The Line of Least Resistance

We stand on the shoulders of giants.

I’m not guilty about using their work and ideas.

Firstly, obviously, I’m going to quote them. Then, I plan to achieve something new, whilst standing on their shoulders. Those will be my two pennies, and feel free, people, to use my two pennies copiously.

The phrase “line of least resistance” was first coined by none other than Mr. Jesse Livermore. He lost a fortune finding it, then won a fortune following it, and again lost a lot of money at times when he ignored his own discovery.

Pioneers have it tough.

Carving out a new path is perilous, to say the least.

So, what is the line of least resistance?

Imagine yourself to be poking and shoving around, looking for a clear path in the dark. Something gives. You push further, and discover that you can easily traverse the path that emerges, without stumbling. For a while.

Let’s just remain there.

You are travelling along seamlessly on this path you’ve discovered after poking and shoving around.

Freeze.

Now imagine the price of an underlying. Any underlying, that tends to trend. GBP vs USD would be a great example.

Price pokes and shoves (at resistance), as it tries to break out.

Once it has broken out, you need to understand why it has broken out.

It is not encountering enough resistance to make it stop.

It’ll keep moving along this line of least resistance, till there develops sufficient new resistance that is enough to make price stop, or even reverse.

That’s a price move. You want to be part of it. Thus, you look for it. The pokes and the shoves are your entry tries. One of your entries will chance upon the line of least resistance. You’ll experience a clear move, which you’re a part of. The move will continue till resistance builds up again.

The idea, obviously, is to stay with the move to make up for failed entries and then some.

You stay in the trade till there is enough resistance to make the underlying reverse more than your threshold.

That would be your trigger stop.

When a concept is broken down to its absolute basics, it becomes easy to understand.

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