The automated machine learning predictive trading system is constantly analyzing the market structural design of the auction market process which has the advantages of considering market crowd psychology and bringing human behavior into the equation.
The personality of markets can be derived from the auction market process and the overall path of market development in the market structural design, and where we are in the sequence is an integral part of the reflection of the mass psychology of the market. The evolution of mass emotions from pessimism to optimism and back again tends to follow a similar path each time around, producing similar circumstances at corresponding points in the market structure.
The auction market process starts from an assumption that the purpose of the marketplace is to facilitate trade and the market is a constant auction process. The market’s auction process translates countless supply and demand factors into the market’s current price. The market’s current price is determined through the market’s own price discovery or bid-offer auction process.
In the broadest sense, it simply means that as the price moves up, it brings in more buying or, as the price moves down, it brings in more selling. Basically, the market auctions up until there are no more buyers. Then it reverses and moves down until there are no more sellers. The end of an up auction is the beginning of a down auction, etc. All market activity occurs within this broad framework with the market moving up to shut off buying and down to shut off selling. This is known as a ‘dual auction’ process which means the end of an ‘up’ auction is the beginning of a ‘down’ auction and vice versa.
More specifically, the market moves directionally seeking an opposing directional response resulting in the initial directional move being stopped. Getting a little more specific, we can say that the market moves directionally and advertises for an opposite response to shut off the directional move. That statement is at the heart of the market's organizational structure.
Say the market moves up directionally and the up move brings in selling. The selling is an opposite response which (one) stops the up move - in other words, shuts off the buying, and (two) causes the market to reverse and move down. The result: the up auction ends and a down auction begins. Now let's say the market moves up and advertises for selling but doesn't get any. Instead, it brings in more buying. Therefore, the market has to move higher to bring in an opposite response. The result: the up auction continues.
The primary value of viewing market structural design is that it provides a basis for a perspective on the market's general position and outlook. At times, its accuracy in identifying, and even anticipating, changes in direction is almost unbelievable.