The Market Correction

The market correction or rollback as a lull before burey.Teoriya "Wave of correction." Analysis of "tacit correction"

After a good job, you need a good rest, or both, and is destined to not finish its work before the end.
Alexander M. Mazurkevich AlMaz Hedge Fund Management www.Mazurkevich.Com

As is well known in the market, there are a rising trend, and top-down trend, the trader's main task is to clearly identify it and its boundaries. All this is necessary in order to follow the work in the market has always made it clear that in a period of time occurs. As a rule, is considered to be among traders that work against the global trend of buying in the opposite direction, the direction of correction, this same global trend is a very risky step. Allow both the risk can only be very knowledgeable traders, traders who place great foot or larger funds, knowing that they do, as financial institutions seek to maximize the percentage of risk capital and equity investors.
Typically, when bidding against the global trend that is on the opposite correction can be safely assumed that the game will enter a number of factors:

1. The influence of significant fundamental news.

Typically, the strong short-term news can bring a system from equilibrium, but if you conduct research in practice, it is possible to argue that any strong news that could change the direction of movement of the trend, would not be so strong that kept the market a long period of time. Typically, balance is lost for several weeks, and then in varying degrees, the price took its position on the bottom-up trend, rising slightly, according to the increased global trend. See below Figure 1.

Figure 1. Daily trading on the news EURUSD intermediate correction against global trend (a time interval - week)

Published news has changed the direction of the global trend for the week, but then, the price returned to its shopping channel, rising during the period of ownership of such a magnitude to which they could climb over that period of time without a correction.

2. Correction function on the foot.

This correction, I called the "tacit correction, yes it is" silent. " The point is that once the "ice" touched, it can be stopped only environment. If the path does not contain a barrier to further movement and the external factors are favorable, the process could take a long period of time. Thus, correction as soon as the process has started it is very difficult to stop it immediately, it may not last long as months and then deploy the trend altogether. So I put the title of "tacit correction" - Look picture 2.

Figure 2. Chart EURUSD (one-week period), the descending trend with short term correction to the global trend

Figure 2 can be pronablyudat as the correction occurs at a longer period of time, and then as it returns to its place, notice the line of resistance, after an adjustment on the global trend line becomes a support. The phenomenon of "silent correction" occurs very often, our research will help you understand the principle of price movements in the time correction. Once a slight deviation from a particular channel, you can be a global trend to suggest that "threw" him out of the zhesamy is the fundamental factor, but now as soon as any of the big investors closed on foot, there is a change in supply and demand for currency, we shall consider our case. Once prices go up, possibly under pressure from some fundamental factors, the course skipped the border resistance, and went to the exposed brake losy that, perhaps with a strong back prices gradually begin to operate. If guided psychology of major investors, it is determined that an important factor for us is, by a stop-loss of these large investors. So they are very rarely moves them, like not moving course of a couple. Therefore, once the course threw in the opposite direction, one can assume that he zadenet stop any large investor, kaktolko this happens, it sells, respectively, which in turn leads to increased traffic in the opposite direction of prices on the global trend. The strength of the movement increases. Such a correction, I called the "silent correction" because of these time periods is very difficult to give a specific explanation for the movement of prices. Of course, if these intervals, and the fundamental factors are still not very favorable influence on the move in the direction of the global trend, it only strengthens the force of motion correction. In these moments, as a rule, a lot of talk about those or other reasons for price movements in the opposite direction, but actually one izsamyh major reasons there is in silence closing in the footsteps of their exposed positions. Large investors, tacitly, to say no words close its loss-making positions, according to the planned methods and all this happens silently. After all, life is always this: if you held a good deal, then scream out loud that all heard about it, whereas if "progorel", then silently with one's tail, and analyzing their mistakes, so this is life and in business the same rules, because those Losers will go to, perhaps, no one wants to be with him, and now turns out that in fact it happens "silent correction, on the causes of which cry out loud, but the real reasons no one ever called, the one who must know everything, but Anyone who does not know, then it is not necessary. In analyzing the "silent correction" I have come to the conclusion that if the investor needs to be done to correct its profit objective is to determine precisely this type of correction, as it usually is very long, in other words one can say that the chain reaction occurs to close the foot, because the longer the continuing correction in the opposite direction, the more foot rose from a variety of investors, as it is a kind of chain reaction, which may last for a long period of time.

3. Described the theory of "tacit correction could
cause another very interesting phenomenon. In the world of money, you can expect just anything, there is no rules, there is no legislation that can be strictly subject to constant returns, so, in depth technical skills and fundamental analysis can increase the likelihood of making a profit, bringing it up to very high. Having its own trading system, you can buy confidence, be introduced into the financial business, but you are never 100% can not answer a single question with: "Where will the price?". Why am I writing all this is just at the point where I must set out the third factor affecting the creation of the opposite correction. The thing is that often times occur in the marketplace, where members of financial transactions, large investors, large and influential foundations, banks, simply can change any amount of money, which in turn will lead to a move in the opposite direction, on a global trend. So throw the cause of such amount of money usually do not know anyone except the participants. And everything is very simple, it must be like something to make money, so here they are and choose an opportune moment in time when it seemed like a lull in the market and begin to swing the course vkidyvaya of several hundred million or even billions, to move it to the place and posnosit hundred-plossy issued by other speculators. Typically, this game could last some time, but when it picked up other funds, to feel the profit, the event into a "silent correction" to the long period of time. And if you are able to buy at this point, consider that you have a case. But the event is very risky, so do not have the information necessary confidence and knowledge does not suggest at all to enter the market at this point.
The above causes of correction at long-term period of time can lead not only to the correction for a long period of time, but also to a variety of unknown changes in the course.
My study focuses specifically on the methods of work with long-term correction, and methods of entry and exit at correction. Therefore, before using the theory of "Wave of correction" and apply it in real terms of trade suggest that very carefully to make sure vtom that begins precisely the same long-term correction, which can make a few pips, trading protivglobalnogo trend.

