Trading the FOREX markets can be complex, but there’s a new way to do it that’s called Shift Theory. It’s based on Shift Ratios that break down the three main types of market conditions into choppy, up trending, and down trending.
- Choppy Markets
- Up Trending Markets
- Down Trending Markets
Shift Theory Ratios concentrate on essential data while ignoring the noise that creates false signals. The reason why Shift Theory is more effective than other Technical Analysis is that it focuses on the science of price analysis. Most technical analysis center around closing prices, which is a moving target. That’s not stable enough since indicators are just measuring tools that require secure data to give accurate readings. Here’s an example: if you keep jumping around on a scale, you won’t get an accurate reading. The same goes for price analysis. The closing price changes every time there’s an uptick or downtick, which alters the reading of most indicators resulting in a lot of noise.
The Shift Trading Ratios rely on undeniable market trends like:
- If a price chart makes a new high, then its price can only rise higher.
- If a price chart makes a new low, then its price can only fall lower.
- Bars with high overlap show choppy markets.
Shift Theory Ratios are an excellent tool for keeping traders disciplined and sticking to sound trading principles. Here’s what they indicate in 3 market conditions:
- Choppy
- Up Trending
- Down trending
The Inside Shift Ratio measures choppy markets. It determines the current bar percentage that overlaps the previous bar. Since choppy markets have a high percentage of bars that overlap each other, it’s easy to spot on a chart but most indicators can’t measure these types of conditions because they’re based on the closing price.
When the market is up trending, the Upper Shift Ratio measures price changes. In an upward market, bars on a chart should be making higher highs, and that’s a fact about upward-moving markets.
The Lower Shift Ratio measures down trending markets, and it’s based on the fact that downward markets will make lower lows to go lower.
These techniques have worked, proved by back testing. Most indicators don’t work, and that’s why no one is willing to display any back testing results. So if you want to find the best FOREX trading Indicator, Shift Theory Ratios are worth a look. To maintain consistent and proven results, traders need to focus on essential data while ignoring signal noise and lag data.