For decades since Newton's Laws of Motion were conceived, our understanding of our universe has changed indefinitely. Right up till today, we never stopped using Newton's law.And it can almost be applied anywhere, anytime, any industry.
How about applying its teaching on Forex market ? Let me bring you guys through my thoughts.
If you have been reading till now, I hope this new topic certainly start to interest you to read further.
THE REFRESHMENT
Recapping what we all learned in Science lesson during High School time, below are the stated Laws by Newton.
Newton's First Law of Motion:
This law claims the concept of inertia we all recognized. Thi s law is often term the "law of inertia".
To me, I belong to a group of life-achievers called experimentalist. Well, or at least that will be what i call myself. Simply put the title to my daily life, I put my ideas into everything I do as I believe. I experiment.
So, if we take Newton's law 1 into Forex trading, we might just be looking at,
Therefore, the first proof is, the market will stay in a bullish or bearish market until the next big news come around.
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To me, I belong to a group of life-achievers called experimentalist. Well, or at least that will be what i call myself. Simply put the title to my daily life, I put my ideas into everything I do as I believe. I experiment.
THE FIRST PROOF
So, if we take Newton's law 1 into Forex trading, we might just be looking at,
A bullish market will always be in a bullish motion, A bearish market
will remain in a bearish motion, unless an external force is applied to it.
will remain in a bearish motion, unless an external force is applied to it.
This presumption seems very logical and literally complete. It matches every single bit of Newton's Law 1. So, lets take a currency chart (taken from forex&binary) to analyse this.
Ok, as we look at the above AUD/USD currency chart. There is always a common scenario. That is, between the Peaks and the Bottoms, it is always a constant motion in general. So, This would have proven that Newton's Law 1 might be applicable to here as well. It was strongly supported by ALL the PEAKS and BOTTOMS being the external forces.
In an usual market, the Peaks and Bottoms resulted because of current news. Currents news of finance. Reports of BIG COMPANIES, INDEXES, COUNTRIES EXCHANGE RATES etc. These are the EXTERNAL FORCE applying to the change in direction of the market.
Recently, for AUDUSD, there was a cause to the rise. OIL PRICE. Read more about this here !
In an usual market, the Peaks and Bottoms resulted because of current news. Currents news of finance. Reports of BIG COMPANIES, INDEXES, COUNTRIES EXCHANGE RATES etc. These are the EXTERNAL FORCE applying to the change in direction of the market.
Recently, for AUDUSD, there was a cause to the rise. OIL PRICE. Read more about this here !
Therefore, the first proof is, the market will stay in a bullish or bearish market until the next big news come around.
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Newton's Second Law of Motion:
II. The relationship between an object's mass m, its acceleration a, and the applied force F is F = ma. Acceleration and force are vectors (as indicated by their symbols being displayed in slant bold font); in this law the direction of the force vector is the same as the direction of the acceleration vector.This is the most powerful of Newton's three Laws, because it allows quantitative calculations of dynamics: how do velocities change when forces are applied. Notice the fundamental difference between Newton's 2nd Law and the dynamics of Aristotle: according to Newton, a force causes only a change in velocity (an acceleration); it does not maintain the velocity as Aristotle held.
This Law will be very interesting to analyze. Reading through it first time might be a bit dense. But i will explain in layman terms to probably try to get your cells moving.
Firstly, lets start to understand between ACCELERATION amd VELOCITY.
Velocity is defined as the rate of change of position. ( the speed of an object moving from position A to position B in a straight direction )
Acceleration is defined as the first derivative of velocity with respect to time. ( the sudden change in speed in a period of time )
THE 2nd ACT
Back to our interpretation of this law has on our forex trade, lets use back the same chart for our analysis.
After we had proven that EXTERNAL FORCE such as current news, reports or indexes change impact on the direction of the market, now we can also see how Newton's law 2 is clearly indicated in the chart.
