A new category of technical analysis is available for trading in foreign exchange markets. This is called shear theory, and this new technique is based on shear ratios that break down three main types of chart conditions:
- Rushing markets
- Upward market trends
- Down market trends
The shift theory relationship is a focus on important data and ignoring the data responsible for false signals and noise. The trade approach to shift theory works better than any other form of technical analysis because it focuses on the science of price analysis. Most technical analyzes today focus on the closing price as the bulk of the data being analyzed. The main problem – the closing price – is the moving goal. Many traders do not understand that indicators are nothing more than measuring instruments, and this is how they should be treated. When it comes to measuring value, you need stable data to get an accurate read. I like to use the example of trying to weigh myself on weight. If you keep jumping, trying to weigh yourself, getting accurate readings is almost impossible. This is exactly what the closing price does. This changes every time there is a tick up or down and it changes the reading of most indicators, resulting in a lot of noise and false trading signals.
Shifted trade ratios are based on indisputable facts of market trends. Some examples:
- Prices on the chart can rise only when they give a new high.
- Prices on the chart can only go down when they make a new low.
- In volatile markets, there are bars that have a high percentage of overlap.
As a trader, shift theory ratios are a great tool to keep traders disciplined and adhere to sound trading principles. As an example, we will consider bias readings and bias readings in 3 types of market conditions:
- Up in trend
- The downward trend
If market conditions are volatile, the internal shift ratio is a graph that measures this type of market. The offset coefficient inside is a measurement of the current percentage of the bar that overlaps the previous bar. In all volatile markets, a high percentage of bars overlap. It’s easy to see on the graph, but most metrics just can’t measure such conditions because they’re based on the closing price.
If the market is growing upwards, then the upper shift ratio is an indicator that measures this type of price change. In the conditions of the trending markets laths on the chart should achieve maxima, and it is an indisputable fact concerning the markets moving upwards.
In lower markets, the bottom shift ratio is an indicator that measures the strength of the downward trend. This is again based on the indisputable fact that declining markets need to lower their lows to go lower.
In the end, these methods work, and the proof is in testing. Many indicators have a dirty secret: they don’t really work, and so no one is willing to show any test results. So if you want to find the best trading index in the FOREX market, you need to look at the ratio of the theory of shifts. If you want consistent and proven results, then as traders you need to focus on important data and ignore the data responsible for noise and signal lag.