Innovation Curve and the Squueze

3 янв. 2021 г.

"Everything in life follows universal laws. If you act against these universal laws, you will experience pain." A very nice piece of wisdom that I picked up from some book.

These universal laws apply everywhere, consciously or unconsciously, visible or invisible.

I have broken some universal laws in my life so I know that pain is a fact. But everything bad always has good sides, because today I know that I prefer to act in sync with these laws.

This post contains a combination of two very, very cool theories:

Diffusion theory according to Rogers with the 5 consumer types &
the Gaussian bell curve of the normal distribution.

"The Innovation Curve", which I blunderingly painted over the chart, is basically nothing more than a Gaussian curve with the parameters of the consumer types from Rogers:

* Innovators
* Early adopters
* Early majority
* Late majority
* Laggards

The idea for the blog post came to me spontaneously when I saw the price action of the current BTC movement.
It is a beautiful and extremely clear picture book example for the representation of the system and I think it is self-explanatory for the logic. It should simply represent the topic in a simple and simple way ... nothing more.

Of course, I cannot guarantee the correctness, but simply give my thoughts here.

With this I would like to encourage the readership to deal more intensively with the topics mentioned, because honestly ... the stuff is just awesome.

You often hear or read that the weak hands are being flushed out of the market. Shakeout, Thrust, Spring, Stophunt ... no matter which words you use for the thing, it is and always remains the same or comes out the same, namely to get the majority out of the way.

I just distributed the individual levels freely according to gusto. So please forgive me if I portrayed something wrong.

The innovators and early adopters have positioned themselves nicely and attracted the masses.
The early majority got wind of it and got hold of a very good position.
The late majority already paid premium prices, but had the advantage that they received many confirmations and signals that made the trade "safer" or "clearer" for them. Here your own expectations of the further course of the position decide.

The Laggards, the main character in our example, is always late. Indicator signals, signals from groups, rumors, hot tips etc etc ...

This is where innovators and early adopters sell their positions (distribution phase).

The weak hands are therefore the majority who go into the trade later and can rarely sit out the losses / drawdown and are squeezed out of their trades.

That is the nice squeeze and also the moment when Fibonacci retracements come into play. It's not really about the Fib series of numbers ... it's about the pain.