In between the PEAKs and the BOTTOMs, we see secondary peaks and bottoms. Why does that happen even when no external force could be affecting the market ? Simple,
Law 2 stated F = ma,
This Law will be very interesting to analyze. Reading through it first time might be a bit dense. But i will explain in layman terms to probably try to get your cells moving.
Firstly, lets start to understand between ACCELERATION amd VELOCITY.
Velocity is defined as the rate of change of position. ( the speed of an object moving from position A to position B in a straight direction )
Acceleration is defined as the first derivative of velocity with respect to time. ( the sudden change in speed in a period of time )
THE 2nd ACT
Back to our interpretation of this law has on our forex trade, lets use back the same chart for our analysis.
In between the PEAKs and the BOTTOMs, we see secondary peaks and bottoms. Why does that happen even when no external force could be affecting the market ? Simple,
Law 2 stated F = ma,
If Applied Force(F) = Current News, Mass (M) = resistance of currency and Acceleration (A) = the change in velocity with respect to time
Answering our earlier question, All news affecting the resistance of currency causes acceleration (can be bullish or bearish). The key word here is TIME !
Depending on the strength of the news and the resistance of the currency, it determines the force of acceleration. Thus, you get to see bullish market that lasted only 3hrs and start to be bearish again even though good news were announced.
So, this is very important. When we want to anticipate a trade, we must know when this power will lose its fire and change direction again. Thus, we must know the TIME. If we know in the next 3Hrs, AUDUSD will appreciates 30pips to reach 0.8570. We can get our target and it is within a possible range before the power of the news cool off.
Thats our 2nd law proven. or at least what I am arguing.
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Depending on the strength of the news and the resistance of the currency, it determines the force of acceleration. Thus, you get to see bullish market that lasted only 3hrs and start to be bearish again even though good news were announced.
So, this is very important. When we want to anticipate a trade, we must know when this power will lose its fire and change direction again. Thus, we must know the TIME. If we know in the next 3Hrs, AUDUSD will appreciates 30pips to reach 0.8570. We can get our target and it is within a possible range before the power of the news cool off.
Thats our 2nd law proven. or at least what I am arguing.
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Newton's Third Law of Motion:
III. For every action there is an equal and oppo site reaction.
This law is exemplified by what happens if we step off a boat onto the bank of a lake: as we move in the direction of the shore, the boat tends to move in the opposite direction (leaving us facedown in the water, if we aren't careful!).
In Newton's 3rd law, it is almost the most famous one that we hear every other day. This is the most simple to understand and the most balanced law from nature. It simply applied to all scientific actions.
When we throw a coin up in the air, we applied a force to make the coin flips up.
The coin also came back down through a force called gravity. Thus, the opposite force in opposite direction.
THE 3rd ENCOUNTER
So, in a bullish market, we will certainly see a bearish market after that. However,
we must be very very clear here that it only states the change in opposite direction.
It does not state the amount of force coming in the opposite direction.
Lets look at the same chart again. Its very clear over here. In forex trading, you will never see CONSTANT graph. The chart will only show you either Up or Down. Never give you a constant horizontal line which sometimes can happen to a stock market.
THE CONCLUSION
With this experiment using sciences law versus conventional forex trading methods,
I am sure to introduce new injection of ideas if not stimulation to you guys out there.
Have fun thinking through my chapter and also try experimenting them if you can.
Most important, leave me comments to tell me your results.
Last but not least, Newton's Three Laws of Motion are meant to be Physical Laws.
When we throw a coin up in the air, we applied a force to make the coin flips up.
The coin also came back down through a force called gravity. Thus, the opposite force in opposite direction.
THE 3rd ENCOUNTER
So, in a bullish market, we will certainly see a bearish market after that. However,
we must be very very clear here that it only states the change in opposite direction.
It does not state the amount of force coming in the opposite direction.
THE CONCLUSION
I am sure to introduce new injection of ideas if not stimulation to you guys out there.
Have fun thinking through my chapter and also try experimenting them if you can.
Most important, leave me comments to tell me your results.
Last but not least, Newton's Three Laws of Motion are meant to be Physical Laws.
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