I-Ching: Yin and Yang and the two phases of the market
Trading can make one become philosophical (or it could be an outcome of watching too much Youtube in between). I share with you the concept of change based on the I-Ching and a quote from Bruce Lee that could shape the way you approach your trading.
Moving between Yin and Yang
I-Ching or Book of Changes talks about the two states of Yin and Yang and their various permutations or hexagrams. In a way markets also have two states: the bull and the bear.
An expert of I-Ching once observed “consider our Moon – at the point the Moon is fullest it starts it’s move towards a new moon“.
Similarly we can see price move up and down. Is it any wonder why oscillators are such popular indicators?
In any case, this is a 3M chart of DXY from 1999 – present. DXY might or might not reverse but sooner or later, it has to do a retracement. This is it’s nature. At this point when bears are most confident to call a down trend in DXY, bulls have the best proposition to go long.
You don’t always have to make a stand, just go with the flow
The late Kungfu star Bruce Lee said
Empty your mind, be formless. Shapeless, like water. If you put water into a cup, it becomes the cup. You put it in a teapot, it becomes the teapot. Now water can flow or it can crash. Be water, my friend.
We don’t always have to know why the market is doing this or that and we should never make a conviction to go all in. Sometimes it’s here, sometimes it’s there. If DXY is going down, we become a bear. If it goes up, we become the bull. Be water my friend.