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What is this Enigma?
Tesla's theory about the numbers 3, 6, and 9, connected to the mathematical and natural patterns of Fibonacci and fractals, suggests that there are fundamental principles governing universal structures and behaviors. In the context of financial markets, these ideas can be applied to understand and predict market patterns, with traders using fractals and Fibonacci ratios to analyze market movements. These connections indicate that, just as nature follows certain mathematical rules, markets may also adhere to these principles.
I think time is the most crucial to understand what enigma in trading means. Time that goes hand in hand with liquidity and more... Think of the different sessions in the day, the specific repetitions in a week and on an annual basis Q1, Q2, Q3, and so on.
I adopted this concept from Michael J. Huddleston. His concepts have stayed with me and motivated me to take action. Over the years, I have studied his ideas and found them to be the most accurate. Not because they work well, but because they truly represent the market. The interplay of time, liquidity, and imbalances inspires me and keeps me engaged with the charts. It has given us the ability to truly understand price action. Some claim it doesn't work, but that's because they don't study and don't realize that it's not a puzzle to solve. It's fractal... an infinite puzzle that you must piece together yourself.
Enigma is a word for the complexity of trading. Let's say if you can trade and are consistently profitable, then you have solved the enigma. it's the thing that you can't just see directly. In my personal terms, this is the art of bringing together price, time and imbalances and inefficiencies. Several factors lead to a good business transaction.
Technical analysis involves what you examine on your chart. Michael J. Huddleston gave it a special name: Technical Science. This means that the chart doesn't need any indicators. They're unnecessary because the real indicators are already within reach: the price itself, and the time, which plays a crucial role in this fractal market. Think of the London open, New York open, midnight, 8:30 AM,... many elements that serve as indicators. And finally, the art of recognizing liquidity, which helps you determine your daily bias. That is the art.
The fact that we call it fractal comes from the idea that we see certain things repeating. This is reflected in his quote: "Every day, every week, and it won't stop." The power of 3, the hunt for liquidity, and imbalances repeat across all timeframes. Within each candle, there's a whole story unfolding that tells us something. That is the art of reading the charts.
The image highlights the contrast between Smart Money (institutional traders) and Retail Traders (speculative uninformed money) within the market. Smart Money operates within a "Market Efficiency Paradigm," strategically targeting areas of liquidity provided by Retail Traders. These institutional players understand how price delivery works, exploiting inefficiencies and retail behavior to fulfill their large orders without significantly disrupting the market.
Retail Traders, on the other hand, often trade based on emotions, patterns, or indicators without understanding the deeper market dynamics. They are more likely to buy at highs and sell at lows, creating predictable liquidity pockets for Smart Money to target.
The key takeaway is that Smart Money seeks liquidity, often moving prices toward areas where retail stop-losses or opposing orders reside. To trade like Smart Money, one must adopt a contrarian approach: enter longs where retail is selling and enter shorts where retail is buying. Timing and understanding liquidity flows are critical in this strategy.
FRACTAL
EVERY DAY, EVERY WEEK AND IT WON'T STOP...
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