Market Geometry

Market Geometry

Market Geometry

Market geometry is a very traditional way to technically analyse the market. It is very old and its main principle is to use the left side of your chart to make future predictions. Given the fact that the market often goes through periods of similar, if not the same activity, it is reasonable to conclude that the same pattern that occurred on the left will occur on the right side of your chart, too. But let us dig a bit deeper with the help of our trading experts and see what else can be learned from examining this method. Stay with us and expand your knowledge of binary options trading!

Market Geometry | Main principle

Market geometry is best used to determine support and resistance levels of an asset’s price. You can examine the price’s fluctuation on the left side of your chart, see how it behaves, determine the levels and then predict them into the future. For example, suppose you have determined a support level, which is then broken by a bearish trend. The level remains the same for the foreseeable future, only it will now act as your resistance level. That is what market geometry is all about – translating past market behaviour into the future with geometrical precision and then sticking to it, no matter what your other Indicators say, because you know the market is bound to behave like that again. But let’s see what this principle means for the way you should behave with your trades. Stay with us and find out!

Market Geometry | Expiration time

The thing that market geometry impacts the most is probably the expiration time of your trades. With this analytical method, it makes no sense to open short-term trades – medium and long-term expiration dates are what you should be aiming for. This is because you will be analyzing a fairly large chunk of time on the market, and you will translate it to the right side of your chart. This amount of time is needed to correctly identify your support and resistance level, something that can’t really be done without a proper sample. Don’t rush things; a bit of patience is needed if you want to become a successful trader. With this method, it can certainly be done.

Market Geometry | Conclusion

So, market geometry is a pretty understandable principle based on the assumption that the market’s behaviour will repeat itself in the future. Thanks to this, you can figure out support and resistance levels of an assets price and act accordingly. This is one of the oldest approaches to technical analysis, but it is still fairly popular among traders. If you’re relatively new to this type of trading, market geometry might be the right principle for you, as it is not that hard to grasp. Expand your knowledge and improve your trading skills – that’s the only sure way to success.

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FURTHER READING:

1. The Little Book That Beats The Market (J. Greenblatt, 2006)
2. The Four Pillars Of Investing: Lessons For Building A Winning Portfolio (W. Bernstein, 2002)
3. The Master Swing Trader: Tools And Techniques To Profit From Outstanding Short-Term Trading Opportunities (A. Farley, 2000)
4. Seasonality in the option market (A Dickinson, DR Peterson – 1989)
5. The Essays Of Warren Buffett: Lessons For Corporate America (W. E. Buffett, L. A. Cunningham, 1997)

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Author: Ben Prescott
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