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# The Path of Least Resistance

Sir Isaac Newton was born in England in 1642 and is considered one of the greatest scientists and mathematicians that ever lived. He lived for 85 years. In college, he had strong ideas about motion and broke them down into three laws which I will explain in simple terms below.

Law 1:  An object at rest remains at rest unless acted on by an unbalanced force. An object in motion continues in motion with the same speed and in the same direction unless acted upon by an unbalanced force.

Law 2:  Acceleration is produced when a force acts on a mass. The greater the mass, the greater the amount of force needed.

Law 3:  For every action, there is a equal and opposite reaction.

Let’s apply what Newton formulated a few hundred years ago to an opportunity in the market this week. Last Friday, the NASDAQ (QQQ) reached an area of supply (A). This was an area of supply because our “Odds Enhancers” told us so. Having a good idea of where price will turn is very important, but there is one more equally important question: where will it go after turning? Area (B) is an unfilled gap that is just below current price as of Monday morning. Meaning, there is little to no demand in area (B) or even just below area (B) for that matter. If we apply Newton’s thinking here, price should decline. The only thing that will stop a decline in price is if a new “force” enters the equation in the form of demand.

NASDAQ (QQQ) – 60 Min Chart. 1/7/2013

In the XLT (Extended Learning Track), our graduate online trading and training program, we start most live trading sessions doing exactly what we did here, identify the path of least resistance for price and most of the time, price goes exactly where we thought it would. Applying the simple “motion into mass” concept first and foremost is a key edge for those who use it. While it is very simple, most of the world will consider other pieces of information first when attempting to determine where price will turn and where it will go. Typically news, fundamentals, and indicators are the starting point for most traders. Another key is the ability to identify proper “force” on a chart, meaning fresh demand and supply.

If Newton were a trader, I suspect he would be a good one as he already has a solid strategy that has proven itself for a few hundred years. I am not suggesting you throw away whatever strategy you are using now and jump into what I’m suggesting here, which is what we do at Online Trading Academy. Start with simply looking at charts with the motion into mass, supply and demand thought in mind. Start identifying these opportunities. Once you are comfortable and confident, then make your switch.

Hope this was helpful, have a great day.

Sam Seiden