Posted by & filed under How to use Vira.

A good way to visualize what the VIRA tool does is best explained in four main scenarios.  I like to call this “The market of lamps”

Let’s imagine we are a merchant that trades in lamps, those nice objects that one rubs and a genie comes out… that kind of lamp.  There is a market of lamps and in there the lamp traders meet to buy and sell their lamps.  To keep this story flowing nicely let us restrict the merchandise to just lamps… genie lamps to be precise.  Let us also establish that you are in the trade of said genie lamps and that you have a stock of them of your own, and also that you have some cash to get into the market if a good opportunity arises.  Of course, let us establish that you are willing to trade in lamps and bear some risks inherent to the trade.

Scenario 1:  You go into the market one sunny morning, and you notice that there is an unusually low amount of lamps being traded, and when they do exchange hands you notice that the price for them is higher than the expected price.  So as the price gets higher and higher, the volume is lower and lower.  This is the first scenario and the question, as always, is: What do you do?

Scenario 2:  You go into the market, and you can hear the traders as you go in, today is a loud one.  You notice that there is an unusually high volume of lamps being traded, and that when they do exchange hands the price of the transaction is lower than the expected price.  So as the price keeps going down the lamps keep being traded.   This is the second scenario and the question is “What do you do?”  Now the inference here is that there is a point in which, due to the demand, the price will eventually bounce.  VIRA will place you in that scenario but will not give you exactly where that point is.

Scenario 3:  You go into the market, and the air smells like orange blossom.  You notice that there is an unusually low amount of lamps traded at an unusually low price.  Traders are starting to walk away from the market and the price keeps dropping.  This is the third scenario:  What do you do?

Scenario 4:  You go into the market this morning, it is raining and there are big tents set everywhere to keep traders from the rain.  You notice that there is an unusually high amount of lamps traded at a very high price.  Traders are happy to keep going into the market, and this is keeping that price up there.  As always the question is:  What do you do?

In our Post No.2 we will discuss further these questions and the specific perspective of VIRA.

 

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