Translation under review. The illustrations are still in Portuguese.
"What moves a chart? Money. Capital. Large amounts of capital."
You stopped in the middle of this chapter.
Big money. It's not the newspaper that moves the chart. It's not the announcement. It's money, a lot of money, from banks and funds. When they move, the chart moves.
Can you see where it is? Sort of, in two places. In the order book, where the orders of people who want to buy and sell at each price sit. And in the options market, where there are contracts betting on where the price will go by a future date. Where there are more contracts, there's more money on the bet.
If a share costs 10 reais, but there's a big volume of contracts saying that share will be at 15 reais X months from now, that share will probably go up. Unless there's the same volume or more saying it'll go to 5.
— Sam
The path of least . The price tends to go where the money is concentrated. A comparison: think of water running down a hill. It goes around the rocks and takes the easiest path.
Tends to. It's not a guarantee. At any moment someone with more money can show up and do the opposite. Nobody knows if the price will go up or down. That's why we follow the chart.
The door to Level 3. Now you know how to read the chart: the candle, time, the trend, the moving average, the line and the . In Level 3 you get the utility belt: the patterns, entries and exits, the , psychology, options and how big money protects itself.
Words in this chapter
Resistance
A price area where rises tend to run into sellers.
RSI (Relative Strength Index)
Relative strength indicator. It measures the speed of rises and drops, from 0 to 100.
