Forex The Market's Illusions & The Human Brain

This thread is going to be an ongoing gathering of information in regards to perception & the human brain and how this affects our decisions in the market. The first post is going to be short & sweet with 2 videos but there is a wealth of information to be learned from it.

Lets talk about Shadows.

First. Is price Bullish or Bearish, & is there even a difference? As you watch this video image you are looking at a chart and trying to determine if it is up and down.

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"Illusions are so powerful that our brains can be fooled by them, even when we know how they work."

You see, the market is always bullish & always bearish. it is all relative to the shadow you are seeing.

Can the market have a shadow and if so, How does the market cast a shadow?
Lets talk about moving averages. What are moving averages? In my opinion they are the shadow price leaves behind as it moves depending on the light source(size of MA) you choose to use.

Now take a look at how these shadows drastically change our perspective of the movement of price if we are using improper light sources.

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Notice how the changing of the shadow appears to drastically change the movement of the ball, even though the movement of the ball is not what is changing, it's the shadow.

Shadows can be cast if you have a light source in any direction, just like a shadow of price can be cast using any size of MA. If you are not using the proper light source, the movement of the ball is completely different than what it actually is. The key is to use the light source that every one else is looking at, for example the sun. In the case of price, it is to use the time windows most people trade. Daily, 4 Hour and 60 Minute Candles. Your moving averages should represent the time frames every one else is using. They should not be random and curve fitting as this will mask the true movement of the ball or market with false shadows.

sis.

Source.

 

Technical Analysis incorporates the investigation and mapping of trends and price designs through different technical indicators or studies. This relationship among price and time can help traders not just observe and interpret more information however can likewise help pinpoint areas of hesitation or reversal of notion. As a result, technical analysis is utilized to help determine the probabilities sections and exits to build up a strategy or technique.