Lets assume that in the beggining, a few traders decided to play around with prediction of future price movements based solely on price itself.

After not long, they understood that methods forecasting changes of variables in the future based on the variables themselves already exist. They found them in meteorology, predicting earth quakes, rain etc...

Those forecasters uncovered that it is possible to anticipate the most likely changes in a variable based on the nearest past states of the variable.

Why did those methods work in the markets ? Its not about why or when someone was buying or selling. It was simply that the nature has quantifiable correlation in changes between variables.

Now assuming this did take place, what exactly did those traders do ? What was available to them ? Formulas and concepts from maths and statistics. After all the changes in price were nothing more than a data set.

So what did they first use ? We can crack this together.

After not long, they understood that methods forecasting changes of variables in the future based on the variables themselves already exist. They found them in meteorology, predicting earth quakes, rain etc...

Those forecasters uncovered that it is possible to anticipate the most likely changes in a variable based on the nearest past states of the variable.

Why did those methods work in the markets ? Its not about why or when someone was buying or selling. It was simply that the nature has quantifiable correlation in changes between variables.

Now assuming this did take place, what exactly did those traders do ? What was available to them ? Formulas and concepts from maths and statistics. After all the changes in price were nothing more than a data set.

So what did they first use ? We can crack this together.

The truth is hidden from you