists mostly of retail traders and […]