Now tell us about the most developed theory of "Wave of correction" and how to work with it. Of the global trend is always after a period of time can be observed some movement of our course in the opposite direction. Let's analyze Figure 3.

Figure 3. EURUSD schedule for 2002-2003. Long-term correction and investigation of (ascending and descending) on a global trend.

Please note that once the adjustment begins on the global trend is necessarily a time the price will be a test of the price channel on the lateral trend. Figure 3 can be pronablyudat is clearly that before any long term or correction starts to determine the price sure to test a specific price channel, forming a lateral trend. Pay attention to the figure 4.

Figure 4. Chart EURUSD long term analysis of the early korrektsiiperiod 2003

Let us discuss Figure 4. In this figure the vertical lines are the beginning of the correction. That is not the correction itself, namely the period after which you can expect our subsequent correction on the global trend. After reviewing the annual interval may be assumed that for a year more or less real, long-term correction, only one time interval at number 3, Figure 4, which is itself correct, of course, after this interval. So in terms of probability it can be argued that a real long-term correction of prices through the rollback of the global trend is not very easy (the probability of about 20 - 30%), under these facts, we argue that trade against the global trend is a highly risky undertaking. And define it in advance is very difficult. However, the task of our study was not to tell you how this is difficult to determine the long-term correction, but is how is it that make it to minimize its losses and withdraw profits.
Figure 4 shows the 4 period of the previous long-term correction. A number of each arrow shows the movement of subsequent growth or recession, the price which means that we can navigate directly to the image we have the arrows, for analysis, given the fact that a global trend turned up. As you can see, the price of the preceding periods numbered 1, 2, 4, after the fluctuations in lateral trend at a certain period of time continued its movement towards global trneda. If you take a look at the period under number 3, you'll notice that this time the power of "Bears" prevailed over the force of a global trend.
The aim of our study is to teach you to feel "strong" correction, and to react with the trade, as in case of an error to try to save his deposit, providing a loss as small as possible.
Suppose you sell on the global trend and is due to fundamental factors, or any other course starts to oscillate in the opposite direction, asking the lateral direction in a certain interval, if you read this to all my articles, then you certainly make a conclusion either that the lateral trend, a correction for the long term. Accordingly, the earlier tactics of trade would not be very well treated. We have developed a new method of work, that is the theory of "Wave of correction" that would suggest, of course, it does not purport to be unique, but that it can be profitable, we can guarantee you, because our goal is to not lose invested money into the market and with the opportune moment to withdraw profits:
1. Thoroughly study the motion of a global trend and cause of recoil in the light of fundamental and technical factors.
2. As has happened of Perforation line support or resistance Put fence to detect fluctuations in the price channel, ie the extent to which it will fluctuate.
3. Refer to a news resource, to be sure that the reason for change in the direction of the trend is not some "strong" temporary news, because there is a very high probability that the price will return to the scene. Also look at all financial developments emerging in the currency in a country of such currency on such resources as ForexTimes.Ru. In the event that the forecasts will be working against you are prompted to think about closing some of your open positions on the global trend, in order to lift profits in advance before the turn into the long-term correction.
4. Once you have done the operation as proposed in paragraph 1 -2 still not believe that you have received a 100% guarantee for the beginning of a long-term correction. In order to increase the likelihood of entry into the market propose to use the following indicators: Moving Averag, MACD, RSI, Stoshastic. Each of these indicators will allow you to find the opportune moment to enter, but in combination they can sosluzhit invaluable service, giving the correct signals. See Figure 5.

Figure 5. Schedule AUDUSD 2003 correction and performance indicators.

I propose to set these indicators, to experiment with each indicator separately. Once you've configured each of the indicators need to be strictly composed of the following specifics.
Stochastic - The red line crosses the dark green on the bottom of the range of 60 - 75, MACD line red line is changed to the opposite, but faint, to clarify the more specific direction to change the setting to more closely examine the direction of movement of the red line. RSI - perekuplennosti 65-70 in the zone and the direction is changed to opposite.

5. As soon as our indicators gave a signal to buy, I think this is a good time, but do not rush, and then propose to go directly to the theory described by us earlier "silently livogo roll", in other words, defining the lateral oscillations of the channel dividing the trend and try to sell or buy in a maximum rollback up to the boundary of the channel, it allows you to minimize the loss of a foot. Therefore, waiting for a convenient entry into the market on a small setback to the boundary of the trade channel, we provide a minimum of losses in case of error.

Once you follow the rules of trade can safely enter the market and moving consistently chosen direction, moving stoploss and profit at the border comfortable position. As soon as the course and revert if the fundamental factors will continue to show that the correction will last for a longer period of time, then feel free to move the stoploss to bezubytok, providing a guarantee of breaking even. Once this operation has been done, you can gradually open up small lots other position in the direction of correction. But do not forget that the correction can be completed, so be very careful, because these moments can be a few weeks to lose all that you earned for the months ahead.

A good trend you!

President and Managing the international hedge fund AlMaz Hedge Fund Management Alexander M. Mazurkevich