Do you think price is just a number on the screen? Think again.
Price is the secret language of the markets, a chaotic oracle that hides patterns, cycles, traps, and opportunities.
If you are a retail trader and want to stop being the prey to become the predator, you need to understand price from its guts: trends, cycles, heavy tails, and above all, how to leverage these fundamentals to hack your statistics.
Here are the hacks that no one dared to write.
1. Price Is Not a Number: It Is an Ecosystem
Price is the sum of all emotions, expectations, fears, and greed of millions of participants. But it is not random: it follows patterns, repeats cycles, and sometimes explodes into extreme movements that destroy accounts and create fortunes.
2. Identify the Trend: The Holy Grail (That Changes Shape)
Why is the trend your best friend?
The trend is the dominant force: 80% of major movements occur following the trend, not against it.
Key tools: Moving averages (golden and death crosses), RSI, MACD, candle patterns (engulfing, doji, hammer), volume analysis, and divergences.
Disruptive example: Don't obsess over predicting the exact turn. Instead, ride the wave when the trend is confirmed by multiple indicators (e.g., moving average crossover + increasing volume + RSI emerging from oversold).
How does a retail trader take advantage of this?
Golden rule: Do not fight against the trend. Use trailing stops to ride the wave and exit when the tide changes.
Backtesting: Test your entry/exit rules in different trends and adjust your strategy according to the context.
3. Cyclical Events and Seasonality: The Market's Hidden Clock
Did you know that markets have seasons?
In stocks: "Sell in May and go away", Santa Claus rally, earnings seasons, elections, and Fed meetings mark cycles of volatility and opportunities.
In crypto: Halvings of #bitcoin , "#altcoins seasons", monthly patterns (February, July, and October tend to be bullish; September, bearish), and protocol events (forks, upgrades).
How does a retail trader take advantage of this?
Event calendar: Always have a macro and specific asset event calendar on hand.
Adjust your exposure: Increase or reduce risk depending on the cycle phase. For example, after a Bitcoin halving, historically there are months of explosive bullish trend.
Asset rotation: When Bitcoin calms down, altcoins usually take over. Don't get married to a single asset.
4. Heavy Tails: The Black Swan Is Closer Than You Think
What are heavy tails?
Not everything is normal: Markets do not follow a Gaussian bell curve. Extreme events (crashes, rallies) are much more frequent than traditional models predict.
Brutal implication: A single event can wipe out years of gains or multiply your account in days.
How does a retail trader take advantage of this?
Radical risk management: Use stops, limit leverage, and never bet more than you can afford to lose in a single trade.
Stress testing: Simulate extreme scenarios in your backtest. Would your strategy survive a flash crash?
Intelligent diversification: Don’t put all your eggs in one basket, but don’t believe that diversification will save you in a systemic crisis.
5. Price as an Edge Tool: Practical Strategies
How to use price fundamentals to improve your statistics?
Supports and resistances: Buy near supports, sell near resistances. Use candle patterns and volume to confirm entries/exits.
Price action patterns: Engulfing, pin bars, double tops/bottoms. Use them in confluence with cycles and trends.
Macro events and news: Anticipate volatility with the economic calendar. Use pending orders to capture explosive movements after key announcements.
Correlations and cycles: If oil rises, CAD usually appreciates. If Bitcoin stagnates, altcoins may take off.
Options and volatility: Analyze implied volatility to detect possible sharp moves and adjust your exposure.
Use artificial intelligence to identify correlations, cycles, events, and keep it in mind when starting your trading week.
6. Real Disruption: How to Communicate and Learn All This?
Gamify your learning: Use simulators, challenges, and gamified backtesting to internalize patterns and cycles (If you want to know how to gamify the process, I'll explain it in the next post by writing "gamify" in the comments section to see if there is real interest).
Storytelling with data: Go beyond theory. Analyze real cases of extreme events and past cycles to understand the "why" behind the price.
Visual tools: Use infographics, dashboards, and automatic alerts to not miss cycle changes or heavy tail events.
Learn from the community: Participate in forums, follow transparent traders, and share your results to accelerate your learning curve.
7. FINAL MESSAGE
Price is not just a number: it reflects collective psychology, economic cycles, extreme events, and hidden opportunities. If you learn to identify trends, anticipate cycles, protect yourself from heavy tails, and use price fundamentals as an edge, your statistics will stop being a roller coaster and become a probability machine in your favor.
The deeper you understand what drives it, the stronger your trading will be.
And remember: “Prices are not random. We simply do not understand
all the factors that drive them.” Jim Simons
It's reading time
I love Bitcoin