Calmly accepting CYDY volatility thru fractal theo
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Posted On: 04/04/2020 8:43:37 PM
Calmly accepting CYDY volatility thru fractal theory
Last week the board filled with posts by new investors scared by the sudden 30-40% drops. I've built plenty of trading psychology wisdom the hard way over 10 years, and want to help the newbies calm their nerves with some fractal theory, AKA Elliot wave theory. Elliot observed in the 1930s that strongly trending markets tend to bounce between the extremes in 5-wave up-channels. He hypothesized that the 5th wave tricks out human investors who intuitively take their profits after surviving just 3 waves of volatility, yet panic and buy back in as the 5th wave negates their early top call. As this phenomena plays out on every time and price scale that people pay attention to, charts in all markets exhibit self-similar, nested 5-wave fractals. CYDY's behavior since the December breakout has been exemplary with several 5-wave runs observable at various scales:
https://www.tradingview.com/chart/CYDY/RY8vuJ...ews-cycle/
Fractal technicians can make predictions by hypothesizing where we are in the nested fractal structure and what future price zones will fill in the channel structure with reasonable geometric symmetry, e.g. wave 3 is typically longest (a Fibonnaci multiple of 1) with wave 1 and 5 heights often similar for parallel channels.
As per who is shorting or selling their warrants causing any particular move, we can't know and it's not psychologically useful to speculate about that. Whether the fractal structure is an emergent phenomenon or self-fulfilling by Fibonnaci-programmed high-frequency trading bots doesn't matter. It's INEVITABLE because the market as mechanical bull seeks to throw off as many investors as efficiently as possible, and such fractal volatility as observed in ALL markets is the surest way to trick out the mass of investors.
So long as you're a long-term investor the SAFEST thing to do with an undiscovered gem like CYDY is simply HOLD ON for the next few years and let the fractals grow and bounce their way to double or triple digits. You might successfully flip in and out of a big chunk a couple times only to miss out one of these 60% gap ups the third time which will be psychologically devastating.
If you need to sell a portion to pay off debt, or otherwise have the trading bug and want to trim a little now and then, try to do so after 5 waves up on the largest time scale you have patience for! (And buy back in the wave 2 or 4 retracements)
Cheers,
pythagoras345
Last week the board filled with posts by new investors scared by the sudden 30-40% drops. I've built plenty of trading psychology wisdom the hard way over 10 years, and want to help the newbies calm their nerves with some fractal theory, AKA Elliot wave theory. Elliot observed in the 1930s that strongly trending markets tend to bounce between the extremes in 5-wave up-channels. He hypothesized that the 5th wave tricks out human investors who intuitively take their profits after surviving just 3 waves of volatility, yet panic and buy back in as the 5th wave negates their early top call. As this phenomena plays out on every time and price scale that people pay attention to, charts in all markets exhibit self-similar, nested 5-wave fractals. CYDY's behavior since the December breakout has been exemplary with several 5-wave runs observable at various scales:
https://www.tradingview.com/chart/CYDY/RY8vuJ...ews-cycle/
Fractal technicians can make predictions by hypothesizing where we are in the nested fractal structure and what future price zones will fill in the channel structure with reasonable geometric symmetry, e.g. wave 3 is typically longest (a Fibonnaci multiple of 1) with wave 1 and 5 heights often similar for parallel channels.
As per who is shorting or selling their warrants causing any particular move, we can't know and it's not psychologically useful to speculate about that. Whether the fractal structure is an emergent phenomenon or self-fulfilling by Fibonnaci-programmed high-frequency trading bots doesn't matter. It's INEVITABLE because the market as mechanical bull seeks to throw off as many investors as efficiently as possible, and such fractal volatility as observed in ALL markets is the surest way to trick out the mass of investors.
So long as you're a long-term investor the SAFEST thing to do with an undiscovered gem like CYDY is simply HOLD ON for the next few years and let the fractals grow and bounce their way to double or triple digits. You might successfully flip in and out of a big chunk a couple times only to miss out one of these 60% gap ups the third time which will be psychologically devastating.
If you need to sell a portion to pay off debt, or otherwise have the trading bug and want to trim a little now and then, try to do so after 5 waves up on the largest time scale you have patience for! (And buy back in the wave 2 or 4 retracements)
Cheers,
pythagoras345
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