The Law of Effort VS Result

The Law of Effort VS Result

The Law of Effort vs. Results – divergencies and disharmonies between
volume and price often presage a change in the direction of the price
trend.


so by the transactions taken place and what effect it has on price and
the market u can judge the quality /quantity of supply or demand..
simply put if u see an increase on demand ie.. the people laying the shit
out of the market, huge amounts get traded on the backside but price
doesent move, the effort was huge.. but the result was zero to nill..

this states that supply is outrunning demand at this level and u should
either get out of a position or think about backing first. but deffenetly
dont want to lay here....

on the other side if u have little effort. behind a big move
then we can speak of a lack of either demand or supply..

examples on Effort vs Result.:



here we have a situation where the layside is clearly heavier



we see that 1700 have been trading @ 2,90 where previously have been
840 but we still see 40 on the backside.. ok this isnt much .. but
we didnt go Lay .. so there is more money resting (iceberg) then we see
wich indicates supply

now lets see whats happening to the backside



the backside even increases after that.. so instead of jumping
infront of the train here.. caution is advised .. as the backside only looks weak
but infact isnt..



another 1k get traded @2,88 but we didnt go Lay here .. where previously 600 where sitting.. this indicates true supply and a heavy resistance,,

so we had two situations where the effort (high volume) has been tarded but the result was poor.. in this case supply is stronger then demand!

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The Law of Cause and Effect

The Law of Cause and Effect

The Law of Cause and Effect: “The effect realized by a cause will be in
direct proportion to that cause.

Consequently to get an important move there must be an important cause. that takes time to developeie if we trade within a range .. we are building a cause for the next effect! ,we may absorb supply while demand gets stronger then supply
(building a cause)we then breakout of that range to the upside (effect)
or we see that supply exceeds demand and demand gets exhausted within the
range .. then we see a down move ie break to the downside


so there has to be significant action to take place within that range in
order to break out or down.. and that effect is underlying of what
happened within that range..

here is a example of a breakdown (effect) after a range(cause) and what
happened within that range wich lead to the breakdown

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The Path Of Least Resistance

the path of least resistance can come in many ways .. but nevertheless
it tells us where the markets wants to go.. and its represented by
strong moves in one direction and weak corrections/pullbacks..

u will notice that the size of the trades are bigger aswell as the frequency
while the size/frequency of the trades in the correction are weak..
basically u will look out where price has an easy time to move to..
and a hard time to move to...

however u need to judge the quality of those moves.. remember lack of
supply or demand are not as vital as if we have equalish situations for
both sides. but one side .is fairly stronger! thats two different
situations..

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Lack Of Supply

we can clearly see that the layside is way heavier then the
backside.. wich even has gaps.. so a lack of supply is iminent



we see a print on 4,0 on the layside wich happen on good vol
and tsill some gaps on the backside



we see follow thru on the layside .. backside still looks weak



and now we even moved up without a fsacilitated trade.. someone pulled
the back order @4,1 .. and we have wittnmesd a follow thru from the layside
wich still looks healthier.. while the backside.. lacks of money

therefore lack of supply and we move up but its not a vital move as demand has it easy to controll the market caused by the lack or absinence of supply..
however we move up ..

but caution is advised as supply can enter anytime..! and force demand to
either stop.. or even swamp demand.. this pulling and pushing is used also on manipulations as there are manny games been played on the ladder..
but that will be a nother article ;)

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The Law Of Supply and Demand

THE LAW OF SUPPLY(backside) AND DEMAND(layside)

The law of supply and demand is not an actual law but it is well confirmed and understood realization that if you have a lot of one item, the price for that item should go down. At the same time you need to understand the interaction; even if you have a high supply, if the demand is also high, the price could also be high.


so as in all markets .. supply and demand are the number one reason price moves.. supply and demand can be in balance for some time and stay within a range
till we have an imbalance . ie .. supply demand outweighs the other.. and we move either down(supply is in control) or up (demand is in control) till we meet balance again.. etc..


so if demand is stronger than supply we move up

if supply is stronger than demand we move down.. its that simple ! ;)

in contradiction.. if there is lack of supply we move up till we meet at least the same amount of supply to keep demand in place.. and find balance agin
also if there is lack of demand we move down till we find demand wich keeps previntening the price going down further.. and we are in balance again...


you cant judge all the participants thoughts and intends in order to know why they buy here or why they sell there.. etc..
nut you can judge the markets by its own action , by simply observing it..

we can simply say that price takes the path of least resistance! in wich direction does price has it easier to go.. up or down?

example the path of least resistance is up when.. we have a significant change in price accompanied with high volume to the upside while on reactions (corrections) volume tends to drie out and price doesnt make a significant move down

example the path of least resistance is down when.. we have a significant change in price accompanied with high volume to the down side while on reactions (corrections) volume tends to drie out and price doesnt make a significant move up



so price moves up when demand exceeds supply (buying pressure)
and price moves down when supply exceeds demand (selling pressure)

these two examples are vital moves.

where if we have lack of supply and price moves up.. we cant speak of healthy move up.. sure we move up but on a lack of supply not on heavy buying ie strong demand .. so caution here is advised

the opposite is true for a lack of demand where price moves down.. but not because of an increase of supply but a lack of demand... caution heretoo , as price is know on the look out for fresh demand..!

stay tuned for examples!

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